More often than not, SaaS entrepreneurs today focus too much on trying to hit all their SaaS metrics too soon. Ultimately, it’s important, but in my experience, it doesn’t make sense to focus on perfecting the business metrics before you’ve hit $1 million or even $3 million in revenue. Instead of thinking about customer acquisition costs or customer lifetime value, founders should focus their energy on proving the idea, the market, and the product — basically, figuring out their ideal customer profile and fine-tuning their product-market-fit. Once that’s baked, then it’s time to shift the focus to optimizing the SaaS business model. That’s not to say you ignore the business metrics, but it’s really a question to address once you hit $10 million and need to take a hard look at which customers are the most profitable. That will guide you as you build the next phase of your business.
In the early days of Marketo, they focused more on customer acquisition than the efficiency of customer acquisition. They ran the business on a monthly cadence. What did they care about? Logos, logos, logos. Why? If they won a critical mass of customers, then everyone would think of Marketo as the market leader. Once Marketo started to attack larger enterprises, the company then switched to quarterly plans. Win the market. Then you win the perception that you’re going to become the leader.