How do you measure the true value of a subscription business? A traditional GAAP financial analysis can’t measure the health of a subscription business because it doesn’t recognize the value of subscription revenue. Learn about how subscription businesses need to measure their performance and the three metrics that really matter.
Innovative Pricing and Packaging StrategiesZuora, Inc.
Learn key marketing strategies for accelerating subscription business growth and hear best practices first-hand from businesses that have done it. Learn how to use pricing and packaging as a strategic weapon to increase customer acquisition, value per customer and reduce churn.
4 Key Challenges in the Shift to Digital Recurring RevenueZuora, Inc.
Digital delivery models are impacting traditional businesses. Driven by consumer demand for convenience and new consumption models, including subscriptions, enterprises are moving to Digital Business offerings and finding huge upside from predictable revenue streams built around long-term customer relationships. But this shift is not easy. Companies at the beginning of the journey want to know - what are those challenges? And what are the strategies that lead to success?
The Seismic Shift to Recurring Revenue Models & What It Means For Your CompanyZuora, Inc.
This webinar will showcase the incredible shift from perpetual license to recurring revenue models among large public companies and hyper-growth companies alike.
With Gartner research as a launching point and Adobe, we will talk about the real-world data that is driving this shift and what it means for your business.
Innovative Pricing and Packaging Strategies Zuora, Inc.
Are you wondering how to price and package your services to drive up revenue and customer acquisition? Here is a teaser: It could be tiered pricing, charging for usage, upgrade plans, or segmented pricing, but finding the right pricing combination makes the difference.
Pricing Strategy: How To Win With Subscription Pricing ModelsZuora, Inc.
http://bit.ly/PricingStrategySlide This presentation is focused on your pricing strategy and how to drive massive revenue growth. Zuora and our partner Simon-Kucher do lot of events together – pricing is always one of the most popular topics, because it’s such an important strategic lever. Pricing is even more important for subscription businesses – We’ll discuss why. We’re fortunate to work with a lot different types of subscription businesses and we learn about their subscription journeys – this is the content that we want to share with you. http://bit.ly/PricingStrategySlide
A Tale of Two Pricing Journeys: Evolving to Usage ModelsZuora, Inc.
Usage based pricing is often perceived to be the truest pricing model that best aligns to customer value. Join two cloud services firms, Pertino and SendGrid, as they share their pricing journeys, their quest to evolve to new models built around consumption, and their learning along the way. They will discuss pros and cons of different models and address the business case and operational requirements to support.
Sydney Subscribed 2016: Disrupting the Traditional Business ModelZuora, Inc.
Brands we know and love are creating new business models anchored on recurring revenue. Join this discussion where we’ll apply lessons from the startup world to local and traditional transaction based business models.
Kim Benito, Director Global Services APAC, Zuora
Innovative Pricing and Packaging StrategiesZuora, Inc.
Learn key marketing strategies for accelerating subscription business growth and hear best practices first-hand from businesses that have done it. Learn how to use pricing and packaging as a strategic weapon to increase customer acquisition, value per customer and reduce churn.
4 Key Challenges in the Shift to Digital Recurring RevenueZuora, Inc.
Digital delivery models are impacting traditional businesses. Driven by consumer demand for convenience and new consumption models, including subscriptions, enterprises are moving to Digital Business offerings and finding huge upside from predictable revenue streams built around long-term customer relationships. But this shift is not easy. Companies at the beginning of the journey want to know - what are those challenges? And what are the strategies that lead to success?
The Seismic Shift to Recurring Revenue Models & What It Means For Your CompanyZuora, Inc.
This webinar will showcase the incredible shift from perpetual license to recurring revenue models among large public companies and hyper-growth companies alike.
With Gartner research as a launching point and Adobe, we will talk about the real-world data that is driving this shift and what it means for your business.
Innovative Pricing and Packaging Strategies Zuora, Inc.
Are you wondering how to price and package your services to drive up revenue and customer acquisition? Here is a teaser: It could be tiered pricing, charging for usage, upgrade plans, or segmented pricing, but finding the right pricing combination makes the difference.
Pricing Strategy: How To Win With Subscription Pricing ModelsZuora, Inc.
http://bit.ly/PricingStrategySlide This presentation is focused on your pricing strategy and how to drive massive revenue growth. Zuora and our partner Simon-Kucher do lot of events together – pricing is always one of the most popular topics, because it’s such an important strategic lever. Pricing is even more important for subscription businesses – We’ll discuss why. We’re fortunate to work with a lot different types of subscription businesses and we learn about their subscription journeys – this is the content that we want to share with you. http://bit.ly/PricingStrategySlide
A Tale of Two Pricing Journeys: Evolving to Usage ModelsZuora, Inc.
Usage based pricing is often perceived to be the truest pricing model that best aligns to customer value. Join two cloud services firms, Pertino and SendGrid, as they share their pricing journeys, their quest to evolve to new models built around consumption, and their learning along the way. They will discuss pros and cons of different models and address the business case and operational requirements to support.
Sydney Subscribed 2016: Disrupting the Traditional Business ModelZuora, Inc.
Brands we know and love are creating new business models anchored on recurring revenue. Join this discussion where we’ll apply lessons from the startup world to local and traditional transaction based business models.
Kim Benito, Director Global Services APAC, Zuora
This will truly be an intimate forum to discuss market trends, metrics and benchmarks that resulted from the CFO Metrics Survey launched earlier this year.
Sydney Subscribed 2016: How the World PaysZuora, Inc.
Worldpay, a global payment processing company, shares the fascinating data behind today’s global digital payment trends.
Kevin Dallas, Chief Product & Marketing Officer – Global eCommerce, Worldpay
For those who don't have a Ph.D in Subscription Metrics, you need to start somewhere. That place is here! Take a high-level look at the basic metrics for managing a subscription business:
The importance of ARR, MRR, ACV
How to calculate churn
Up-sell vs. cross-sell, and how to measure each
Do I really care about customer lifetime value?
Evergreen vs. Termed Subscriptions
Subscribed World Tour Keynote: London, 2015Zuora, Inc.
Zuora CEO, Tien Tzuo, kicks off Subscribed 2015 in London with a powerful keynote addressing the global impact the Subscription Economy is making on businesses, consumers and technology. He shares the stage with Anthony Fletcher, CEO of Graze, Pete Tomlinson, Sales & Marketing Director, KCOM and Mark Beard, Marketing & Circulation Director at The Economist.
