Keys to a mutually beneficial investor board relationship for CFOs

Forging a trusted relationship with your investors is one of your career-defining goals and responsibilities as a SaaS CFO. Especially during market turbulence and broader financial instability, your primary investors can be an essential source of capital and stability around resources. 

In exchange, however, you need to hold up your end of the deal. Your investor board will have expectations, and receiving continued support and capital largely depends on meeting them. In particular, you should prioritize transparency around your company’s present position and long-term trajectory. 

In this article, we’ll walk you through some of the primary components of keeping your investor board happy.

Revenue metrics: What does your investor board want to see?

Naturally, a SaaS company’s revenue performance–and the various metrics that comprise it–are top-of-mind for investors. Here are a few of the revenue metrics your investor board is likely to value most: 

• Upgrade & expansion MRR: Upgrade and expansion MRR are a big deal to your investor board. High performance on these two metrics signals to investors that your company will continue to be a stable, growth-oriented investment. High MRR is desirable in and of itself since it signals a high degree of user retention. But terrific performance on these MRR subsets will be equally exciting to your board–after all, when customers are upgrading, they aren’t churning.

• CAC to CLTV ratio: Your customer acquisition cost (CAC) to customer lifetime value (CLTV) ratio is another revenue metric that matters greatly to your investor board. You should always aim for the lowest possible CAC since that proves you’re acquiring customers effectively. But you also need to pair that with a high CLTV. The golden formula is to obtain customers cheaply and turn them into profitable long-term buyers.

• CAC recovery rate: Your CAC recovery rate tells your investor board how quickly you break even on the cost incurred by drumming up new business. It’s a critical metric to investors–and should be to you as well–because the sooner a SaaS company recoups its CAC, the higher its overall annual profits will be. 

• Lead-to-customer rate: A SaaS company’s lead-to-customer rate is essentially the “sales closing percentage” for the broader company rather than individual sales reps. As CFO, your investor board will be directing their inquiries to you personally about optimizing this critical metric.

2 useful customer metrics for your investor board

These two customer metrics can be thought of as “soft metrics” because they’re somewhat more subjective. The basic process involves determining objective performance markers, assigning a numerical value to them, and using that to gauge customer satisfaction.

Let’s take a closer look: 

• Customer engagement score: Customer engagement is the lifeblood of any SaaS business and a solid pointer to whether a customer relationship is going smoothly or beginning to hit some bumps in the road. When determining their customer engagement score, most companies place the highest value on product usage–essential data for any SaaS investor board. But some other useful signs of engagement include: total volume of social traffic or posts, blog traffic, website navigation rates, and similar indicators.

• Customer health score: Whereas the customer engagement score measures engagement levels, the customer health score is a bit broader. It relies on signs that objectively point to the health of a customer’s ongoing relationship with your brand, such as: how many product features are being used, whether in-app surveys are being taken, the number of upgrades purchased and in what timeframe, and similar signs of interest. Think of your customer health score as a more nuanced, deeper version of your customer engagement score.

In addition to purely quantitative metrics, make sure to give your investor board a balanced perspective by giving them a sense of your qualitative market drivers. What broader cultural or technological trends are offering your company attractive opportunities in the near-term future?

Automate your way to a better investor board relationship

Hopefully, you have a clearer understanding of what your investor board expects from you as CFO. The metrics we’ve covered in this post are useful, but they’re just the beginning. 

To learn more about improving your investor board relationship, explore a few ways to tell your story to your investors.