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Lessons learned from 3k SaaS Companies - Patrick Campbell, CEO, Price Intelligently

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Patrick Campbell, CEO, Price Intelligently presented "Lessons learned from 3k SaaS Companies" on the Playbook Stage at SaaStock 2016.

Watch the video here: https://www.saastock.com/blog/view/lessons-learned-from-3k-saas-companies

SaaStock is Europe’s premier Conference for B2B SaaS at RDS, Dublin Ireland in September 2017 www.saastock.com

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Lessons learned from 3k SaaS Companies - Patrick Campbell, CEO, Price Intelligently

  1. 1. Lessons learned from 3k SaaS companies SaaStock 2016 @PriceIntel
  2. 2. We live in a world where acquisition as we know it is dead @PriceIntel
  3. 3. @PriceIntel Single feature SaaS WE’RE LIVING IN A DIFFERENT PRODUCT ERA
  4. 4. @PriceIntel Single feature SaaS Multi feature SaaS WE’RE LIVING IN A DIFFERENT PRODUCT ERA
  5. 5. @PriceIntel Single feature SaaS Multi feature SaaS Automation WE’RE LIVING IN A DIFFERENT PRODUCT ERA
  6. 6. @PriceIntel Single feature SaaS Multi feature SaaS Automation Consolidation WE’RE LIVING IN A DIFFERENT PRODUCT ERA
  7. 7. @PriceIntel Single feature SaaS Multi feature SaaS Automation Consolidation Workflow & Anti-Active Usage Products WE’RE LIVING IN A DIFFERENT PRODUCT ERA
  8. 8. Our world is now pin pointed on customer value for growth. @PriceIntel
  9. 9. Who are you? @PriceIntel
  10. 10. Happy customers big and small ProfitWell SaaS pricing software and tech enabled services Free financial metrics for subscription businesses @PriceIntel
  11. 11. We’ve seen inside more SaaS companies than anyone else on the planet. @PriceIntel
  12. 12. The market is becoming saturated and unit economics just aren’t what they used to be… @PriceIntel
  13. 13. Our world is more competitive, making switching costs easier. @PriceIntel
  14. 14. Competition is growing N = 289 SaaS companies, +/- 3.44% MoE at 95% level 0 2 4 6 8 10 12 5 Years Ago 3 Years Ago 1 Year Ago Today #ofCompetitors How many competitors did you have during the following periods? @PriceIntel
  15. 15. Competition is here 0% 10% 20% 30% 40% 50% 0 to 2 3 to 5 6 to 10 11+ %ofRespondents How many competitors do you current have? (Companies around for less than 1 year) N = 547 software companies @PriceIntel
  16. 16. The relative value of features is declining. All software is going to $0. @PriceIntel
  17. 17. “Differentiation” isn’t what is used to be… N = Varies by line, but minimum of 10,000 customer respondents per line 0% 25% 50% 75% 100% 125% 4 Years Ago 3 Years Ago 2 Years Ago 1 Year Ago Today WTPas%ofWTP4YearsAgo Willingnessto pay over time relative to WTP 4 years ago Core Features Single Sign On Integrations Analytics @PriceIntel
  18. 18. CAC is increasing over time. @PriceIntel
  19. 19. Acquiring a customer is getting pricier N = Varies by line, but minimum of 453 companies per data point -­‐25% 0% 25% 50% 75% 4 Years Ago 3 Years Ago 2 Years Ago 1 Year Ago Today CACas%ofCAC4YearsAgo Blended CAC relative to four years ago B2B B2C @PriceIntel
  20. 20. We make matters worse by focusing on the wrong fundamentals @PriceIntel
  21. 21. We’re obsessed with acquisition. Like stalker level obsessed. @PriceIntel
  22. 22. Looked at 25,679 blog posts. @PriceIntel
  23. 23. We love talking about acquisition 0% 25% 50% 75% 100% Acquisition Monetization Retention %oftotalarticles Category of growth articles written from 2014 to 2106 N = 25,679 blog posts written between 2014 to 2016 @PriceIntel