Subscribed 2016: Metrics that Matter - An Operational Framework for Running Y...Zuora, Inc.
Unlike traditional financial metrics, subscription metrics are forward-looking metrics that give insight into your customer’s success as well as the health of your business. From ARR to churn, learn from best-in-class companies how your metrics can drive growth.
Check out Zuora Academy for more actionable advice for finance, marketing, tech, operations, product, and more. All the info you need to build and run an amazing subscription business: https://www.zuora.com/academy/
Driving Success in the Subscription EconomyZuora, Inc.
Your customers want a new way to relate to you. Build a business that embraces the subscription economy by following these six key steps to success. www.zuora.com
Subscribed 2015: The New Revenue Standard: How SaaS are Approaching the New R...Zuora, Inc.
World wide revenue recognition rules take effect 2016, that will impact every company, including subscription based businesses. Learn how you should be preparing for and applying these new revenue recognition rules to your business.
Zuora's CEO's Keynote for Subscribed in London. Subscribed is Zuora's first annual global conference series for the Subscription Economy, landing down in San Francisco, London and Sydney in the Fall of 2012. Learn more about future dates and keynote replays at Subscribed.com.
Until now, there has been no blueprint for how to succeed in the Subscription Economy. This Slideshare is the first in a series Zuora created to help companies thrive in the Subscription Economy with practical guidance. Based on key insights gleaned from Zuora customers, partners and the community of subscription businesses at large. http://bit.ly/9KeyWPSS
Preparing for the Board Room: Subscription Metrics (Subscribed13)Zuora, Inc.
Deloitte - Andy Main, Customer Solutions Leader
TrackVia - Pete Khanna, CEO
The measurement of success is fundamentally different in the Subscription Economy. Communicating the health of your business to the Board requires a unique approach, with a new set of forward-facing metrics. Come hear from two visionary CEO’s about how they measure and communicate the health of their business.
Zuora CMO, David Gee, kicks off Subscribed 2016 in Sydney with a powerful keynote addressing the global impact the Subscription Economy is making on businesses, consumers, and technology. He shares the stage with Michael Addison, Group Manager at Energy Australia, and Danny Gravell, CIO at Sensis.
Sydney Subscribed 2016: Metrics that Matter - An Operational Framework for Ru...Zuora, Inc.
Unlike traditional financial metrics, subscription metrics are forward-looking metrics that give insight into your customer’s success as well as the health of your business. From ARR to churn, learn from best-in-class companies how your metrics can drive growth.
Iain Hassall, VP Finance, Zuora & John Burke, CFO, Siteminder
Subscribed 2015: The Subscription Maturity Model? Where do you fit?Zuora, Inc.
A subscription business is a relationship business. Subscription approaches need to support customers that wish to ease into a relationship with the product or service as well as those that are deeply committed. Learn about this new subscription maturity model that provides a framework of stages, critical measures, outcomes, and actions required for the effective management of subscription approaches.
Subscribed 2016: A Peek Under the Hood at Zuora's Subscription Automation EngineZuora, Inc.
Learn how Zuora can help streamline your subscription billing, payments, and AR settlement. From complex calculations and tax rules to payment collection and refunds, we have you covered!
Check out Zuora Academy for more actionable advice for finance, marketing, tech, operations, product, and more. All the info you need to build and run an amazing subscription business: https://www.zuora.com/academy/
Subscribed World Tour: Paris Keynote 2015Zuora, Inc.
Tien Tzuo (Zuora CEO), Marc Diouane (President) and Guillaume Vives (SVP-Product) kick off Subscribed 2015 in Paris with a powerful keynote on the vision and strategy of
the new subscription economy with a demonstration of agile subscription management: from creation of offers to accounting processing and analytical management of subscriber data.
This will truly be an intimate forum to discuss market trends, metrics and benchmarks that resulted from the CFO Metrics Survey launched earlier this year.
Sydney Subscribed 2016: How the World PaysZuora, Inc.
Worldpay, a global payment processing company, shares the fascinating data behind today’s global digital payment trends.
Kevin Dallas, Chief Product & Marketing Officer – Global eCommerce, Worldpay
For those who don't have a Ph.D in Subscription Metrics, you need to start somewhere. That place is here! Take a high-level look at the basic metrics for managing a subscription business:
The importance of ARR, MRR, ACV
How to calculate churn
Up-sell vs. cross-sell, and how to measure each
Do I really care about customer lifetime value?
Evergreen vs. Termed Subscriptions
Subscribed World Tour Keynote: London, 2015Zuora, Inc.
Zuora CEO, Tien Tzuo, kicks off Subscribed 2015 in London with a powerful keynote addressing the global impact the Subscription Economy is making on businesses, consumers and technology. He shares the stage with Anthony Fletcher, CEO of Graze, Pete Tomlinson, Sales & Marketing Director, KCOM and Mark Beard, Marketing & Circulation Director at The Economist.
Subscribed 2016: Metrics that Matter - An Operational Framework for Running Y...Zuora, Inc.
Unlike traditional financial metrics, subscription metrics are forward-looking metrics that give insight into your customer’s success as well as the health of your business. From ARR to churn, learn from best-in-class companies how your metrics can drive growth.
Check out Zuora Academy for more actionable advice for finance, marketing, tech, operations, product, and more. All the info you need to build and run an amazing subscription business: https://www.zuora.com/academy/
Driving Success in the Subscription EconomyZuora, Inc.
Your customers want a new way to relate to you. Build a business that embraces the subscription economy by following these six key steps to success. www.zuora.com
Subscribed 2015: The New Revenue Standard: How SaaS are Approaching the New R...Zuora, Inc.
World wide revenue recognition rules take effect 2016, that will impact every company, including subscription based businesses. Learn how you should be preparing for and applying these new revenue recognition rules to your business.
Zuora's CEO's Keynote for Subscribed in London. Subscribed is Zuora's first annual global conference series for the Subscription Economy, landing down in San Francisco, London and Sydney in the Fall of 2012. Learn more about future dates and keynote replays at Subscribed.com.
Until now, there has been no blueprint for how to succeed in the Subscription Economy. This Slideshare is the first in a series Zuora created to help companies thrive in the Subscription Economy with practical guidance. Based on key insights gleaned from Zuora customers, partners and the community of subscription businesses at large. http://bit.ly/9KeyWPSS
Preparing for the Board Room: Subscription Metrics (Subscribed13)Zuora, Inc.
