Lean-Case Tutorial - The SaaS B2B Template

​Overview

This tutorial shows how to create a Lean-Case SaaS B2B model with a Get-Customer-Phase modelling the Sales Process of converting prospects into customers and a Keep-and-Grow-Customer-Phase modelling the Account Management Process. You learn how to set up all revenue streams across those two phases, connect the streams with conversion rules and validating the mechanics of your model. We are also showing you how to add all elements to calculate your unit economices - churn, cost of goods sold and cost of selling.  Finally, we provide an example how to add organizational units to your model with jobs, groups, team roles and manager roles. Headcounts can be automatically calculated driven by the number of sales teams, customer quotas or revenues. After learning these basics, you can get started to adjust your model. 

The SaaS B2B Model

For a Lean-Case SaaS B2B model, we break down the customer life cycle into two main phases. Each of which has a number of stages.

LeanCase Tutorial B2B Template

For a Lean-Case SaaS B2B model, we break down the customer life cycle into two main phases. Each of which has a number of stages.


1. The Get-Customer-Phase models the Sales Process of converting prospects into customers who sign up for your service. A typically SaaS Sales Process incorporates four stages:

  • Prospect
  • Market Qualified Lead (MQL)
  • Sales Qualified Lead (SQL)
  • Committed 

2. The Keep-and-Grow-Customer-Phase models the Account Management Process on on-boarding first time customers and ideally converting them into loyal, long-term customers. This includes three stages:

  • Live Customers (LIVE)
  • Annual Recurring Revenue (ARR) Customers
  • Lifetime Value (LTV) Customers

This tutorial shows you how to 

  • Set up the revenue streams for the Get-Customer-Phase(Step 1) and the Keep-and-Grow-Customer-Phase (Step 2)
  • Connect the revenue streams by setting up Conversion, Time Delay and Volume Metrics (Step 3)
  • Verify your model by validating Conversion Rules and Revenues (Step 4)
  • Adding Cross-Selling Revenues for one-time Professional Services (Step 5) 
  • Adding Churn for all stages in the Keep-and-Grow-Customer-Phase (Step 6)
  • Add Cost of Goods Sold to Keep-and Grow-Customer stages (Step 7)
  • Add Cost of Selling (Step 8)
  • Add Other Teams (Step 9)
  • Getting Started to adjust your assumptions using benchmarks (Step 10)

Step 1: Set up the Get-Customer-Phase for All Revenue Streams

We add each stage of the Get-Customer-Phase in Lean-Case Menu “Revenues” as so-called revenue streams which model different revenue types (e.g. subscription revenues) and which can include several customer contracts - in a SaaS context often referred to as revenue plans (e.g. Enterprise Plan). Even though customers in the sales process don’t create revenues, this is a required step.

For the first revenue stream “Prospect”:

  • Click the button “Add Revenue Stream” to create a revenue stream
  • Select a revenue type for this revenue stream by choosing “Subscription (Customer Contract)” from the dropdown (Note: For all stages in the Get-Customer-Phase with “0”-revenues, you could potentially select any other revenue type.)
  • On the top right side of revenue stream widget, enter the name of the stream; let’s start with “Prospect”
  • Click the button “Add Revenue Stream” to create a revenue stream
  • Select a revenue type for this revenue stream by choosing “Subscription (Customer Contract)” from the dropdown (Note: For all stages in the Get-Customer-Phase with “0”-revenues, you could potentially select any other revenue type.)
  • On the top right side of revenue stream widget, enter the name of the stream; let’s start with “Prospect”
  • Below that, also enter the name of the revenue plan/customer contract. As we only use one plan, just use the same description “Prospect”
  • Go to tab “Forecast”. For now, set the forecast of new customers in field “Forecast Driver: New Customers per Month” to 0 (by default it is set to 1).
  • Click button “Save” to save the revenue stream

Repeat the same procedure for all the other revenue streams. At the end of it all, your Get- Customers-Phase should have four revenue streams, one for each stage.

Step 2: Set up the Keep-and-Grow-Customer-Phase

Using the same procedure as above, set up a revenue stream for each of the three stages in the Keep-and-Grow-Customer-Phase.