  24. 24. Looked at 6,324 B2B companies @PriceIntel
  25. 25. We love building for acquisition 0% 25% 50% 75% 100% Acquisition Monetization Retention %oftotalcompanies Category of B2B SaaS companies N = 6,324 companies currently active @PriceIntel
  26. 26. Asked SaaS Founders/Executives @PriceIntel
  27. 27. What’s most important? 0% 25% 50% 75% 100% More logos Making more money per customer Keeping customers around longer %oftotalcompanies C-Level/Founder Growth Preferences N = 1,432 SaaS companies, +/- 2.19% MoE at 95% level @PriceIntel
  28. 28. What’s most important? N = 1,218 SaaS companies, +/- 2.61% MoE at 95% level 0% 25% 50% 75% 100% Acquisition Monetization Retention %oftotalcompanies C-Level/Founder Spend Their Time @PriceIntel
  29. 29. There are clear winners and losers in this environment. @PriceIntel
  30. 30. SaaS Death correlates to acquisition focused teams 0% 25% 50% 75% 100% Less than $2.5M ARR $2.51M to $5M ARR $5.01M+ ARR %ofRespondents Of those companies who died, what was the makeup of their growth Primarily  Acquisition   Growth Balanced  Growth N = Minimum of 30 companies per category who died over the past 4 years @PriceIntel
  31. 31. Balanced growth velocity is much larger 0% 25% 50% 2012 2013 2014 2015 %ofRespondents How do growth rates compare to our two growth groups? Primarily Acquisition Growth Balanced Growth N = Minimum of 512 companies per segment pulled from the middle 2/3 of companies in terms of growth rate. This, along with a dampening model was used to control for outlier spikes in growth rate. @PriceIntel
  32. 32. Our focus will kill us. @PriceIntel
  33. 33. The root cause here stems from a lack of buyer centricity. @PriceIntel
  34. 34. We don’t really know our buyers @PriceIntel
  35. 35. Buyer Personas Table Stakes Tony • Valued features: • SFDC Integration • Chrome extension • Least valued features • Analytics • API access • WTP = ~$10/month • CAC = ~$22 • LTV: $160 Advanced Arnie • Valued features: • Analytics • API Access • Least valued features • Chrome extension • Premium support • WTP = ~$25/month • CAC = ~$56 • LTV: $325 @PriceIntel
  36. 36. We don’t know our buyers that well 0% 25% 50% 75% 100% Thought about them Central document Quantified buyer personas %ofRespondents Which single category best describes your buyer personas? N = 1,647 SaaS companies @PriceIntel
  37. 37. We don’t do a lot of cust dev conversations 0% 25% 50% 75% 100% Less than 10 11 to 25 26 to 50 51+ %ofRespondents #  of  cust dev conversations How many cust dev conversations are you having per month? N = 1,647 SaaS companies @PriceIntel
  38. 38. We don’t send any cust dev surveys 0% 25% 50% 75% 100% 0 1 2 3+ %ofRespondents #  of  cust dev surveys How many cust dev surveys are you sending each month? N = 1,647 SaaS companies @PriceIntel
  39. 39. We aren’t truly testing that much 0% 25% 50% 75% 100% 0 1 to 3 4 to 10 11+ %ofRespondents #  of  tests/experiments How many tests or experiments are you running each month? N = 1,647 SaaS companies @PriceIntel
  40. 40. We don’t realize the power of balanced growth. @PriceIntel
  41. 41. If we improve each lever by the same amount, which lever causes the most growth? @PriceIntel
  42. 42. Impact of improving each growth lever 3.32% 0% 5% 10% 15% Acquisition Monetization Retention %impactonthebottomline Impact of improvingeach lever by 1% N = 578 SaaS companies, +/- 2.89% MoE at 95% level @PriceIntel
