MLTC Breakfast SeminarSaaS Business Model SeriesImproving Customer Satisfaction and the Customer Experience by Leveraging ...
Agenda<br />Why do we care about Customer Service?<br />What are the linkages between Customer Service and overall SaaS bu...
I. Why do we care about Customer Service?<br />
What Is SaaS?<br />sometimes referred to as "on-demand software," is a software delivery model in which software and its a...
SaaS Is A True Utility<br />Thinking about using SaaS as a true utility, what are the impacts of poor customer service?<br...
II. 	What are the linkages between Customer Service and overall SaaS business performance?<br />
SaaSVersus Traditional Software Model<br />Revenue Model<br />Term	<br />Investment<br />Implementation Cost/ Switching Ba...
Key Metrics In A SaaS Business<br />Revenue Drivers<br /><ul><li>MRR:	Monthly Recurring Revenue
Churn: 	Dollars lost on a monthly basis
Organic Growth:	Growth ($) per customer on a monthly basis</li></ul>Costs<br /><ul><li>Customer Acquisition
COGS
Operating Expenses</li></ul>Math<br /><ul><li>Revenue = 	(MRR * (1-Churn) * Organic Growth) + New MRR
Costs = 	Customer Acq + COGS + Operating Expenses</li></li></ul><li>Impact of Churn On SaaS Business Model<br />*Note: as ...
III. What are Best Practices to maximize Customer Experience?<br />
Customer Experience vs Customer Support<br />To do it right, SaaS companies need to think about the true end-to-end custom...
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MassTLC SaaS Business Model Series, Improving Customer Satisfaction: Castile Ventures

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6/7/11 Skip Besthoff from Castile Ventures, keynoted at a MassTLC SaaS seminar on customer satisfaction and the customer experience in a SaaS environment

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MassTLC SaaS Business Model Series, Improving Customer Satisfaction: Castile Ventures

  1. 1. MLTC Breakfast SeminarSaaS Business Model SeriesImproving Customer Satisfaction and the Customer Experience by Leveraging OperationsJune 7, 2011<br />Skip Besthoff<br />Castile Ventures<br />
  2. 2. Agenda<br />Why do we care about Customer Service?<br />What are the linkages between Customer Service and overall SaaS business performance?<br />What are Best Practices to maximize Customer Experience?<br />
  3. 3. I. Why do we care about Customer Service?<br />
  4. 4. What Is SaaS?<br />sometimes referred to as "on-demand software," is a software delivery model in which software and its associated data are hosted centrally … and are typically accessed by users using a thin client, normally using a web browser over the Internet.<br />… the supplying or supplier of utilities or commodities, as water, electricity, or gas, required or demanded by the public<br />Definition of <br />‘Software-as-a-Service’ <br />(wikipedia)<br />Definition of ‘Service’<br />(dictionary.com)<br />
  5. 5. SaaS Is A True Utility<br />Thinking about using SaaS as a true utility, what are the impacts of poor customer service?<br />Lost revenue <br />Current customers spend less (fewer $ per seat due to some form of metered billing)<br />Fewer seats from existing customers (lower organic growth)<br />Fewer new customers (lower brand equity / reputation)<br />Higher support costs<br />More people / hours<br />
  6. 6. II. What are the linkages between Customer Service and overall SaaS business performance?<br />
  7. 7. SaaSVersus Traditional Software Model<br />Revenue Model<br />Term <br />Investment<br />Implementation Cost/ Switching Barrier<br />Cash Flow<br />Traditional<br />Large, up front license and maintenance<br />Long <br />(5-10 years +)<br />Heavy ($ millions)<br />High<br />Up front;<br />Disconnected from usage and customer satisfaction<br />SaaS<br />Per user per month <br />Meter or transaction-based<br />Short to Medium<br /> (months – 1year)<br />Light (negligible)<br />Low<br />Meter or transaction-based;<br />Highly sensitive to usage and customer satisfaction<br />
  8. 8. Key Metrics In A SaaS Business<br />Revenue Drivers<br /><ul><li>MRR: Monthly Recurring Revenue
  9. 9. Churn: Dollars lost on a monthly basis
  10. 10. Organic Growth: Growth ($) per customer on a monthly basis</li></ul>Costs<br /><ul><li>Customer Acquisition
  11. 11. COGS
  12. 12. Operating Expenses</li></ul>Math<br /><ul><li>Revenue = (MRR * (1-Churn) * Organic Growth) + New MRR
  13. 13. Costs = Customer Acq + COGS + Operating Expenses</li></li></ul><li>Impact of Churn On SaaS Business Model<br />*Note: as posted by David Skok in VentureFizz<br />Customer Lifetime Value = Annual Recurring Revenue<br /> Churn<br />Examples: 1) $5,000 = $250,000 2) $5,000 = $50,000<br /> 2% 10%<br />
  14. 14. III. What are Best Practices to maximize Customer Experience?<br />
  15. 15. Customer Experience vs Customer Support<br />To do it right, SaaS companies need to think about the true end-to-end customer lifecycle<br />Pre-Sales<br /><ul><li>Freemium
  16. 16. Trials
  17. 17. Exploration</li></ul>Expansion and Upsell<br />Sales<br />Implementation/<br />Training<br />
  18. 18. ‘Consumerization’ Drives Expectations<br />Key Principles<br /><ul><li>At minimum responsive; at baseline proactive; at best can anticipate
  19. 19. High ease of use; UI matters
  20. 20. Efficient
  21. 21. Multiple touch points</li></li></ul><li>Customer Experience Infused Across Entire Organization<br />Old Model: ‘Customer Support’ is an afterthought<br />Little to no consideration in product development<br />Primary focus on post-sales support<br />New Model: ‘Customer Experience’ is baked into the product; touches all aspects of the company<br />Senior management accountability<br />Systems and processes to collect data (buy or build)<br />KPIs defined: churn, lifetime customer value, $/customer/mo, support costs/customer<br />Cross-functional visibility and integration<br />
  22. 22. Examples Of Best Practices<br />Product Development<br />Applications ‘fully instrumented’ (i.e. tracks all user activity)<br />Become predictive over time<br />Sales<br />Track MRR, not bookings (i.e. reps get paid on usage)<br />Account Management<br />Leverage tools such as FAQs, wikis, crowdsourcing<br />Multichannel: web, chat, phone, social<br />
  23. 23. Thank you<br />Skip Besthoff<br />General Partner<br />Castile Ventures<br />930 Winter Street, Suite 500<br />Waltham, MA 0245<br />781-890-0060<br />www.castileventures.com<br />15<br />

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