Usage-Based Revenue Models: Successes and Pitfalls from Checkr COO Lindsey Scrase and Sam Blond on CRO Confidential
In the latest episode of our SaaStr CRO Confidential podcast, host Sam Blond sat down with Lindsey Scrase, COO of Checkr (and former CRO), to discuss her tactics for driving growth at the background screening unicorn. Having joined Checkr from Google in 2022, Lindsay shared valuable insights about identifying and executing on major opportunities for improvement within an already mature go-to-market organization.
Checkr’s go-to-market strategy was already well-established when Lindsay joined in 2022. It was started in 2014 when founders Daniel and Jonathan were working together at a delivery startup and experienced firsthand how slow background checks were slowing down worker onboarding. Naturally, their first customer was DoorDash and the quickly captured 95% of the gig economy market in their early days.
When Lindsey joined, she inherited an already built-out self-serve/PLG model for small businesses and a mid-market and enterprise sales, customer success, and post-sales team. But at the start of its expansion play, Checkr’s enterprise motion failed, and sales cycles were slow, taking up to a year for $100k & up deals. So within her first year, Lindsay identified these core areas that helped accelerate Checkr’s growth.
1. Re-Structuring Comp Plans with Desired Outcomes
Lindsey discovered several areas where incentives weren’t properly aligned with company goals. As Checkr follows usage-based pricing, it’s a transactional business that needs to be managed differently than a typical subscription SaaS model since they only earn revenue when the customer is using the product.
Lindsey explains: “On one hand, if it’s a SaaS product you sell x many seats or licenses and the customer goes live, then you often can set it and forget it for the following year. Whereas in usage-based you have to be laser-focused on making sure that your customers are going live, adopting, and using the product as intended.”
Quickly, Lindsey found that comp plans weren’t aligned with Checkr’s revenue goals and incentives. The SMB sales team was incentivized purely on logo acquisition rather than revenue.
She explains: “Our smallest segment sales team was focused on activating customers. There were no incentives on revenue whatsoever, just a volume-based incentive plan. And so I completely changed that focus of that team and moved them to be revenue-focused, bringing value to the customer and to Checkr.”
The other thing Lindsey did was bring that revenue and focus into the entire cadence of running the business. So instead of just thinking about bookings targets and bookings attainment in meetings, she brought revenue focus into every cadence of running the business. That meant weekly business reviews, measuring it at each segment, the team level, the individual level, and looking at bookings to revenue conversion more closely.
By restructuring compensation plans to focus more on actual revenue realization, Lindsey was able to better align seller behavior with company objectives.
“How do we align the reps’ incentives to the success of the company and then make them as successful as possible?” Lindsay shared. “I want them to be blowing out their number and where we’re all celebrating, not blowing out their number where at the cost to the company.”
2. Improving Rev Ops for Data-Driven Decision Making
One of Lindsey’s first priorities was diving deep into the company’s existing data to identify trends and leverage these findings for growth. Some key findings included:
Bookings to revenue conversion rates were significantly below target. With only 4% conversion by month two versus a 10% goal. At first, Lindsey thought customers weren’t ramping as expected. But as she dug in, the real answer was too many sales reps were overbooking deals because of the pressure to hit their bookings quota. Under Lindsey’s direction, the conversion has now tripled to 12%.
The team lacked visibility into key metrics like average revenue per customer. At Checkr, it’s not a license-based model, and yet the team had no visibility in the usage-based equivalent metric of average revenue per user, which is average revenue per report that the customer is running. Lindsey found a way to track this data, then brought it into every meeting. From weekly business reviews, to team meetings, to individual meetings – every call focused on bookings to revenue conversion.
Better RevOps uncovered excessive discounting. The broader sales team had oversized incentives for upfront commitments, leading to excessive discounting for larger customers. Lindsey took that specific incentive out and started spiffing compensation on revenue realization, which is better for the customer.
“If you’re not measuring it and not looking at it, then there’s not really an explicit focus,” Lindsey emphasized.
3. Increasing Customer Gross Revenue Retention to 90
The third major focus area for Lindsey was improving the end-to-end customer experience to better align with the newly incentives sales team and larger focus on customer retention. The results speak for themselves – Checkr now maintains incredibly strong retention rates with GRR in the high nineties. Here’s how they did it:
Strengthening the pre-sales process to ensure better solution fit. In addition to flipping comp plans from bookings to revenue, Lindsey also implemented a process step for Checkr’s presales team, and solutions engineers to sign off on product commitments in a deal before it closes.
Implementing tighter feedback loops between customers and product/engineering teams. In addition to talking to more customers firsthand, Checkr hired a new CPO and created an “adopt a customer” program for engineers and product teams.
Enhancing implementation and onboarding processes. Sam gives a related example from Brex where they would have the same CSM serving customers right after they signed up also serving customers that were 6-12 months into their journey on Brex. They changed this and optimized the customer experience to better onboard new customer and less frustrated veteran customers with tailored CSMs per stage.
There’s no higher ROI than time spent learning from your customers. Strengthening the pre and post-sales process ensures a better long-term solution fit.
The power of getting these fundamentals right helped drive Checkr’s continued growth and Lindsay’s individual promotion from CRO to COO. For scaling SaaS companies looking to optimize their go-to-market motion, these three areas provide a solid framework for identifying and capturing growth opportunities.