Unit Economics

Welcome to episode 11 of What's Broken in GTM and How to Fix It with Louis Fernandes and Simon Daniels. Each week, together with occasional guests, we explore the challenges that face go-to-market leaders in SaaS scale-up businesses and suggest solutions to common issues.

This week sees us arriving at episode 11, placing us into the hallowed company of the 4% of podcasts that make it past ten instalments, invoking a moment of reflection! Louis has been struck by the relevance of the topics covered in the podcast so far, frequently encountering the issues we’ve been discussing with revenue leaders and founders he meets. Simon agrees and has also been enjoying the opportunity to step back from the revops coal face and reflect on the broader strategy and purpose behind the topics we’ve been discussing. The podcast, Louis reckons, is providing valuable insights that many GTM leaders don't have the time to consider in their daily routines. So keep listening for bite-sized chunks of guidance!

Moving on to this week’s discussion, we address the topic of unit economics. Here’s the TL;DL (“ Too Long; Didn’t Listen)”) in case you don’t have time for the whole episode:  SaaS companies have for years chased vanity metrics, like pipeline coverage, logo counts, opens, and clicks. But now in today's paradigm investors and boards are asking tougher questions about profitability and scaling. That's where unit economics comes in. 

Listen on as we discuss the importance of unit economics for revenue leaders (not just CFOs!), encompassing the costs associated with acquiring, retaining, and expanding revenue. Key metrics such as CAC, LTV, CAC/LTV ratio, CAC payback period, and NRR are essential for understanding profitability. We cover key challenges including bloated GTM infrastructures and misalignment of goals, which can lead to inflated costs and inefficiencies. SaaS companies should focus on narrowing their ICP, shortening the CAC payback window, enhancing customer onboarding and retention, and investing in a robust pricing strategy.

Read more on this topic in the corresponding edition of Louis’ What's Broken in GTM and How to Fix It newsletter.

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