SaaS MetricsThere are many great articles about SaaS metrics on the web (e.g., see here, here and here.)  There are also great resources for metrics specific to marketplaces (see here).  But much of my work is with a special kind of network, where one side of the platform is an enterprise buyer (or supplier) and on the other side is their supply base (or customers).  Typically one side’s enterprises tend to be much larger than the other side’s.  That’s why I call them enterprise-driven.  Examples of these types of networks include:

  • Procure to Pay (e.g., Ariba, Coupa, Basware, Jaggaer, Tradeshift, etc.)
  • Order to Cash (e.g., Billtrust, HighRadius, etc.)
  • Invoicing and payment (e.g., Taulia, C2FO, Paymode-X, NvoicePay, etc.)
  • Supplier information management or credentialing (e.g., Ecovadis, Aravo, ISNetworld, etc.)
  • EDI networks (e.g., SPS Commerce, OpenText)
  • Enterprise versions of Upwork or other labor marketplaces

SaaS Metrics Unique to Enterprise-Driven B2B Networks

The following series of posts will cover metrics unique to these enterprise-driven networks.  (This means I’m not going to cover common metrics such as GMV/GSV, Take Rate, Churn, NPS, Rule of 40, etc.)  This post and  subsequent ones will cover four metrics:

  1. Buyer-Supplier Revenue Mix
  2. Modified LTV/CAC
  3. Bookings (for compensation)
  4. Buyers per Supplier

Buyer-Supplier Revenue Mix

The prevailing wisdom among two-sided market economists is that the side of the market that is more likely to attract the other side of the market to the platform is the one that should be subsidized.  (These days “subsidized” usually means free!)  In some markets this strategy means large enterprise buyers get subsidized software and services and their supply base pays.  But in the list of enterprise platforms above, there are some in which buyers generate nearly 100% of the revenue, some in which suppliers pay nearly 100% and some which are a mix of the two.  In some of these markets, in fact, these different pricing schemas co-exist, as a point of differentiation.

There’s no “right” or “wrong” buyer-supplier revenue mix.  The more important question is: does the network explicitly think about this metric?  Have they chosen it wisely or is it simply a historical accident?  Has the network wisely structured pricing to both sides?

In general, I place more value on platforms that have monetized both sides of their network.  The ability to monetize both sides of the platform demonstrates the platform understands both sides of the value equation.  It also demonstrates that participants on both sides of the platform see real value they are willing to pay for.

It’s fine to subsidize one side of the network to attract the other side.  But once you have both sides on your platform, why not figure out what each of them might value that you can sell them?  Are you really a network if only one side sees value?

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