As outlined in Step 1

  • Select the Revenue Type “Subscription (Customer Contract)”
  • Enter the name of the stream and the name of the plan
  • Set the forecast to 0

In addition, select the billing interval from “Billing Period” dropdown and enter the Average Monthly Recurring Revenue (MRR) for a customer contract – setting it to

  • for revenue stream “Live” to Billing Interval “Monthly” and $100 MRR
  • for revenue stream “ARR” to Billing Interval “Quarterly” and $500 MRR
  • for revenue stream “LTV” to Billing Interval “Yearly” and $1,000 MRR

Click button “Save” to save the revenue stream.

Step 3: Set up Conversion, Time Delay and Volume Metrics

When getting, keeping and growing customers, there are always four different types of metrics at play. These include:

  • Volume Metrics
  • Conversion Metrics
  • Time Delay Metrics
  • Financial Metrics

Set Volume Metrics

To start with, let’s set up the major volume driver: The more prospects are created, the more volume we can potentially generate in our model. Let’s assume that we can address “1,000,000” new prospects for the month of January 2019:

  • Select revenue streams “Prospect” and go to the “Forecast” tab which we initially set to 0 earlier
  • Select revenue streams “Prospect” and go to the “Forecast” tab which we initially set to 0 earlier
  • Under the “Forecast Driver” input “1,000,000” new prospects for the month of January 2019  (between start month “Jan 19” and end month “Jan19”)

Set Conversion and Time Delay Metrics

After addressing as many prospects as possible, it becomes a matter of converting as many of them as fast as possible to create paying customers. We can add conversion rules to each revenue stream connecting all the stages with Conversion Rate and Time Delay Metrics.

Let’s assume that 10% of all prospects will convert into MQLs after 1 month.

  • Still under revenue stream Prospects, go to the “Churn and Movements” tab
  • Click button “+ Add Customer Movements” to add a conversion rule which “moves” customers from one revenue stream to another. For each conversion rule, input
  • Conversion Rate: under the “One-Time Conversion Rule” box, input a rate of 10% 
  • “Move From”: select the revenue stream and contract type from which customers convert (here: stream “Prospect” and plan “Prospect”)
  • “Move To”: select the revenue stream and contract type to which customers convert (here: stream “MQL” and plan “MQL”)
  • Time Delay: enter the number of months it takes before conversion takes placeBy default, this is assumed to be 1 month
  • Click button “Save” to save the changes to the revenue stream

Repeat the above steps so as to connect each of the stages with conversion rules. Following the same procedure for all subsequent revenue streams:

  • 10% of MQLs will convert into SQLs after 1 month
  • 10% of SQLs will convert into Commits after 1 month
  • 10% of Commits will convert into Live Customers after 1 month
  • 10% of Live Customers will convert into ARR customers after 1 month
  • 10% of ARR customers will convert into LTV customers after 1 month

Click button “Save” to save the revenue stream.

Step 4: Set up the Keep-and-Grow-Customer-Phase

Let’s now verify our model by validating the conversions mechanics and revenue patterns. This is a good step to get comfortable with the way Lean-Case works and calculates.

Verify Conversion Mechanics

To validate if your conversion rules work as intended, follow these steps:

  • Go to the topmost menu and select menu “Dashboard” and then click on sub-menu “Insights” which provides charts for all Lean-Case numbers
  • Say on tab “Revenue” and focus on the chart “No of Customers – All Streams”
  • According to the details we input for January, there was a total of 1 million prospects at the onset. Hover with your mouse over the January bar to verify.
  • 10% of them, equivalent to 100,000, will convert after 1 month and proceed to the MQL stage. Easily verify by de-selecting the “Prospect” entry in the chart’s legend

Repeat and validate the same steps for the next stages:

  • During the next month, 10% of the MQLs will convert to give a total of 10,000 SQLs after two months
  • After three months, 10% of SQLs will convert into 1,000 Commits
  • After four months, 10% of Commits will convert into 100 Live Customers
  • After five months, 10% of Live Customers will convert into 10 ARR customers
  • And after six months, the 10 ARR customers will convert into 1 LTV customer

Verify Revenue Pattern

To validate if your revenue patterns work as intended, follow these steps:

  • Go back to the topmost menu on the screen and click on menu Revenues to check out graph “Total Revenues by Revenue Stream,”
  • in May, the chart reveals a total of 10,000 MRR for all Live Customers (4 months after prospects were generated) which is the product of 100 Live Customers and an average contract value per customer of 100 MRR.
  • In June, there are a total of 10 ARR customers which when multiplied by 500 MRR shows a total of 5,000 MRR for all ARR customers (plus a total of 9,000 MRR for all Live Customers which is the product of 90 Live Customers multiplied by 100 MRR)
  • In July, the one LTV customer who converts after six months multiplied by 1,000 MRR produces a total of 1,000 MRR after a period of seven months.

