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SAAS : MODÈLE D'AFFAIRES ET
PRICING
Len Madigan
2013.11.19
SaaS…

« En 2013, 82% des
nouvelles entreprises dans
le domaine de logiciels
appliquent le modèle
SaaS. »

2

©2013 bolti ...
Objectifs – Aujourd’hui
• Elaborer un cadre ainsi que certains stratégies et métriques
d’une entreprise « SaaS »
• Favoris...
Bio - Len Madigan

B.Comp.Sci., MBA

• SaaS Business and Operations Leader (2004-2012)
• Business modelling and selling
• ...
Where to Begin?
Product Offering
Pricing

Getting
Customers

Trial vs. Freemium
Churn
Metrics

etc…
5

©2013 bolti systems...
Agenda
1.
2.

Pricing and Revenues

5.

Company Confidential

How to Acquire
Customers

4.

©2013 bolti systems

What to S...
Credits
• The following sources were used to create content for this
presentation and are excellent references for SaaS bu...
1. Participant Worksheet
Participant Work Sheet
GOAL

OBJECTIVE
Steps on Staircase

GOSPA Framework - Ref: Business Coach for Professionals.com
9

...
2. What to
Sell
Cause and Effect
Copyright © 2013 Bolti
10

©2013 bolti systems

Company Confidential

10

Credit: R. Gano...
Success !
80% of users say your service is “must-have”

= Success

50% of users churn within a few months

= Failure

“Get...
What’s Wrong With This Picture?

“I need to
work on my
virality”

SaaS Manager

A: Nothing… if your customers are staying…...
Getting Customers Who Stay – Interview Them
Tell Your Story – Why It Matters

Their Problems

Have Them Rank
Problems/Solu...
To Do #1 - Measure Responses Vs. Expectations
Your Estimate
(What it has to be)

Problem
• % who have this need
• % who ar...
To Do #2 – Measure Usage
Spend 20% of Development Effort
Instrumenting Your Product
• See where value is
• See how they ge...
Recap – What to Sell
Measure – Be Sure Customers Want Your Product

Build It

Measure Usage to Refine Offer

16

©2013 bol...
3. How to Acquire Customers
Your View of the
World

Their View of
the World

CAMPAIGNS
S
E
O

S
E
M

What’s the real cost?

E
M

What’s their uptime?
...
Don’t just organize a sales process
(left hand side)

Organize your teams so they address
the customer’s concerns
(right h...
Who’s Knocking on Your Door?
20 % Serious Evaluators

20% Casual Evaluators

Convince them it’s the right
choice

Turn The...
Customer Acquisition Cost (CAC)

Which Sales Model to Pick?

Pick a Sales Model that Aligns with
Customer Buying Process
N...
Recap – How to Acquire
Pick the “best” campaigns

Organize your teams to address customer concerns

Pick sales model that ...
4. Pricing & Revenues
Lifetime Value of Customer (LTV) & Customer
Acquisition Cost (CAC)
•
LTV L

Lifetime gross profit from customer

CAC

Cost...
Some CAC/LTV Drivers
• Virality
• Inbound mktg
• Touch-less
conversion

CAC

• Churn

LTV
• Field sales
• Outbound
marketi...
Scalable Pricing – Getting More as You deliver
more value
Best In Class Companies…
• Grow rev/customer by
20% per year

Us...
27

©2013 bolti systems

Company Confidential
Monthly Recurring Revenue & Churn
CHURN

# of abandons during month
# customers at beginning of month
Month 1

Month 2

Mo...
Impact of Churn on Monthly Recurring Revenue
Churn %

$8,000,000

-2.5%

MRR
$7.439 M

$7,000,000

$6,000,000

$5,000,000
...
Churn Strategies

• Strategy 1 - Track segments separately
• Power users vs. casual users
• Unpaid users vs. paying custom...
31

©2013 bolti systems

Company Confidential
Churn is a Lagging Indicator -Customer Engagement is a Good Predictor
• Strategy #1 – Use Customer Engagement metrics to i...
Recap – Pricing and Revenues
Develop multi-axis pricing

Ensure LTV >> CAC

Implement Churn and Upsell strategies from Day...
5. Group Discussion / Review of
Worksheets
Merci
len.madigan@bolti.com
(514) 262-8756
www.bolti.com
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Len madigan saas - 19 nov 2013 version finale

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Len madigan saas - 19 nov 2013 version finale

