SaaS 101: Metrics & Best Practices

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This document summarizes key metrics and best practices for Software as a Service (SaaS) companies. It discusses important SaaS metrics like monthly recurring revenue (MRR), churn, lifetime value (LTV), and customer acquisition cost (CAC). Best practices include using incentivized referrals, optimizing the onboarding process, and creating valuable content. The document also provides an overview of the global SaaS market and notes that while the US dominates, European companies can also achieve strong growth and success in the SaaS space.

Software Technology

SaaS 101: Metrics & Best Practices
March 13, 2015
Nicolas Wittenborn, Point Nine Capital

Nicolas Wittenborn
Associate at Point Nine Capital
Tweet @ncsh and blog at heyni.co

Founded 2011 in Berlin
Investing €100,000-1,000,000
Raised €45M
Team of 8

Who’s Point Nine
Vancouver
Washington
D.C
Auckland
Edmonton
New York
San Francisco
Berlin
Riga
Point Nine ’s SaaS
Paris
Barcelona
Warsaw

III. Best Practices
II. Important SaaS Metrics
I. What’s SaaS?

aaS
Software as a Service
No installation
Continuos updates
Accessible from everywhere

Why VCs like SaaS companies
Recurring revenues
High margins
Global scale from day 1

The SaaS market is quite ‘frothy’
which might change soon**
* Data analysis by Tom Tunguz **Jason Lemkin: ’Unfortunately, SaaS Start-Up Valuations Are About To Fall by 50%’
?
*

Global SaaS Market Size
ROW
21%
France
3%
Canada
4%
Germany
6%
UK
6%
US
60%
Global SaaS Market Volume*
shows strong US bias
* Siemer's SaaS Industry Report 2013

Founded in Copenhagen 2007
Move to US HQ in 2009
IPO ($ZEN) in 2014
Europe still produces great SaaS companies

negative churn
Extension MRR > MRR churn

Churn & Retention: Cohort Analysis
Yours truly: ‘Cohort Analysis Q&A’

Incentivised referrals are a great ‘growth hack’*
* if you have a suitable (freemium) model

Get to WOW! fast*
* a great on-boarding can increase conversions signiﬁcantly

???
You might be too cheap!
* if you provide real value
& haven’t raised prices since you launched
???
Price increase

Valuable content = King
One time effort, long time effect

There is no silver bullet
Just the Long, Slow, SaaS Ramp of Death*
* Gail Goodman: How to negotiate the long, Slow, SaaS Ramp of Death

At least until now…
Hyper-growth?
Outlook:  
SaaS 2015
Edited Social + Capital Chart

Thanks…
…and found all the SaaS Startups!
nicolas@pointninecap.com

Ressources
•Blogs:
• David Skok http://www.forentrepreneurs.com/
• Tom Tunguz http://tomtunguz.com/
• Christoph Janz http://christophjanz.blogspot.de/
• Jason Lemkin http://saastr.com/
•Slides:
• 9 Worst Practices in SaaS Metrics: http://www.slideshare.net/PointNineCap/9-worst-practices-insaas-metrics
• Siemer SaaS Industry Report 2013: http://www.slideshare.net/SiemerAssoc/sa-saa-s-industry-report-
summer-2013-25007137?ref=http://www.siemer.com/research/summer-2013-saas-industry-report/
•Secrets to raising VC (Mamoon Hamid): http://www.slideshare.net/03133938319/saastr
•More:
• Quora SaaS topics: http://www.quora.com/Software-as-a-Service-SaaS
• Long, slow, SaaS Ramp of Death: http://pawel.ch/post/71104054756/the-long-slow-saas-ramp-of-death-i-have-just
• Cohort Analysis Q&A: http://heyni.co/post/79862265851/cohort-analysis-a-practical-q-a
• ‘Unfortunately SaaS Startup Valuations about to fall by 50%’: http://saastr.com/2014/04/29/unfortunately-saas-start-
up-valuations-are-about-to-fall-by-50/
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