Deloitte - Andy Main, Customer Solutions Leader
TrackVia - Pete Khanna, CEO
The measurement of success is fundamentally different in the Subscription Economy. Communicating the health of your business to the Board requires a unique approach, with a new set of forward-facing metrics. Come hear from two visionary CEO’s about how they measure and communicate the health of their business.
Zuora CMO, David Gee, kicks off Subscribed 2016 in Sydney with a powerful keynote addressing the global impact the Subscription Economy is making on businesses, consumers, and technology. He shares the stage with Michael Addison, Group Manager at Energy Australia, and Danny Gravell, CIO at Sensis.
Sydney Subscribed 2016: Metrics that Matter - An Operational Framework for Ru...Zuora, Inc.
Unlike traditional financial metrics, subscription metrics are forward-looking metrics that give insight into your customer’s success as well as the health of your business. From ARR to churn, learn from best-in-class companies how your metrics can drive growth.
Iain Hassall, VP Finance, Zuora & John Burke, CFO, Siteminder
Subscribed 2015: The Subscription Maturity Model? Where do you fit?Zuora, Inc.
A subscription business is a relationship business. Subscription approaches need to support customers that wish to ease into a relationship with the product or service as well as those that are deeply committed. Learn about this new subscription maturity model that provides a framework of stages, critical measures, outcomes, and actions required for the effective management of subscription approaches.
Subscribed 2016: A Peek Under the Hood at Zuora's Subscription Automation EngineZuora, Inc.
Learn how Zuora can help streamline your subscription billing, payments, and AR settlement. From complex calculations and tax rules to payment collection and refunds, we have you covered!
Check out Zuora Academy for more actionable advice for finance, marketing, tech, operations, product, and more. All the info you need to build and run an amazing subscription business: https://www.zuora.com/academy/
Subscribed World Tour: Paris Keynote 2015Zuora, Inc.
Tien Tzuo (Zuora CEO), Marc Diouane (President) and Guillaume Vives (SVP-Product) kick off Subscribed 2015 in Paris with a powerful keynote on the vision and strategy of
the new subscription economy with a demonstration of agile subscription management: from creation of offers to accounting processing and analytical management of subscriber data.
Predictable Revenue. Predictable Risk? Sales Tax & Recurring RevenueZuora, Inc.
As more commerce has moved to the web, the subscription-based model has encompassed emerging technology as well. See how Avalara and Zuora outline what every company needs to know about avoiding sales tax compliance risk when dealing with recurring billing.
Subscribed World Tour: Pricing Strategies For TomorrowZuora, Inc.
Subscribed World Tour: Simon-Kucher Partners Pricing Strategies For Tomorrow - How to win with new price models.
A recent Simon-Kucher global pricing study shows that more than 80% of all companies face increasing price pressure. Pure price level reactions can hardly be the answer to this challenge – the change of the revenue / price model on the other hand can be. This session will highlight why companies should think out-of-the-box when it comes to their price model and how for example subscription models and bundling can not only protect but actually improve margins.
Lessons Learned When Monetizing Subscription ServicesZuora, Inc.
Monika Saha, VP of Product Marketing for Zuora, the world’s leading provider of subscription billing, commerce, and finance solutions, outlines how to design your subscription pricing growth journey, select pricing variables, and maintain a healthy pace of pricing and packaging innovation.
• 3. We’ll cover...1 The metrics we like to track...2 The metrics we NEED to track3 Q&A
• 4. WHY DO METRICSMatter?
• 5. They tell us if we’re succeeding
• 6. Great metrics help us work on the right projects
• 7. THE METRICS WE LIKEToo Much
• 8. Total users
• 9. Pageviews and visitors
• 10. Vanity metrics are a distraction
• 11. We need metrics that track our business
• 12. Metric #1 MONTHLY RECURRING Revenue
• 13. What is monthly recurring revenue (MRR)?
• 14. SaaS depends heavily on recurring revenue All your costs are up front. And it takes a long time to turn a profit on a customer.
• 15. MRR best practices
• 16. Metric #2 USER AND REVENUE Churn
• 17. Churn is the percentage of people that bail
• 18. High churn = pain, low churn = win
• 19. Churn starts low but grows quickly If customer growth is constant, churn will eventually match it. You’ll stop growing.
• 20. 100 new customers per month at 10% churn 800 600 Customers 400 200 0 Jan Feb Mar Apr May Jun Jul Aug Sept Oct Nov Dec Jan Feb Mar
• 21. High churn = improve your product
• 22. Once you have control of churn... To keep growing, you’ll need to acquire customers faster every month.
• 23. Churn best practices
• 24. Metric #3 AVERAGE REVENUE PER Customer
• 25. Average revenue per customer
• 26. Up-sells and cross-sells are the key
• 27. Up-selling = get them on a higher plan
• 28. Cross-selling = sell more stuff
• 29. Average revenue best practices
• 30. Metric #4 LIFETIME Value
• 31. There are many different ways to calculate LTV LTV combines current revenue with churn to predict how much you’ll earn in the future.
• 32. Different from average revenue per customer?
• 33. LTV best practices
• 34. Metric #5 COST PER Acquisition
• 35. What’s the cost to acquire a new customer?
• 36. The importance of CPA
• 37. Get CPA for each marketing campaign
• 38. CPA best practices
• 39. Metric #6 THE SIGNUP Funnel
• 40. Track each step to becoming a customer
• 41. Don’t forget to track activation Activation = Someone uses a core part of your product for the first time
• 42. Funnel best practices
• 43. CAN WE TRACK THESE IN Analytics?
• 44. Google Analytics can’t track any of this.
• 45. You need to connect revenue to customers.
• 46. A customer analytics revenue report
• 47. We can also segment by traffic source
• 48. Where do we get customer analytics?
• 49. Two metrics you’ll need to pull by hand (for now)
• 50. KISSmetrics will track these metrics for you
Subscription eCommerce, is the next big wave?
About Principia SGR: Principia is the leading Italian Venture Capital firm that focuses on the ICT industry, has 90 millions(€) under management divided into two funds. In the last 8 months the new management company has invested in 8 companies with the second fund.