  1. 1. SAAS : MODÈLE D'AFFAIRES ET PRICING Len Madigan 2013.11.19
  2. 2. SaaS… « En 2013, 82% des nouvelles entreprises dans le domaine de logiciels appliquent le modèle SaaS. » 2 ©2013 bolti systems Company Confidential
  3. 3. Objectifs – Aujourd’hui • Elaborer un cadre ainsi que certains stratégies et métriques d’une entreprise « SaaS » • Favoriser une échange entres les participants concernant leur propres objectifs et stratégies SaaS 3 ©2013 bolti systems Company Confidential
  4. 4. Bio - Len Madigan B.Comp.Sci., MBA • SaaS Business and Operations Leader (2004-2012) • Business modelling and selling • Implementing, scaling and operating 24/7 • GM, North American Messaging – Nokia • VP, Operations – OZ Communications • • • • 4 Revenues: Subscribers: Hosted systems: Service availability: ©2013 bolti systems Company Confidential 195% CAGR over 4 years 8 million monthly active users 1B transactions processed per month 99.95%
  5. 5. Where to Begin? Product Offering Pricing Getting Customers Trial vs. Freemium Churn Metrics etc… 5 ©2013 bolti systems Company Confidential Upselling
  6. 6. Agenda 1. 2. Pricing and Revenues 5. Company Confidential How to Acquire Customers 4. ©2013 bolti systems What to Sell 3. 6 Participant Worksheet Group Discussion / Review of Worksheets
  7. 7. Credits • The following sources were used to create content for this presentation and are excellent references for SaaS business planning: • Lean Analytics – A. Croll and B. Yoskovitz • Forentrepreneurs.com – D. Skok • The Entrepreneur’s Guide to Customer Development – B. Cooper and P. Vlaskovits 7 ©2013 bolti systems Company Confidential
  8. 8. 1. Participant Worksheet
  9. 9. Participant Work Sheet GOAL OBJECTIVE Steps on Staircase GOSPA Framework - Ref: Business Coach for Professionals.com 9 ©2013 bolti systems Company Confidential STRATEGIES How to Get There NOTES
  10. 10. 2. What to Sell Cause and Effect Copyright © 2013 Bolti 10 ©2013 bolti systems Company Confidential 10 Credit: R. Ganoza
  11. 11. Success ! 80% of users say your service is “must-have” = Success 50% of users churn within a few months = Failure “Get close to your customers” = Cliché …. But it increases the chance of your customers staying 11 ©2013 bolti systems Company Confidential
  12. 12. What’s Wrong With This Picture? “I need to work on my virality” SaaS Manager A: Nothing… if your customers are staying… 12 ©2013 bolti systems Company Confidential
  13. 13. Getting Customers Who Stay – Interview Them Tell Your Story – Why It Matters Their Problems Have Them Rank Problems/Solutions Find out About Related Problems Steps Their Purchasing Process Criteria Concerns Concerns 13 ©2013 bolti systems Company Confidential
  14. 14. To Do #1 - Measure Responses Vs. Expectations Your Estimate (What it has to be) Problem • % who have this need • % who are aware of having this need • % who have a related problem Solution • % who try product • % willing to pay • % churn 14 ©2013 bolti systems Company Confidential Reality Do Not Build (too much) Until You Know
  15. 15. To Do #2 – Measure Usage Spend 20% of Development Effort Instrumenting Your Product • See where value is • See how they get to the value • Segment your customers You Own the SaaS Box Look At the Data Inside! 15 ©2013 bolti systems Company Confidential
  16. 16. Recap – What to Sell Measure – Be Sure Customers Want Your Product Build It Measure Usage to Refine Offer 16 ©2013 bolti systems Company Confidential
  17. 17. 3. How to Acquire Customers
  18. 18. Your View of the World Their View of the World CAMPAIGNS S E O S E M What’s the real cost? E M What’s their uptime? ROI VISITORS They want my credit card # ? They’ll spam me How secure is it? TRIALS Conversion % Will I get locked in? What’s the payback? What if they get hacked? CLOSED DEALS Conversion % How will we integrate it? Ref: D. Skok, forentrepreneurs.com 18 ©2013 bolti systems Company Confidential