Step 5: Add Cross-Selling Revenues for Professional Services

Very often in SaaS Models, companies offer professional services to clients, e.g. for onboarding, integration or training. In Lean-Case, we have developed a separate forecast model called “cross-selling” for this purpose. An additional revenue is cross-sold to an existing customer base.

In order to carry out this step, we first need to add another revenue stream:

  • Click “Add Revenue Stream”
  • Under Revenue Stream Type, however, select “Services” from the drop-down
  • Name revenue stream and the contract type “Services”

Let’s assume that we are able to cross-sell Integration Services to 20% of our Live Customers with a time-delay of 1 month and that the average service per customer takes 2 hours at a rate of $100 per hour.  

  • Fill the customer contract - into “Monthly Sales Volume in Units” input 2 (units of time) and in “Selling Price per Unit” input the $100 rate
  • Go to the Forecast tab and select another forecast method. From drop-down “Forecast driven by ..” select “Cross-Selling”
  • Next, specify to which customers you cross-sell: Under “Cross-Selling linked to Revenue Stream and Contract Type”, click on the drop-down menus to select “Live” as the revenues stream and “Live” as the contract type within the revenue stream.
  • Under “Forecast Driver: Cross Sell in % of Customers” input 20% which is the cross-selling rate and below that, indicate the delay in months to be 1 month
  • Click “Save” to store your changes

The chart “Total Revenues by Revenue Stream” will update to also show Service Revenues.

If we cross-sell services to 20% of all the 100 new Live Customers in the month of May, then 20 Live Customers will buy our one-time integration services with a delay of 1 month in June. This is why our one-time service revenues show a figure of $4,000 in June which is the product of 20 customers multiplied by 2 hours multiplied by $100 per hour.

Step 6: Add Churn for all stages in the Keep-and-Grow-Customer-Phase

By now, we have created a linear model and made the calculations transparent. However, the success of a SaaS Business Model is highly determined by Churn. In Lean-Case, you can model Customer Churn and Revenue Expansion. Please note that customer churn is dependent on the billing period. If customers contract for a month, a quarter or a year,   they can only churn after a month, a quarter or year. 10% yearly churn obviously has a much different impact than 10% monthly churn.

To add customer churn, select the respective revenue stream and go to tab “Customer Movements” (as churn is actually a specific customer movement).

  • For revenue stream Live Customer, enter 5% Churn (which is Monthly Churn as the Billing Interval for Live Customers is Monthly)
  • Save the revenue stream to check the impact of a 5% monthly churn rate
  • Check chart “Total Revenues by Revenue Stream” for the month of June. With 8,500 revenues from Live Customers in June and a 5% churn rate (i.e. 5% of customers do not renew their contracts), the revenues decrease by 425 (= 8,500 * 5%) to 8,075 in July. 
  • With each month, the number drops another 5% - down to 7,671, to 7,287 in September

Next, go to ARR Customers under Revenue Streams, who have Quarterly Contracts.

  • Click on Churn and Movements, and under Customer Churn, add a 5% Quarterly churn rate
  • To view the impact of this change, save the revenue stream and check the “Revenues by Revenue Stream” chart
  • Next, specify to which customers you cross-sell: Under “Cross-Selling linked to Revenue Stream and Contract Type”, click on the drop-down menus to select “Live” as the revenues stream and “Live” as the contract type within the revenue stream.
  • In August, the revenues of ARR customers total 4,500. All of them started their contracts in June so that they are all up for renewal September. As 5% of customers do not renew their contracts, revenues drop by 5% to 4,250.

Next, go to LTV customers who operate under a Yearly Contract system.