Understanding the Financial Health of your Subscription BusinessTotango
Industry leaders, Zuora and Totango, present which metrics truly give an accurate picture of the health of your subscription business. Which metrics should you calculate and optimize on - ARR, GEI, CRC or other ratios?
Chief Financial Officer, Tyler Sloat from Zuora shares 3 metrics they measure for their company and track against other best-in-class subscription companies. Chief Marketing Officer, Kaiser Mulla-Feroze from Totango, also presents a couple key metrics he finds missing from the boardroom discussions.
Visit totango.com to view the entire webinar and hear their insightful commentary that accompanies these slides and Q&A.
4 Key Metrics for Your Subscription BusinessFusebill
Do you know how healthy your subscription business is? If you're just looking at today's revenues, you're in for some nasty surprises. Churn, lifetime value, monthly recurring revenue (MRR), and Customer Acquisition Cost are leading indicators of later revenues. Join Fusebill CEO Steve Adams to explore the key metrics that SaaS companies need to be focused on.
SaaS Metrics: The Secret to Subscription SuccessEd Shelley
Behind every successful SaaS business is a wealth of SaaS metrics.
This presentation gives you a broad overview of the key metrics you should be measuring to fully understand how your business is growing.
Metrics like Monthly Recurring Revenue (MRR), Customer Churn Rate, MRR Churn Rate and Customer Lifetime Value (LTV) can often be measured in a number of ways. We show you the intricacies of all of them.
Sydney Subscribed 2016: Pricing Strategies for TomorrowZuora, Inc.
A recent Simon-Kucher global pricing study shows that more than 80% of all companies face increasing price pressure. Pure price level reactions can hardly be the answer to this challenge – the change of the revenue / price model on the other hand can be. This presentation highlights why companies should think out-of-the-box when it comes to their price model and how, for example, subscription models and bundling can not only protect but actually improve margins.
Chris Petzoldt, Managing Director ANZ, Simon Kucher & Partners
Subscribed 2016: Extending Your Zuora PlatformZuora, Inc.
An exclusive look at our newest platform technology! Extend Zuora's out-of-the box capabilities with APIs, notifications, and add your own business logic into core Zuora features.
Check out Zuora Academy for more actionable advice for finance, marketing, tech, operations, product, and more. All the info you need to build and run an amazing subscription business: https://www.zuora.com/academy/
Sydney Subscribed 2016: Monetising Subscription ServicesZuora, Inc.
How can you monetise subscriber relationships? Learn how to align market demands, organisational goals, and customer experience requirements to drive your pricing and packaging strategy.
Lane Russell, Senior CSM APAC, Zuora, Hannah Zambrano, Senior Partner, Mindvalley & Andrew Porter, Director Customer & Subscriptions, Fairfax Media
Totango's 3rd Annual SaaS Metrics Survey Report: The big take-away from this year’s survey underscores the importance of customer success in the SaaS business model – and why it is imperative for SaaS companies to be relentlessly focused on delivering recurring value to customers.
Totango's 4th Annual SaaS Metrics Survey Report. This year's key take-away underscores the importance of customer success in the SaaS business model – and why it is imperative for SaaS companies to be relentlessly focused on boosting retention and increasing customer upsells in order to increase revenue.
With this study, we distill and prescribe characteristics, practices and best-in-class methods associated with "fast growers,“ which we define as companies with GAAP revenue growth rates of 30% or higher. As discovered in previous years and validated again this year, the central driving force for fast growers is the appropriate, aligned go-to-market model executed with excellence and coupled with financial discipline and investment.
Use this report to compare your business to like companies in the Edison portfolio, as well as industry guidance. These benchmarks and advice will enable you to map your own plan and journey to becoming a fast grower, or accelerate even faster to a $100M company.
The wonders of the SaaS business model is even more clear in these tough times as capex budgets are tight and forward revenue visibility is critical. David Cowan pioneered Bessemer effort in recurring revenue businesses and led investments in 18 companies such as Postini, PSI-Net, Trigo, Hotjobs, Eality, Valicert, Register.com, Verisign, which he co-founded and where he served as CFO and Chairman, Keynote, Telocity, Counterpane, Netli, Qualys, Cyota, and more recently Lifelock, LinkedIn, Goodmail and Perimeter eSecurity. Philippe Botteri has been working with SaaS and technology companies for more than a decade at McKinsey&Co and Bessemer. He wrote several white papers on SaaS finance and has been involved with the firm's investments in half a dozen recurring revenue businesses. This slideshow presents a new perspective on the finance of SaaS and highlight the metrics that really matter most in the current environment. It also presents a benchmark of these metrics for a select set of private and public companies
Sales Compensation in SaaS Companies Annual Survey 2018Viola Group
The topic of salary compensation for sales professionals is a hotly debated one among SaaS companies, so to see how Israeli startups stack up against international benchmarks, we (Viola Ventures) surveyed some of our portfolio and non-portfolio companies about their sales compensation policies.
You can read the accompanying blog post here: http://www.viola-group.com/violanotes/sales-compensation-in-saas-companies-viola-ventures-annual-survey-2018/
Customer Success Summit Keynote
Presented by: Thomas Lah, Executive Director, TSIA
Customer success has become one of the hottest capabilities technology companies find themselves investing in today. For technology-as-a-service providers, customer success potentially holds the key to retaining customers and expanding customer relationships. However, TSIA has been inundated with inquiries from member companies that are struggling to deliver customer success at scale.
In this closing keynote, TSIA executive director Thomas Lah will leverage recent benchmark data and industry observations to outline a seven-step approach to establishing and scaling a customer success capability. From the charter to the financial model to enabling technology, Thomas will provide practical frameworks customer success organizations can leverage as they grow.
Understanding what metrics are relevant to your startup, and why, can be a daunting task. In this meetup we will discuss what metrics matter for a SaaS company or project. What investors are looking for in the metrics you track and why do they think they are important. What is CAC and LTC, why is CHURN critical? We will also review how to calculate these important metrics, what equations will give you the right answer, and what tools make sense to use for your business.
Presenter: Lecole Cole, Founder & CEO, Skydera
From ITC Agent Conference 2016...
This breakout will cover the key data points you need to manage in order to improve efficiencies and increase profits within your agency. Today, data comes in multiple facets from websites, management systems, phone systems, rating systems and other sources. You will learn to recognize these key data elements and understand how to use this data to make better decisions that will lead to more profits.
