      kellblog.com · 2018-05-01
      · 2956d
    

Understanding SaaS Growth Efficiency: Net New ARR and the Leaky Bucket Model

Dave Kellogg analyzes the concept of net new ARR in SaaS companies, explaining the 'leaky bucket' metaphor where new ARR is added through sales while churn causes losses. He proposes a Growth Efficiency Index (GEI) metric that measures cash burn per dollar of net new ARR to provide a comprehensive view of overall business health beyond just sales efficiency.

3 metrics· Cited 0× in the knowledge base ·Open source ↗

Metrics in this report

Churn ARR YoY Growth Example

167%

example case

1Q17 performance showing impact on net new ARR

Upsell as Percentage of New ARR - Lower Bound

20%

below indicates

Potential inadequate monetization of installed base

Upsell as Percentage of New ARR - Upper Bound

40%

above indicates

Potential over-reliance on existing customers and insufficient new business