Nicolas Wittenborn presentation at TechChill Baltics

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Presentation by Nicolas Wittenborn on Worst Practices in SaaS metrics at TechChill Baltics conference

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Nicolas Wittenborn presentation at TechChill Baltics

  1. 1. 9 Worst Practices
 in SaaS Metrics Christoph Janz Point Nine Capital
  2. 2. 9 Worst Practices
 in SaaS Metrics Christoph Janz Point Nine Capital TODAY: NicolasWittenborn
  3. 3. About me Associate at Point Nine Capital I blog (too little) at heyni.co and tweet (too much) at @ncsh We love SaaS!
  4. 4. A new member !
  5. 5. 9 HORROR worst practices in SaaS Metrics
  6. 6. Image source:
  7. 7. Image source:
  8. 8. Image source:
  9. 9. Confuse MRR with Cash Inflow (or Bookings or Sales or Revenues) 9 worst practice
  10. 10. MRR: • Monthly Recurring Revenue • Shows how much revenue you make next month if you don‘t win any new customers 
 (assuming no churn, no upgrades/downgrades, etc.) • #1 SaaS metric. Much more important indicator than bookings or cash inflow 
 (but cash inflow pays the bills!) • 2 customers • 1 on a $20/m monthly plan • 1 on a $120/y yearly plan => MRR = $30 Example: Predictable revenue! Lifetime value! Valuation multiple!
  11. 11. Underestimate churn (by mixing up monthly with yearly plans) 8 worst practice
  12. 12. Churn rate # of customers who churned # of customers who could have churned Including customers who can‘t cancel in the denominator screws up your churn estimate! Don’t forget churn in your financial plan!
  13. 13. 7 worst practice Ignore your cohorts
  14. 14. Cohort analyses are the only way to get a good understanding of retention and customer lifetimes Image source:
  15. 15. Cohort analyses are the only way to get a good understanding of retention and customer lifetimes Image source: Change in retention over product lifetime Retention over user lifetime
  16. 16. Don‘t track each step of the conversion funnel worst practice 6
  17. 17. ttention nterest esire ction
  18. 18. AARRR!
  19. 19. AARRR!Acquisition Activation Retention Referral Revenue
  20. 20. Visitors Free Trial Signups Paying
 Customers Visitor-to-Trial Conversion Rate Trial-to-Paying Conversion Rate Retention Rate and Account Expansions Referrals
  21. 21. Mix up visitors to your marketing website with users of your software worst practice 5
  22. 22. 0,00%$ 0,50%$ 1,00%$ 1,50%$ 2,00%$ 2,50%$ 3,00%$ 3,50%$ 4,00%$ 4,50%$ 5,00%$ 0$ 200$ 400$ 600$ 800$ 1000$ 1200$ 1400$ 1600$ 1800$ 1$ 2$ 3$ 4$ 5$ 6$ Visits$ Signups$ Signup$Rate$
  23. 23. 0,00%$ 1,00%$ 2,00%$ 3,00%$ 4,00%$ 5,00%$ 6,00%$ 0$ 200$ 400$ 600$ 800$ 1000$ 1200$ 1400$ 1600$ 1$ 2$ 3$ 4$ 5$ 6$ Signups$ Website$visits$ Signup$Rate$
  24. 24. Show CACs on a blended basis only 4 worst practice (mixing up paid and non-paid sources of leads)
  25. 25. • 100 customers @ $0 per customer • 20 customers @ $500 per customer average CACs of $83.33, but the average is pretty meaningless Example:
  26. 26. Catch the low-hanging fruits, just don‘t expect them to scale!
  27. 27. Attribute all conversions to your sales team 3 worst practice
  28. 28. Find out how well your signups are converting without being called by a salesperson. ! A/B test and calculate the ROI on your sales investments based on the conversion uplift. Vice versa: Maybe it’s not the sales person?
  29. 29. Assume you‘re growing exponentially 2 worst practice
  30. 30. • True exponential growth is very, very rare in SaaS – requires virality which most SaaS products don‘t have • Most SaaS companies grow linearly and with step changes • Even a modest exponential growth rate of 10% p.m. is very hard to sustain for a longer period of time Reading exponential growth into linear growth numbers can lead to wrong conclusions GAIL GOODMAN: THE LONG, SLOW, SAAS RAMP OF DEATH
  31. 31. Don‘t start tracking KPIs until investors request it 1 worst practice
  32. 32. • Many metrics are actionable – they tell you what to focus on, when to invest in acceleration, etc. • Metrics help you focus your team on what matters most • Investors want historic numbers, not just a snapshot Because...
  33. 33. Thank you. Questions? christoph@pointninecap.com
  34. 34. Thank you. Questions? christoph@pointninecap.com Or, if easy ;) nicolas@pointninecap.com

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