Does your company have any unprofitable customers? How much money do you leave on the table with your customers? What profit does each of your customer add or destroy to your companies profit? How much profit do you make or lose with activities performed for your customers? We can help you to answer all of those questions
Every year we take the opportunity to run a comprehensive survey of professionals at SaaS companies ranging from early startups to established businesses with over $100M in revenue. Our aim is to better understand the key performance indicators used by SaaS companies to run their business.
For the 2016 SaaS Metrics survey report, we have added several questions based on the comments and responses over the years. New topics covered this year include company spending on customer retention and the definition/measurement of customer health.
Similar to Measuring the Performance of Your Subscription Business: The Three Metrics That Matter (20)
Get deep technical accounting insights into the biggest pain points companies have faced with implementing and analyzing Standalone Selling Prices. Learn how you can be more strategic with pricing policies and improve processes for setting SSP.
Subscribed 2019 - CPQ X: The Future of CPQZuora, Inc.
Curious about what's next for Zuora CPQ? Join us to hear Zuora's CPQ Product Management demonstrate the brand new UI and features included with Zuora's CPQ X.
Subscribed 2019 - Going Global: Demystifying International PaymentsZuora, Inc.
Going global is a key strategy to drive company growth, but setting up and managing international payments can be very complicated. Join us at this session to understand payment operation requirements for multi-geography expansion and the Zuora configurations that will help you take your business anywhere in the world.
Let's admit it: Payment fraud is widespread and a huge liability for companies. The only way to successfully combat it is to develop comprehensive strategies and make the most of fraud management tools. Join this session to hear new ideas and strategies from our payment partners and customers on how to defeat fraud, increase consumer confidence, and reduce collection friction.
Subscribed 2019 - Optimizing Recurring Collections at ScaleZuora, Inc.
Managing collections in the Subscription Economy is complicated. You're chasing unpaid invoices and delinquent accounts of unprecedented volume. Join this session to hear how customers are using Zuora Collect to improve their collections process and reduce involuntary churn.
Subscribed 2019 - Regulations and What Lies Ahead with Zuora Payments and Col...Zuora, Inc.
Going global is a key strategy to drive company growth, but setting up and managing international payments can be very complicated. Join us at this session to understand payment operation requirements for multi-geography expansion and the Zuora configurations that will help you take your business anywhere in the world.
Subscribed 2019 - Collection Strategies: Recovering Critical Revenue to Drive...Zuora, Inc.
Strategic AR teams are always seeking ways to improve collection techniques and refine existing processes, especially when new products are launched. Attend this session to hear first-hand from high-volume B2B companies on how they use Zuora to recover revenue and drive business growth.
Subscribed 2019 - Why Digital Transformation Should Drive Business Model Tran...Zuora, Inc.
Hear from business leaders who have successfully led their companies through a digital transformation and those who are currently in the midst of the process. We'll have an open and healthy conversation on why and how companies need to digitally transform, challenges to expect, and how to build a business case internally. This is a great opportunity for executives responsible for transformation strategy to learn from each other and get a real sense of what life is like on the other end of the journey.
Subscribed 2019 - Business Transformation: Architecting the Launch for SuccessZuora, Inc.
Business transformation projects are a big undertaking that can take several years for large organizations to complete. Picking the right launch strategy is the key to success. Hear first-hand from Heather Maniscalco, Director of Enterprise Architecture at Neustar, and Ksenia Kouchnirenko, Head of Business Systems at SurveyMonkey, about the launch strategies their companies adopted and why.
In addition, Zuora's Enterprise Architecture team will share a framework to help you develop a launch strategy to quickly realize value while minimizing risk, cost, and impact on customers and internal operations teams. This is an ideal session for CIOs getting started on the Zuora journey.
Subscribed 2019 - Deliver Growth Without Breaking Your Back OfficeZuora, Inc.
Is the shift to subscriptions wreaking havoc on your RevRec process? Learn how RevRec automation can help support business growth and agility by seamlessly handling complex long-term contracts and frequent contract modifications without breaking your back office.
Subscribed 2019 - Customer First Approach to Pricing Zuora, Inc.
Pricing is at the core of how companies sell, support, and talk about their products. Yet most companies fail to architect a well thought out customer journey and decision-making process. In this session, Hazjier Pourkhalkhali, Global Director, Strategy & Value at Optimizely shares how the company changed its ways two years ago and saw a dramatic reduction in churn rates while improving win rates, deal sizes, and expansions. All due to a customer-first approach to pricing.
Subscribed 2019 - Empower Sales Operations Zuora, Inc.
Does your Sales Operations team police every quote that goes out the door? With Zuora CPQ, that isn't necessary. At this session, long-time Zuora CPQ technical administrator, Jacob Feisley, shares tips for quote configuration that enable automation (= fewer manual checks) and his best practices for managing approval processes.
Subscribed 2019 - Best Practices for Realizing Optimal Value from ZuoraZuora, Inc.
Is your head spinning thinking through operationalizing pricing changes or rolling out a new product? Come hear from Mario Espinoza, Revenue Operations Manager at Outreach.io on how you can improve efficiency by getting maximum value from Zuora's products. Whether it's a product catalog cleanup, quoting process pains, or getting Sales and Finance in sync, you're guaranteed to benefit from Mario's expertise.
Subscribed 2019 - Omni-Channel Customer Acquisition and RetentionZuora, Inc.
Using multiple channels is a proven method for customer growth. It often requires new systems, which add complexity and cost to "stitch" them together and maintain them over time. Zuora aims to solve that problem with Zuora Commerce, and at this session our product experts will share how. You'll leave understanding how our strategy of unifying configurations and data through a common integration supports the delivery of a consistent and seamless experience for your customers across all channels.
Subscribed 2019 - Quote Smarter, Faster and Get Products to Market Quicker wi...Zuora, Inc.
Eager to hear how companies use Zuora Billing and Zuora CPQ to manage the quote to cash process? This is your session! We'll do a deep dive into Zuora CPQ, -- how to use it to configure, price, and quote your deals -- then hear from long-time Zuora Billing and CPQ users at Solium; they'll share their journey of moving from cumbersome spreadsheets to custom quotes, things to consider downstream when managing Zuora CPQ and change management best practices. The team has refined its processes over time, leading to faster time to market for new products. Come learn from their experience. This will be an interactive session, so bring your questions!