  19. 19. Don’t just organize a sales process (left hand side) Organize your teams so they address the customer’s concerns (right hand side) How? Give Potential Customers: - ROI tool - Testimonials - White Paper on security - List of employee certifications - Access to Live Chat etc. 19 ©2013 bolti systems Company Confidential
  20. 20. Who’s Knocking on Your Door? 20 % Serious Evaluators 20% Casual Evaluators Convince them it’s the right choice Turn Them Into Serious Evaluators Convince them to evaluate 60% Curious Visitors Source: Lean Analytics 20 ©2013 bolti systems Company Confidential
  21. 21. Customer Acquisition Cost (CAC) Which Sales Model to Pick? Pick a Sales Model that Aligns with Customer Buying Process Not Only the One You Can Afford No Touch 21 ©2013 bolti systems Company Confidential Inside Sales Channel Sales Field Sales
  22. 22. Recap – How to Acquire Pick the “best” campaigns Organize your teams to address customer concerns Pick sales model that aligns with customer buying process 22 ©2013 bolti systems Company Confidential
  23. 23. 4. Pricing & Revenues
  24. 24. Lifetime Value of Customer (LTV) & Customer Acquisition Cost (CAC) • LTV L Lifetime gross profit from customer CAC Cost (lead gen & selling) to acquire the customer* = Cost / # signed deals *excludes selling mgmt and marketing 24 ©2013 bolti systems Company Confidential
  25. 25. Some CAC/LTV Drivers • Virality • Inbound mktg • Touch-less conversion CAC • Churn LTV • Field sales • Outbound marketing • Scalable pricing • Upsell Ref: D. Skok, forentrepreneurs.com 25 ©2013 bolti systems Company Confidential
  26. 26. Scalable Pricing – Getting More as You deliver more value Best In Class Companies… • Grow rev/customer by 20% per year Users Strategy: add Cross-sell Axis • Convert 0.6% of free users to paying (month) Strategy: Allow self-upsell Freemium Starter Enterprise Pro Features Depth of Usage 26 ©2013 bolti systems Company Confidential • • • • # transactions # projects # Gbytes # calls to support line • Convert 2.3% of paying users to a higher tier (month)
  27. 27. 27 ©2013 bolti systems Company Confidential
  28. 28. Monthly Recurring Revenue & Churn CHURN # of abandons during month # customers at beginning of month Month 1 Month 2 Month 3 Month 4 Month 30 Bookings 10,000 $ 12,000 $ 14,000 $ 16,000 $70,000 MRR Added This Month $ 10,000 $ 12,000 $ 14,000 $ 16,000 $70,000 MRR Prior Months $ - $ 10,000 $ 21,750 $ 35,206 $910,076 Churn at 2.5% $ - -$ 250 -$ 544 -$ 880 -$22,753 Total MRR Monthly Churn / MRR Added 28 $ $ $ 21,750 $ 35,206 $ 50,326 ©2013 bolti systems Company Confidential 10,000 ---- 2.1% 5.5% 32.5%
  29. 29. Impact of Churn on Monthly Recurring Revenue Churn % $8,000,000 -2.5% MRR $7.439 M $7,000,000 $6,000,000 $5,000,000 MRR at 2.5% $4,000,000 MRR at 5% MRR at -2.5% $3,000,000 2.5% $2.612 M 5% $1.827 M $2,000,000 $1,000,000 $1 3 5 7 9 11 13 15 17 19 21 23 25 27 29 31 33 35 37 39 41 43 45 47 49 51 53 55 57 59 29 ©2013 bolti systems Company Confidential
  30. 30. Churn Strategies • Strategy 1 - Track segments separately • Power users vs. casual users • Unpaid users vs. paying customers • Strategy 2 - Measure churn at various intervals • Different root causes • Strategy 3 - Keep churned users in mind • Consider nurturing them back to paid use • In event of feature or price changes Source: Lean Analytics 30 ©2013 bolti systems Company Confidential
  31. 31. 31 ©2013 bolti systems Company Confidential
  32. 32. Churn is a Lagging Indicator -Customer Engagement is a Good Predictor • Strategy #1 – Use Customer Engagement metrics to identify and address at-risk customers • Not behaving as you’d expect • Blocked at a certain stage • Changing patterns • Strategy #2 - Use Customer Engagement data to find “great” customers, then figure out: • Why are they behaving that way • How to get more of them 32 ©2013 bolti systems Company Confidential
  33. 33. Recap – Pricing and Revenues Develop multi-axis pricing Ensure LTV >> CAC Implement Churn and Upsell strategies from Day 1 33 ©2013 bolti systems Company Confidential
  34. 34. 5. Group Discussion / Review of Worksheets
  35. 35. Merci len.madigan@bolti.com (514) 262-8756 www.bolti.com

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