1. The Economy of Hugs
Why The Best SaaS Companies
Treat Every Day Like Valentine's

2. “We surveyed 306 companies to
gather benchmark data with regard
to growing a successful SaaS
business.”
-- David Skok, Matrix Partners

3. (Don’t worry we’ll explain)
CAC ACV LTV DRR
Important Acronyms & Lingo
(Don’t worry we’ll explain)

4. Cut the crap!
Just tell me why the
best SaaS companies
treat every day like
Valentine's.

5. SaaS companies invest big $$
to acquire new friends...
go on dates...and get hugs.
CAC = Cost of Acquiring Customers

6. In this sense
hugsare the universal
currency of SaaS
companies...

7. Of course,
not all
friends are
equal.

8. SaaS companies carefully
measure the number of
hugs per friend, per year.
ACV = Annual Contract Value

9. They also measure hugs
received over lifetime.
LTV= Life Time Value

10. $@!t happens.
So SaaS companies also
measure breakups...
Churn

11. …and total annual
hugs minus breakups.
DRR = Dollar Retention Rate

12. Ultimately, SaaS companies
have 3 types of friends:
• Friends with Benefits
• Friends with Costs
• Friends with Biggest Benefits

13. Friends with benefits
stick around and give
many hugs over time.
LTV > 3X CAC

14. Friends with costs give
few hugs and leave
early.
LTV < 3X CAC

15. Friends with biggest benefits
not only stick around...
but they give more hugs the
longer they stay.
LTV > 10 X CAC

16. So, it's all about the hugs!
And that's why the best SaaS
companies treat every day like
Valentines.

17. Happy Valentine’s Day
Don’t forget to hug your customers!
Follow me @matthewjhoward