  • Under the “Churn and Movements” tab, go to Customer Churn and add 5% yearly churn. Save the changes before proceeding to the next step

Step 7: Add Cost of Goods Sold to Keep-and-Grow-Customer stages

Cost of Goods Sold (CoGS) covers all the cost required to keep your existing customers running (looking at it differently: all cost still required in case you have stopped any new customer acquisition). We want to show you a few different ways how to add different cost types – based on time, based on volume drivers and based on percentages.

Let’s assume that we have a “Time-Based Cost” of 1,000 per month growing at the rate of 2% per quarter.

  • Select revenue stream Live and go to tab “Cost of Goods Sold"
  • Under COGS Item, enter the description for your cost item, e.g.  “Hosting Base Cost”
  • Under Amount, input 1,000 and under Growth per Period, input 2% and set the period to “Quarterly”

In addition, let’s assume a “Volume-Based Cost” of $100 occurs every time when a new Live Customers is onboarded. As we have seen above, Live customers are the result of direct conversions. This is what we call an Expansion Customer.

  • With this in mind, create a second “COGS Item” by clicking on button “+Add Cost of Goods Sold” and input “Onboarding” as a descriptor
  • Click on the switch Time-based / Volume based to make this a volume-based cost
  • Under “Amount” enter $100 and select the volume driver by
  • Selecting the driver “per Expansion Customer” and
  • Selecting the revenue stream “Live (customer)” for which this driver should apply

On top, let’s assume a “Volume-Based Cost” of $10 per month for customer specific hosting for every existing Live Customer (which we refer to as “Ending Customers” in Lean-Case).

  • Create a third “COGS Item” by clicking on button “+Add Cost of Goods Sold” and input “Hosting Customer” as a descriptor
  • Click on the switch Time-based / Volume based to make this a volume-based cost
  • Under “Amount” enter $10 and select the volume driver by
  • Selecting the driver “per Ending Customer” and
  • Selecting the revenue stream “Live (customer)” for which this driver should apply

Finally, let’s assume a “Percentage-based Cost” of 3% of all Live Customer revenues for payment processing.

  • Create a fourth “COGS Item” by clicking on button “+Add Cost of Goods Sold” and input “Payment Processing” as a descriptor
  • On the vertical tabs on the left side of the widget, click on the % icon.
  • Under Amount, enter 3% and then click on the drop-down to select the revenue stream this percentage based cost is driven by, select “Live/Total Revenues”

After clicking “Save” to store the COGS inputs, you can check the COGS by revenue stream and period.

Step 8: Add Cost of Selling to model your Sales Organization

Cost of Selling is related to all direct costs to acquire new customers. Depending on the go-to-market, SaaS business can pursue different organizational models (see picture). This picture shows different organizational models for SaaS businesses targeting SMBs, mid-sized businesses or enterprises. In Lean-Case, we have the flexibility to model any of these or combinations thereof for the Get-Customer as well as Keep-and-Grow-Customer-phase.

Let’s assume, you target Small and Medium-sized Businesses (SMBs) and that based on-targets you have the following organizational requirements:

  • You scale Inbound Marketing with Sales Teams requiring 1 Inside Sales Rep (ISR) per Sales Team.
  • 1 Marketing Development Rep (MDR) has a target of 1,000 new SQL per month
  • 1 Account Executive has a target of 100 new Commits per month
  • 1 Customer Success Manager can manage Live Customer revenues of $10,000 per month.

Please remember – the numbers we select in this example are only chosen to illustrate calculations but are not related to real benchmarks.

Add Sales Team for Inbound Marketing

As shown above, the major volume of the model is driven by the number of prospects created by the forecast in revenue stream Prospects. To scale the volume further, we assume that Sales Teams drive the number of prospects. In Lean-Case, we model this in 2 steps by:

  • Defining sales teams via a forecast model and
  • Adding headcounts to the teams

Define sales teams via a forecast model

To define a sales team via a forecast Mode, follow the followig steps:

  • Select revenue stream Prospect and go to tab Forecast
  • Select forecast model “New Customers per Sales Team” from dropdown “Forecast Driven By”
  • Enter the description for your Forecast Model “Inbound Sales Team”
  • Let us assume we hire 1 Inside Sales Team in January 19 capable of handling 1 new Million Prospects every month. Therefore, leave the start and end date to hire sales teams unchanged at January 2019 and under “Forecast Driver” input “1” Sales Team and type in “1,000,000” as the Forecast Target
  • “Save” changes and then scroll up to view the effect on the Total Revenues by Revenue Stream graph. Check the effect on the Monthly, Quarterly and the Yearly figures

Adding headcounts to the sales teams

To be able to also track headcounts, we are adding teams and headcounts in menu “Headcount”.