Subscribed 2019 - Empower Sales Operations with Zuora CPQZuora, Inc.
Does your Sales Operations team police every quote that goes out the door? With Zuora CPQ, that isn't necessary. At this session, long-time Zuora CPQ technical administrator, Jacob Feisley, shares tips for quote configuration that enable automation (= fewer manual checks) and his best practices for managing approval processes.
Subscribed 2019 - Implementing a Consumption-Based Pricing StrategyZuora, Inc.
Adding consumption-based pricing has shown to increase revenue growth. Many companies consider it but aren't sure when and how to implement the change. At this session, we'll share popular consumption pricing strategies, show how to implement them in Zuora, outline how to ready an organization to meter and bill for subscriber consumption, and end with best practices for integrating metering of consumption with billing.
Subscribed 2019 - Proration: Why Getting it Right MattersZuora, Inc.
Proration can be a complex and daunting topic. But mastering it will give you flexibility in how you price and structure product lines, and drive additional revenue. In this session, we'll share best practices with proration and the impact it has on revenue. You'll also learn the key differences between billing rules and revenue rules and how they affect invoicing and revenue recognition.
Subscribed 2019 - Beyond reporting analytics for growthZuora, Inc.
“Reporting” is critical for measuring what is happening in specific areas of your business. “Analytics” goes beyond operational reporting and enables you to truly understand and grow your business. At Zuora, we're working on data APIs, operational reporting and analytics as three pillars of a complete data strategy. Come to this session and learn how the features on our roadmap address Subscription Economy business metrics and tackle top asks from our customers.
Software Delivery At the Speed of AI: Inflectra Invests In AI-Powered QualityInflectra
In this insightful webinar, Inflectra explores how artificial intelligence (AI) is transforming software development and testing. Discover how AI-powered tools are revolutionizing every stage of the software development lifecycle (SDLC), from design and prototyping to testing, deployment, and monitoring.
Learn about:
• The Future of Testing: How AI is shifting testing towards verification, analysis, and higher-level skills, while reducing repetitive tasks.
• Test Automation: How AI-powered test case generation, optimization, and self-healing tests are making testing more efficient and effective.
• Visual Testing: Explore the emerging capabilities of AI in visual testing and how it's set to revolutionize UI verification.
• Inflectra's AI Solutions: See demonstrations of Inflectra's cutting-edge AI tools like the ChatGPT plugin and Azure Open AI platform, designed to streamline your testing process.
Whether you're a developer, tester, or QA professional, this webinar will give you valuable insights into how AI is shaping the future of software delivery.
The Art of the Pitch: WordPress Relationships and SalesLaura Byrne
Clients don’t know what they don’t know. What web solutions are right for them? How does WordPress come into the picture? How do you make sure you understand scope and timeline? What do you do if sometime changes?
All these questions and more will be explored as we talk about matching clients’ needs with what your agency offers without pulling teeth or pulling your hair out. Practical tips, and strategies for successful relationship building that leads to closing the deal.
JMeter webinar - integration with InfluxDB and GrafanaRTTS
Watch this recorded webinar about real-time monitoring of application performance. See how to integrate Apache JMeter, the open-source leader in performance testing, with InfluxDB, the open-source time-series database, and Grafana, the open-source analytics and visualization application.
In this webinar, we will review the benefits of leveraging InfluxDB and Grafana when executing load tests and demonstrate how these tools are used to visualize performance metrics.
Length: 30 minutes
Session Overview
-------------------------------------------
During this webinar, we will cover the following topics while demonstrating the integrations of JMeter, InfluxDB and Grafana:
- What out-of-the-box solutions are available for real-time monitoring JMeter tests?
- What are the benefits of integrating InfluxDB and Grafana into the load testing stack?
- Which features are provided by Grafana?
- Demonstration of InfluxDB and Grafana using a practice web application
To view the webinar recording, go to:
https://www.rttsweb.com/jmeter-integration-webinar
"Impact of front-end architecture on development cost", Viktor TurskyiFwdays
I have heard many times that architecture is not important for the front-end. Also, many times I have seen how developers implement features on the front-end just following the standard rules for a framework and think that this is enough to successfully launch the project, and then the project fails. How to prevent this and what approach to choose? I have launched dozens of complex projects and during the talk we will analyze which approaches have worked for me and which have not.
Transcript: Selling digital books in 2024: Insights from industry leaders - T...BookNet Canada
The publishing industry has been selling digital audiobooks and ebooks for over a decade and has found its groove. What’s changed? What has stayed the same? Where do we go from here? Join a group of leading sales peers from across the industry for a conversation about the lessons learned since the popularization of digital books, best practices, digital book supply chain management, and more.
Link to video recording: https://bnctechforum.ca/sessions/selling-digital-books-in-2024-insights-from-industry-leaders/
Presented by BookNet Canada on May 28, 2024, with support from the Department of Canadian Heritage.
Search and Society: Reimagining Information Access for Radical FuturesBhaskar Mitra
The field of Information retrieval (IR) is currently undergoing a transformative shift, at least partly due to the emerging applications of generative AI to information access. In this talk, we will deliberate on the sociotechnical implications of generative AI for information access. We will argue that there is both a critical necessity and an exciting opportunity for the IR community to re-center our research agendas on societal needs while dismantling the artificial separation between the work on fairness, accountability, transparency, and ethics in IR and the rest of IR research. Instead of adopting a reactionary strategy of trying to mitigate potential social harms from emerging technologies, the community should aim to proactively set the research agenda for the kinds of systems we should build inspired by diverse explicitly stated sociotechnical imaginaries. The sociotechnical imaginaries that underpin the design and development of information access technologies needs to be explicitly articulated, and we need to develop theories of change in context of these diverse perspectives. Our guiding future imaginaries must be informed by other academic fields, such as democratic theory and critical theory, and should be co-developed with social science scholars, legal scholars, civil rights and social justice activists, and artists, among others.
Builder.ai Founder Sachin Dev Duggal's Strategic Approach to Create an Innova...Ramesh Iyer
In today's fast-changing business world, Companies that adapt and embrace new ideas often need help to keep up with the competition. However, fostering a culture of innovation takes much work. It takes vision, leadership and willingness to take risks in the right proportion. Sachin Dev Duggal, co-founder of Builder.ai, has perfected the art of this balance, creating a company culture where creativity and growth are nurtured at each stage.
