Map your path to revenue growth: Start at the top with a leading metric then act to improve it (click for larger view)

What would you pay for a crystal ball? You can peer into the future to see your company’s future performance.  So why don’t you do it?

If you are part of a SaaS company you are probably already using Bessemer’s 5 Cs of SaaS finance. Of course SaaS companies need to be operationally excellent (there’s no reason why that comment is limited to SaaS companies). And these metrics point out that operational excellence is a company-wide discipline, not just for the data center.

That said, I’m troubled by the constant focus on lagging indicators of business measurement. Most financial metrics are backward-looking – showing you a rear-view mirror of performance. It’s time for companies put more emphasis on forward-looking metrics. Don’t just consider “quarterly sales forecasts” since those are internally generated, subject to bias, and don’t show you what’s coming 6 to 12 months down the road.

Related to my earlier post, consider instead a forward-looking measure of your most important asset: your customers.

Do you have strong relationships with your customer base? Are they evangelizing on your behalf and referring business? Do they expect to continue doing business with you? Or, are they ‘trapped’ and suggesting to their friends and colleagues that they stay away?

This is neither rocket science nor expensive. You can get these metrics in place within 1 quarter and with minimal (inexpensive) effort. Once in place, you will clearly know what the future looks like – is a hockey-stick growth curve in your near future? Or are you destined for linear (or declining!) growth? Don’t you want to know so you can plan ahead…?

Many executives will say their most important asset is their employees or their products. I would argue that for most companies it’s their customers. Why?

Customers fuel your growth. We know customers provide cash for your products and services, but they also serve as an extension of your employees. When leveraged effectively, your customers allow you to scale through their word-of-mouth. Whether you are B2B or B2C focused, if you aren’t leveraging your customer base as a critical asset then you are probably growing linearly through your employees, and missing out on the hockey-stick. You can’t just scale as effectively without your customers becoming an extension of your sales and marketing engine.

Check out Bessemer’s 5 Cs of SaaS Finance. If your growth curve doesn’t look like this then you are not leveraging your customers as a critical asset.

We all know this is true, yet what do we do about it? Often, we sit in our offices and claim that we need to lead our customers. While that may be true it’s missing the point. No one says you should let your customers tell you what to build. But face it – your customers have a pretty good understanding of your marketplace and what they need to be successful. You can influence them, but they will have a picture of what your value proposition is and how you compare to competitive alternatives (and what those alternatives truly are). Most importantly, they can be your evangelists. We all know about the power of word-of-mouth.

So what are you doing to leverage your customers as an asset? Do you hear what they are saying to you? Or do you think you know better than them?

Quick update from my note below about Schwab and the difference between “products” and “customer experience” (see
Great products but Bad Experience = DETRACTOR )

A letter arrived in today’s mail (a week after the incident). They write, “Unfortunately, we have been unable to reach you to discuss this matter. Please call us at…”

I know they have home phone, my cell phone, and my email address because they verified that info when I called last week. I never received any messages from them.

If they had honestly tried to contact me, they would have delivered me with the “Wow!” experience that creates loyalty and positive word-of-mouth. I wish I could have blogged about that!