Is it time to ditch the old SaaS metrics?

How to manage a SaaS company in the era of Product Led Growth

We’ve grown accustomed to the traditional set of SaaS metrics as just part of how to operate a SaaS business. It’s hard to conceive of what to do without metrics like CAC payback, LTV:CAC, average ACV, or the magic number.

Here’s the thing: the traditional SaaS metrics playbook can be extremely misleading when it comes to managing a PLG or consumption-based SaaS company. (Battery has a helpful visual of this in their latest Software 2021 report.)

Let’s look at a few examples, shall we?

• Product as a growth driver: Atlassian spends only 19% of their revenue on sales & marketing (slower growing New Relic spends 55% for comparison), making its CAC payback appear to be best-in-class. That’s because most of their growth is powered by the product itself through a highly efficient self-service motion. In fact, Atlassian out-spends its peers on product & engineering (47% of revenue compared to 25% for New Relic). How do we account for the rise of product as a growth driver?

• Land-and-expand dynamic…