  43. 43. Impact of improving each growth lever 3.32% 6.71% 0% 5% 10% 15% Acquisition Monetization Retention %impactonthebottomline Impact of improvingeach lever by 1% N = 578 SaaS companies, +/- 2.89% MoE at 95% level @PriceIntel
  44. 44. Impact of improving each growth lever 3.32% 12.70% 6.71% 0% 5% 10% 15% Acquisition Monetization Retention %impactonthebottomline Impact of improvingeach lever by 1% N = 578 SaaS companies, +/- 2.89% MoE at 95% level @PriceIntel
  45. 45. Improving retention and monetization has 2- 4x the impact of focusing on acquisition. @PriceIntel
  46. 46. What we find important 0% 25% 50% 75% 100% More logos Making more money per customer Keeping customers around longer %oftotalcompanies C-Level/Founder Growth Preferences N = 1,432 SaaS companies @PriceIntel
  47. 47. What works for growth 3.32% 12.70% 6.71% 0% 5% 10% 15% Acquisition Monetization Retention %impactonthebottomline Impact of improvingeach lever by 1% N = Data from 512 companies @PriceIntel
  48. 48. This should be scary. @PriceIntel
  49. 49. Everything aligns to the customer Point of Conversion Drive Customer #1 Offer Product #1 Offer Product #2 Drive Customer #2 Drive Customer #3 Offer Product #3 Justify price #1 Justify price #2 Justify price #3 @PriceIntel
  50. 50. How do we fix this? @PriceIntel
  51. 51. Three ways to overcoming acquisition addiction • Know your numbers • Quantify your buyer personas • Implement a customer development process @PriceIntel
  52. 52. Know your numbers. @PriceIntel
  53. 53. Know your numbers ProfitWell.com
  54. 54. Quantify your buyer personas @PriceIntel
  55. 55. Persona-Product Fit Table Stakes Tony • Valued features: • SFDC Integration • Chrome extension • Least valued features • Analytics • API access • WTP = ~$10/month • CAC = ~$22 • LTV: $160 Advanced Arnie • Valued features: • Analytics • API Access • Least valued features • Chrome extension • Premium support • WTP = ~$25/month • CAC = ~$56 • LTV: $325 @PriceIntel
  56. 56. Go to the customer! @PriceIntel
  57. 57. What do your customers value the most? Needed: Relative Preference Analysis @PriceIntel
  58. 58. How much are your customers willing to pay? Needed: Price Sensitivity Analysis @PriceIntel
  59. 59. For the love of God. Talk to your customer. @PriceIntel
  60. 60. If you don’t know who you’re driving to your product, how do you know what build or how to price? @PriceIntel
  61. 61. Implement a customer development process @PriceIntel
  62. 62. Your Cust Dev Process Customer/Market Research Communication Plan Week: 1 2 3 4 5 6 7 8 9 Impact Analysis Customer Advisory Panel Implement Changes Step: @PriceIntel
  63. 63. Your Pricing Committee Main Decision Maker (could be a member of the committee, as well) Main Coordinator Typically in Product or Marketing Product Leadership Corp Dev/Finance Sales Leadership Marketing Leadership @PriceIntel
  64. 64. We’re in a customer value centric world. @PriceIntel
  65. 65. You will be left behind if you think you can brute force your growth. @PriceIntel
  66. 66. Thankfully, there’s a community around you to help you grow, but you need to take the first step. @PriceIntel
  67. 67. Here’s how we’re going to help today • SaaS Pricing Workshop – 1:30pm – Pricing workshop, where we’ll walk through the steps to quantify your personas and answer every pricing question you’ve ever had • SaaS Benchmarking Data Dump – 4pm – We have the world’s largest SaaS dataset, and we’ll be walking through some key benchmarks and differences between companies doing well and those in trouble @PriceIntel
  68. 68. Patrick@priceintelligently.com @PriceIntel

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