Neuro-symbolic is not enough, we need neuro-*semantic*Frank van Harmelen
Neuro-symbolic (NeSy) AI is on the rise. However, simply machine learning on just any symbolic structure is not sufficient to really harvest the gains of NeSy. These will only be gained when the symbolic structures have an actual semantics. I give an operational definition of semantics as “predictable inference”.
All of this illustrated with link prediction over knowledge graphs, but the argument is general.
UiPath Test Automation using UiPath Test Suite series, part 3DianaGray10
Welcome to UiPath Test Automation using UiPath Test Suite series part 3. In this session, we will cover desktop automation along with UI automation.
Topics covered:
UI automation Introduction,
UI automation Sample
Desktop automation flow
Pradeep Chinnala, Senior Consultant Automation Developer @WonderBotz and UiPath MVP
Deepak Rai, Automation Practice Lead, Boundaryless Group and UiPath MVP
FIDO Alliance Osaka Seminar: The WebAuthn API and Discoverable Credentials.pdf
Measuring the Performance of Your Subscription Business: The Three Metrics That Matter
1. Why Zuora : Zuora Provides a BluePrint to Succeed in
the Subscription Economy!
Measuring the Performance of Your
Subscription Business:
The Three Metrics that Matter
3. The Problem of Assessing
Subscription Companies
High growth subscription companies are
often “unprofitable”
Yet the markets value subscription revenue
at twice product revenue
4. Fast Growing, Money Losing, Highly Valued SaaS
Vendors
4
FireEye
Workday
Tableau
NetSuite
Marketo
Salesforce
Intuit
Microsoft
Oracle
SAP
Splunk
Adobe
-100.0%
-80.0%
-60.0%
-40.0%
-20.0%
0.0%
20.0%
40.0%
-25% 0% 25% 50% 75% 100%
%NetIncome
Revenue Growth
Companies moving to SaaS have
high valuations even with negative
growth.
Legends:
Size of Bubble =
Valuation/Revenue
SaaS
Mixed
Software
Only 30% of public SaaS
companies make a profit!
5. Financial Differences
Sale Subscription Annuity
Revenue Acquisition
Costs
Prior to Purchase Prior to Contract
Profit from Sale At Delivery Over Life of Customer
Revenue and Profit
Predictability
Large Profits, then nothing
until next sale
Greater Profits, but over the
Life of the Customer
Comparing financial results requires a different analysis
6. Revenue comes later with Subscription Companies;
Much later with High Growth Subscription Companies
$K
$20K
$40K
$60K
$80K
$100K
$120K
$140K
$160K
$180K
$200K
Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8
AnnualRevenue
Purchase versus Subscription
Annual Revenue – No Growth
Purchase
Subscription
100 New Deals/Year
$3K Purchase versus
$1K Annual Subscription
10% Annual Churn
$K
$100K
$200K
$300K
$400K
$500K
$600K
$700K
Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8
AnnualRevenue
Purchase versus Subscription
Annual Revenue – 30% Growth
Purchase
Subscription
100 New Deals/Year
$3K Purchase or
$1K Annual Subscription
10% Annual Churn
7. We need financial analysis methods to
value long term profitability of the growing
Subscription Annuity stream, not just short
term profit.
8. The Limitations of GAAP Financials
GAAP is backward looking not showing the
value of the recurring revenue stream
GAAP Income Statements do not give
insights into the health of a rapidly growing
subscription business
9. Subscription Financials Analysis Requirements
Build on GAAP standards
Recognize the future value of the Subscription
Recurring Revenue stream
Measure the Revenue Acquisition Costs against
the Recurring Revenue stream
Segregate the costs of Running the Business from
Acquiring New Business
10. *at a sustainable cost
Subscription Businesses are all about
Efficiently Building the Recurring
Revenue Stream*
11. 3 Metrics Measure Subscription Business
Efficiency
Churn
The revenue that is lost and must be replaced
Growth Efficiency
= Revenue Acquisition Costs/ New Annual Recurring Revenue
The cost to obtain a dollar of new subscription revenue
Recurring Profit Margin
= Subscription Revenue – (Cost of Subscription Services
+ R&D Expense
+ Administrative Expense
+ Acquisition Cost of Replacing Churn)
Profit excluding Costs of Incremental Revenue
12. Key Metric: Churn
Churn destroys the value of the
subscription revenue stream
Churn must be replaced raising
the total cost of Customer
Acquisition
Churn should decline over time
ChurnRate
Time as Customer
14. Key Metric: Growth Efficiency Index (GEI)
The company’s ability
to grow is constrained
by the cost of growth
The acceptable GEI is
a function of churn
The GEI should
decline with company
maturity
35%
104%
31%
111%
88%
152%
75%
154%
262%
111%
0%
50%
100%
150%
200%
250%
300%
Growth Efficiency of Public Companies
% Growth Growth Efficiency
* Pre IPO
15. Growth Efficiency Index Targets
GEI will be high during the early
company life
New Customer Acquisition is
Expensive
Customer Expansion is much less
expensive
Later Stage subscription
companies have lower GEI
Target GEI
~.5
~1.0
~1.5+
~2.0
B2C, High Churn
B2B, Later Stage
B2B, Growth Stage
B2B, Launch Stage
16. Key Metric: Recurring Profit Margin
Recurring Profit Margin is
the estimated profit with no
growth
Additional Sales &
Marketing expenses will
fund growth 26%
16%
6%
-4%
-14%
-40.0%
-20.0%
0.0%
20.0%
40.0%
60.0%
80.0%
100.0%
120.0%
140.0%
0% 10% 20% 30% 40%
EXPENSES
GROWTH RATE
COGS Sales & Marketing R&D G&A Profit
Recurring Profit Margin with
no growth
Sales Efficiency 1.0x
Subscription Businesses trade-off Profitability and Growth
19. 3 Direct Measures of Growth
• Increase in ARR
– Value of all Subscriptions contracts at a point in time
• Increase in Revenue
– Includes all revenue from the business
• Increase in Cash Flow
– Focuses on the cash generated from operations
– Should exceed the income from operations
The median growth of public and private SaaS companies is 30%
20. Customer Lifetime Value Predicts the Value of Subscriptions
• Customer Lifetime Value (CLV)
is the Predictive Measure of the
Net Present Value of the future
Subscriptions Gross Profits
• Customer Equity is the sum of
Customer Lifetime Values
When Customer Equity is growing rapidly, loses are defensible
Customer
Equity
Annual
Recurring
Revenue
Cost of
ServiceChurn
Cost of
Capital
Customer Equity = Total Recurring Revenue – Cost of Service
%Revenue Churn + %WACC
21. Target Revenue Acquisition Cost from CLV
• Revenue Acquisition Cost < 25% CLV
– Comparable to Product Sales
• Growth Efficiency Index < 25% CLV/ARR
– Equivalent measure based on GEI
22. Tying it all together in the
Subscription Financials
23. Contrasting Public Software & Subscription Profits
Subscription
Companies
Software
Companies
