🎙️ Happy Friday, SaaSpreneurs!🎙️

Welcome to another exciting edition of SaaS Metrics School! 📚 I'm your host, Ben Murray, and in today's newsletter, we're diving into the hot topic of close dates for software bookings. 🔍

During my recent SaaS Metrics Foundation course, a spirited debate emerged regarding the right close date for software bookings. Two camps stand divided: one favors the contract execution date while the other champions the subscription start date.

To shed light on this, I ran a LinkedIn poll to gauge community preferences. Results revealed the contract execution date as the leader, followed closely by the subscription start date.

However, different companies have their own methods. It's vital that your team knows when to consider a booking closed and reflected in your reports. ⏱📊

Consider the impact on sales and marketing efficiency metrics. Misalignment can lead to performance inaccuracies. Tune in as we explore the two camps and their impact on SaaS companies. Gain insights to navigate this debate for your organization's success! 🚀📈

You can also listen to this episode here. For a deep dive on software bookings, check out this post.

📓Key Concepts to Learn💡

The Two Camps: 🏕️

When it comes to determining the close date for a software booking, there are two main philosophies.

The first camp believes that the close date should be the date of contract execution, where the customer signs the contract. This approach offers clarity, as it marks the moment when the commitment is sealed. And the moment CAC stops!

The second camp considers the subscription start date as the close date, even if the contract is signed earlier. This approach reflects when the actual service or product usage begins, which may be seen as a more customer-centric approach. Both approaches have their merits, but it's important to internally define which one works best for your company. 🤔💼

Reporting and Metrics: 📊

The close date for software bookings directly impacts your reporting and metrics. If you choose the first camp's approach of using the contract execution date, your bookings report will reflect the actual date of signing, ensuring accuracy in aligning sales efforts with efficiency metrics.

Conversely, the second camp's approach using the subscription start date can create a lag between when a contract is won and when it appears in your bookings report. This discrepancy might affect your sales and marketing efficiency metrics, as it may create a timing mismatch.

To avoid confusion and to align your metrics with your chosen close date philosophy, it's essential to communicate this clearly within your organization. 📈🕒📉

By understanding and choosing the right close date philosophy for your company, you can streamline your processes and ensure your metrics accurately reflect your performance, contributing to more effective decision-making and strategy development. 🚀📈📚

Understanding the ideal close date for software bookings is vital for accurate reporting and optimization of your sales and marketing efforts. By defining the close date internally, you can ensure consistent and reliable reporting in your company.

So take the time to discuss and determine which approach suits your organization best. Remember to check out the show notes for this episode, where you'll find resources related to software bookings and more.

If you found this episode helpful, make sure to tune in to future episodes of SaaS Metric School to broaden your knowledge on essential SaaS metrics and finance topics.

Got any burning questions or specific metrics you'd like us to cover?

Drop us a line, and we'll do our best to address them in upcoming episodes.

Until next time, keep hustling and measuring those metrics!

Best regards,

Ben Murray
Host of SaaS Metric School

📝 Episode Recap 🎧

In this episode of SaaS Metrics School, host Ben Murray explores the importance of close dates for software bookings. He starts by discussing the two different camps or philosophies when it comes to determining the close date for a software booking.

The first approach, which Ben personally uses, is to consider the close date as the date of contract execution. For example, if the contract is signed on the 15th of the month, the booking is considered closed on that date.

The second approach, as shared by a student in Ben's course who had experience with Salesforce, is to use the subscription start date as the close date. In this scenario, even if the contract is signed today, the booking is not counted until the subscription actually starts, which could be months in the future.

To gauge the popularity of these approaches, Ben conducted a poll on LinkedIn. The results showed that the contract execution date was the more prevalent choice, followed by the subscription start date.

Ben highlights the importance of companies defining their own internal guidelines for determining the close date. This ensures consistency and clarity throughout the organization, as everyone will know when a booking appears in the reports.

Additionally, Ben cautions against potential discrepancies between bookings and start dates when using the subscription start date approach. If there is a gap between the contract signing and the start of the subscription, it can affect sales and marketing efficiency metrics, leading to misalignment.

In conclusion, Ben emphasizes the significance of determining the close date for software bookings and advises listeners to establish clear guidelines internally. Understanding the timing of bookings and aligning sales and marketing metrics is crucial for accurate reporting and analysis.

Make sure to check out the show notes for additional resources related to this episode. And don't forget to subscribe to Ben's monthly SaaS newsletter for more valuable content.

We hope you enjoyed this episode of SaaS Metrics School. Stay tuned for more insights and discussions on important SaaS metrics.