It’s fair to say we are living in bananaland right now. The overall US economy seems like it’s plowing ahead, oblivious to interest rates on fleek and a growing pile of tech layoffs. Consumer goods companies like Walmart are reporting strong earnings, and overall unemployment rates stubbornly low. And to round out the tornado of weirdness, we have crypto making a comeback.

Bitcoin

When you’re in the thick of operating, it can be hard to see the forest through the trees and accurately call if you are living in a recession.

It’s very common to deny you are in a downturn - I’d estimate it takes one quarter for a company to admit it internally, and two quarters to verbally confirm to their board and investors that they are indeed experiencing softness in some segments.

In other words, it can take up to six months before the scissors come out and the operating plan gets a haircut. And in retrospect, 90% of the time you’ll say you waited too long (in fact, I’ve never heard of a CEO or CFO saying “we acted too soon.”)

In order to expedite that crucial “come to SaaS Jesus” moment, here’s my scorecard to snuff out degradation before you’re in a real hole.

Note: None of these trends in isolation necessarily mean you are up against a nasty rip tide, but experiencing a collection of them certainly means you should seriously consider battening down the hatches.

TL;DR:

  1. New hire salaries are changing faster than pipeline growth

  2. Multi Product Attach is plateauing (or even dropping)

  3. Customers are downgrading to cheaper plans

  4. The velocity of early renewals is slowing

  5. Customers are no longer buying multi year deals that ramp

  6. Registration volume is dropping (Paid readers only below)

  7. (Former) Slam dunk deals are hitting the deal desk for discounting

  8. Rep call volume per deal is increasing

  9. Effective commission rates are climbing

  10. Contribution margin by segment is falling

  11. CAC Payback Period by segment is increasing

  12. Customers are paying you slower

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