Bookings Data is Finance Data Source 1 | SaaS Metrics School | Four Key SaaS Finance Data Sources
Greetings, SaaS community! Ben Murray here, and welcome back to another edition of SaaS Metrics School. This week, I’m excited to release a special blog post covering the four key SaaS finance data sources. Over the next four days, I'll dive deep into each source, sharing insights to help you better manage and track these critical data points in your SaaS business.
In today’s video, we’re talking about Data Source #1: Bookings Data. This is one of the most misunderstood and poorly tracked metrics I’ve encountered in SaaS companies. But getting it right is essential for forecasting, sales performance analysis, and calculating sales and marketing efficiency metrics. Let’s break it down:
What is a Booking?
A booking is an executed contract for products, services, or software that your company offers. But whether you’re an enterprise SaaS with a traditional sales motion or a self-service SaaS with a high-volume, low-price point product, understanding where and how to track bookings data is critical.
If you run a self-service SaaS model, you’ll likely be tracking bookings through your Monthly Recurring Revenue (MRR) schedule. For more enterprise-oriented businesses, bookings are typically captured in your CRM system through closed-won opportunities. These data sources then flow into your MRR waterfall, tracking the beginning balance, new expansions, contractions, churn, and ending balance.
Two Key Sources of Bookings Data:
1. CRM System: For those with traditional sales motions, tracking bookings in a CRM system, particularly the closed-won report, is crucial. This system captures new customers, revenue, and contract details.
2. MRR Schedule: If your model is self-service SaaS, bookings data will originate from your MRR schedule, and this feeds into your MRR waterfall for revenue tracking.
Why Bookings Data Matters:
Bookings data is vital for multiple reasons:
Forecasting: It helps you understand current sales performance and how your go-to-market engine is performing.
Sales & Marketing Efficiency: You can’t assess your GTM efficiency if you’re not tracking bookings data properly. It feeds directly into your performance analysis and efficiency metrics.
Tracking bookings data monthly is crucial for monitoring new customers, associated revenue, and other key variables, especially if you're dealing with annual contracts, multi-year contracts, or complex ARR and TCV (Total Contract Value) distinctions.
Key Metrics to Track:
ARR (Annual Recurring Revenue) vs. TCV: It’s important not to confuse these. ARR reflects recurring revenue on an annual basis, while TCV accounts for the entire value of a contract over multiple years. Always ensure your reports clearly distinguish between these.
Contract Duration: Always track contract start and end dates in your closed-won reports for accurate forecasting and cash flow planning.
Net Incremental Revenue: In the case of upsells and expansions, track the net increase in recurring revenue. For instance, if a customer’s subscription increases from $10K to $15K, it’s essential to track that incremental $5K for forecasting and efficiency metrics.
The Role of Bookings Data in GTM Efficiency:
Without accurate bookings data, you’re flying blind when trying to optimize your sales and marketing efficiency metrics. Expansion deals, upsells, and cross-sells all feed into this equation. For example, understanding the net incremental revenue when you upgrade a customer’s subscription is crucial for your sales metrics.
The Importance of Clean Data:
Having clean, accurate data in your CRM system is non-negotiable. Make sure your CRM system is updated and reconciled with your sales operations manager by the close of every month. I usually run my bookings report by day three of the month to double-check for any discrepancies and ensure the data ties out perfectly. This accuracy is key for several business-critical processes, including:
Sales commission calculations
Forecasting
Sales and marketing performance metrics
Bookings Data in Practice:
Each month, you’ll be tracking new customers and the associated revenue. Depending on the nature of your business, this could involve:
Annual or multi-year contracts
Variable revenue
One-time services
Hardware sales
It’s essential to break these down into distinct line items in your closed-won report for accurate tracking and analysis. Dates matter, so make sure contract start and end dates, as well as subscription periods, are recorded precisely.
Until next time, thanks for watching!
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