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Killer SaaS Metrics.
The Impact of Churn, Customer Success and
Instrumentation on SaaS Performance

Stanley Sarpong, Olju Man & Atiq Khan.

@
Updated January 2014

Punchlime Confidential and Proprietary
The Blind Men & Elephant.

Image source: expertcytometry.com

Punchlime Confidential and Proprietary
Saas Conversions.
Case Study
200,000 Visitors
10%

20,000 Free Trial Signups
2.5%

500 Free Trial Users
40%

1%

200 Converted to paid

Punchlime Confidential and Proprietary
Key SaaS KPIs.

1. COCA
2. LTV

(Cost of Customer Acquisition)

(Life Time Value per Customer)

3. Churn

(Customers you lose per month/year)
Punchlime Confidential and Proprietary
Why Churn is Your Killer Metric.
Potential impact of Churn on Revenue & Valuation
Success Metrics

Scenario 1

Scenario 2

Customers Acquired

1200

1200

Average Monthly
Revenue per customer

$700

$700

Customers Lost

180

90

Customer Churn

15%

7.5%

6.7

13.3

$5.6M

$11.2M

$28M

$56M

Average Lifetime in
Months per customer
Total Revenue

Valuation
(if 5x)
5 Years Example.

Punchlime Confidential and Proprietary
T Ford.
The car without a dashboard

You can drive it, but you do not know how far you will get.
Image source: kpilibrary.com

Punchlime Confidential and Proprietary
Key Metrics per Evolution Stage.
1. Site Visitors

2. Trials

3. Stickiness

4. Signups

5. Recurring Revenue

6. COCA & LTV
Punchlime Confidential and Proprietary
One Metric That Matters.
At each stage of the business evolution
1. Site Visitors

200K

Early Days

Visitors

Optimization Opportunity!

10%

20K
2. Trials

Signup
conversion

Signed Up

500
Trial started

3. Stickiness

0.25%
Visit to Trial Conversion

4. Paying
Clients

250

0.125%

Active Trials

Sticky Trial Users

200
Converted from Trial

5. Recurring
Revenue

Recurring Revenue from
previous month/year

Net New Recurring
Revenue per
month/year

6. COCA & LTV

Marketing & Sales
Expenses / Total new
clients

Average monthly/yearly
revenue per client *
Lifetime of Client

&

Punchlime Confidential and Proprietary
Free Trial Anatomy.
Best in class metrics based on 80/20 rule
Early Days
10%

1. Active Trial Users

250

Optimization Opportunity!

Active Trial Users

Trial users most likely to buy.

20%

2. Casual Trial Users

500

250

Trial started

Active Trial Users

Nurture casual trial users to increase conversions.

70%

3. Accidental Signups

20K

500

Signed Up

Trial started

Likely to churn.

Punchlime Confidential and Proprietary
Thank you.

Image source: v3wall.com

Punchlime Confidential and Proprietary

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Killer SaaS Metrics: The Impact of Churn, Customer Success and Instrumentation on SaaS Performance - Punchlime Presentation Slides - January 2014

  • 1. Killer SaaS Metrics. The Impact of Churn, Customer Success and Instrumentation on SaaS Performance Stanley Sarpong, Olju Man & Atiq Khan. @ Updated January 2014 Punchlime Confidential and Proprietary
  • 2. The Blind Men & Elephant. Image source: expertcytometry.com Punchlime Confidential and Proprietary
  • 3. Saas Conversions. Case Study 200,000 Visitors 10% 20,000 Free Trial Signups 2.5% 500 Free Trial Users 40% 1% 200 Converted to paid Punchlime Confidential and Proprietary
  • 4. Key SaaS KPIs. 1. COCA 2. LTV (Cost of Customer Acquisition) (Life Time Value per Customer) 3. Churn (Customers you lose per month/year) Punchlime Confidential and Proprietary
  • 5. Why Churn is Your Killer Metric. Potential impact of Churn on Revenue & Valuation Success Metrics Scenario 1 Scenario 2 Customers Acquired 1200 1200 Average Monthly Revenue per customer $700 $700 Customers Lost 180 90 Customer Churn 15% 7.5% 6.7 13.3 $5.6M $11.2M $28M $56M Average Lifetime in Months per customer Total Revenue Valuation (if 5x) 5 Years Example. Punchlime Confidential and Proprietary
  • 6. T Ford. The car without a dashboard You can drive it, but you do not know how far you will get. Image source: kpilibrary.com Punchlime Confidential and Proprietary
  • 7. Key Metrics per Evolution Stage. 1. Site Visitors 2. Trials 3. Stickiness 4. Signups 5. Recurring Revenue 6. COCA & LTV Punchlime Confidential and Proprietary
  • 8. One Metric That Matters. At each stage of the business evolution 1. Site Visitors 200K Early Days Visitors Optimization Opportunity! 10% 20K 2. Trials Signup conversion Signed Up 500 Trial started 3. Stickiness 0.25% Visit to Trial Conversion 4. Paying Clients 250 0.125% Active Trials Sticky Trial Users 200 Converted from Trial 5. Recurring Revenue Recurring Revenue from previous month/year Net New Recurring Revenue per month/year 6. COCA & LTV Marketing & Sales Expenses / Total new clients Average monthly/yearly revenue per client * Lifetime of Client & Punchlime Confidential and Proprietary
  • 9. Free Trial Anatomy. Best in class metrics based on 80/20 rule Early Days 10% 1. Active Trial Users 250 Optimization Opportunity! Active Trial Users Trial users most likely to buy. 20% 2. Casual Trial Users 500 250 Trial started Active Trial Users Nurture casual trial users to increase conversions. 70% 3. Accidental Signups 20K 500 Signed Up Trial started Likely to churn. Punchlime Confidential and Proprietary
  • 10. Thank you. Image source: v3wall.com Punchlime Confidential and Proprietary