  • Select Menu “Headcount” and click on “+Add Team” to add a team
  • Enter a description for your team “Inside Sales”
  • Specify the team’s “Cost Type” selecting between Indirect and Direct Cost Types from the dropdown and assigning a revenue streams for direct cost
  • for a Sales Team, select “Cost of Selling – Direct” from dropdown cost type
  • assign this direct cost to revenue stream “Prospects”  


  • There are 4 different tabs in a headcounts team widget (Jobs, Groups, Team Role and Manager Role) – to add headcounts to a team, go to tab “Team Role"
  • Click on “+Add Team Role” and enter “ISR” as a “Position Title”
  • Input $1,000 as a “Monthly Base Salary” 
  • Specify the driver which determines to add a new Team Role in column “1 Team Role for every …”. For example, to “Add 1 new ISR per existing Sales Team in revenue stream Prospect” requires you t0
  • Enter “1” in Team role
  • Select “Per All Sales Team” from the dropdown and
  • Select  “Prospects” from the lower dropdown
  • Click button “Save” to store the changes
  • To view the impact of the changes made, check the chart “Total Headcount Expense by Team” which will show a monthly expense of $1,000 for the ISR’s salary. (Remember, you hire a 1 Sales Team in Jan. 19 and per Sales Team you are adding 1 ISR with a salary of $1,000).

Add a Team Role with a target

To add team roles with targets, proceed as above. Add more teams: be able to also track headcounts as we are adding teams and headcounts in menu “Headcount”.

  • If 1 Marketing Development Rep (MDR) has a target of 1,000 new SQL per month, we need 10 MDRs to achieve an overall target of 10,000 SQLs per month,
  • If 1 Account Executive (AE) has a target of 100 new Commits per month, we will require 10 AEs for a total of 1,000 new Commits every month
  • If 1 Customer Success Manager (CSM) can manage $10,000 of revenues per month, we require 1 CSM to start with in May 2019 growing in a linear fashion.

Step 9: Add Engineering Team with Managers

Let’s take the final step. To demonstrate how to use the entire headcount functionalities, let’s add an Engineering Team with a CTO job, a Group of Engineers and Lead Engineers as Manager Roles.

  • Select Menu “Headcount” and click on “+Add Team” to add a team
  • Enter a description for your team “Engineering”
  • Specify the team’s “Cost Type” selecting R&D - Indirect Cost from the dropdown

Add the CTO job

You find 4 different tabs in a team widget. To add an individual job:

  • Select tab “Jobs”
  • Input “CTO” under the Position Title/Function column
  • Set a Monthly Base Salary of $1,000

Add a Group of Engineers

To add a group of team members with similar salary profiles:

  • Select tab “Groups”
  • Input “Engineers” under Position Title/Function column - this will be your group of developers, all of whom will have a similar salary profile
  • Set the Monthly Base Salary to “$1,000”
  • Let’s assume you hire 1 engineer per month, input “1” in column Hiring Plan, to indicate the number of new jobs and below it, select “Monthly” as a driver for revenues
  • Click “Save” once you are done editing

Add Lead Engineers

To be able to also track headcounts, we are adding teams and headcounts in menu “Headcount”.

  • Select the “Manager Roles” tab
  • Under Position Title/ Function, type “Lead Developer.” Let’s assume that for every 6 developers, there will be one Lead Developer
  • Set a Monthly Base Salary of $1,000
  • In column “1 Manager Role for every…” type “6”
  • Under this, select the group profile “Engineers” from the drop-down menu
  • Click “Save” and check the impact of the changes on the graph

Step 10: Getting Started

Congratulations! At this point, you have set up and validated the basic structure of the Lean-Case model for your business. From here, you can start adjusting the assumptions to reflect the actual company and business details. These include forecasts, churn rates, salary targets and sales quotas among others.

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