Revenue 100% 100%
Cost of Service* (30%) (33%)
Gross Profit 70% 67%
Operating Expenses
S&M (39%) (23%)
G&A (17%) (10%)
R&D (18%) (15%)
Total Op Ex (73%) (49%)
EBITDA (.3%) 19%
* Includes low margin professional services
Median Growth 26.0% 9.9%
Economic
Value/Revenue 8.0x 3.2x Source: SEC Software Equity Group,
Q1 2014 Software Industry Financial Report
Public Subscription
companies have over twice
the valuation ratios of Public
Software companies
24. Alternative Income Statement Presentation
Revenue 100%
Cost of Service -20%
Gross Profit 80%
Operating Expenses
S&M -40%
G&A -15%
R&D -20%
Total Operating Expenses -75%
EBITDA 5%
Revenue 100%
Cost of Ongoing Operations
Cost of Service -20%
S&M - Churn Replacement -10%
G&A -15%
R&D -20%
Cost of Ongoing Operations -65%
Recurring Profit Margin 35%
S&M - Incremental Revenue -30%
EBITDA 5%
Traditional Income Statement Subscription Income Statement
Yearly Metrics:Prior Current Growth
Revenue 100 130 30%
Ending ARR 115 150 30%
Revenue Churn 10% 10% 0%
Cost of Capital 10% 10% 0%
Customer Equity 576 749 30%
Growth Efficiency 1:1 1:1 0%
Yearly Metrics:Prior Current Growth
Revenue 100 130 30%
25. Summary
GAAP financials show the historical company results.
Growth in Customer Equity and Recurring Revenue measure the
company’s growth and future revenue.
Recurring Profit Margin of existing subscriptions should be
separated from the costs of new revenue.
Subscription Metrics of Growth Efficiency and Churn are the Key
Performance Indicators of cost effective growth.
The growth in the company’s Customer Equity measures the increase
in company value.
The issue is the time frame of the profits. Sell a product and you know your profit from that sale. When someone subscribes to product or service, the profits come in the future. You must assess the future revenue stream to value your future profits.
I talk to a lot of companies about their subscription business model, how they present it, and how they assess how they are doing. I work with both Subscription companies as well as venture capitalists and private equity groups that are assessing subscription companies.
I suspect in this group most of you are “believers” in the subscription model, but looking for new methods to assess how you are doing at each stage of your development.
The reason some vendors resist converting to a Subscription model is they don’t know how to make the transition, set appropriate benchmarks for success, or know how to manage the transition. This is the case whether it is a new “pure play” subscription company, a new division of a software company (like Microsoft Office 365), or providing an option of purchase or subscribe models.
The majority of SaaS companies are unprofitable from a GAAP perspective during their high growth period. The financial markets don’t seem to care about loses that much since they understand these companies are building long term profitability from an occurring subscription revenue stream.
The core problem with subscription model finances is the cost of the customer acquisition happens before the revenue stream begins, and the time to recoup the customer acquisition costs can be substantial.
We’ll give you the insights that the financial markets see in the value of the growing subscription revenue stream and assess if the growth is worth the cost of that revenue acquisition.
Subscription businesses generally grow faster, but from a backward looking financial perspective lose money. In fact, the median growth for a software company was xx% while the median growth for a public SaaS company was xx%
Yet the financial markets see the value in the growing customer base and value them appropriately.
Many software companies are moving to provide Subscription offerings. Companies such as Adobe and Intuit see short term loss of revenue from this transition, but the market values them higher than pure software companies.
The cost of revenue acquisition occur up front for both the sale and the subscription, the revenue is immediate with the sale, and over the life of the customer for the subscription.
That means the corresponding profit is immediate for the sale, and over the life of the customer for the subscription
THIS IS THE MOST FUNDAMENTAL DIFFERENCE IN THESE MODEL
With this revenue over the life of the customer, the revenue stream is much more consistent. In each quarter, the majority of the revenue is from the existing customer base and just incremental revenue from new subscriptions. With the purchase model, you start over each quarter.
The cost of revenue acquisition occur up front for both the sale and the subscription, the revenue is immediate with the sale, and over the life of the customer for the subscription.
That means the corresponding profit is immediate for the sale, and over the life of the customer for the subscription
THIS IS THE MOST FUNDAMENTAL DIFFERENCE IN THESE MODEL
With this revenue over the life of the customer, the revenue stream is much more consistent. In each quarter, the majority of the revenue is from the existing customer base and just incremental revenue from new subscriptions. With the purchase model, you start over each quarter.
So how do we augment our financial models to do decent financial analysis of Subscription companies?
So we know the problems with GAP…
The answer is to build on GAAP,
Assess the value of the recurring revenue stream – the Customer Equity
Gauge the efficiency of obtaining new revenue
Determine the profitability of the business without growth – we separate the profit of the steady state business from the cost of growth which is adding shareholder value.
So the attributes of a healthy subscription business is that they grow efficiency, and that recurring revenue stream is profitable over the life of the customer.
The metrics for maximizing the Customer Lifetime Value, and the Subscription Business Efficiency are encapsulated in the “3 Key Subscription Metrics that Matter” first proposed by Zuora.
Churn is what determines the long term value of the customer.
Growth efficiency determines the cost to obtain new customers
And
Recurring Profit Margin is what is the profit from the existing customer base
Since the Customer Equity is a predictive metric, it can only be derived based on past results and management judgment.
Since it is predictive, it is not guaranteed, but also should not be ignored because it is the core of the value of a subscription company. In fact, if you estimate the Customer Equity of large Subscription companies such as Salesforce, this value can explain a great deal of their high market valuations.
It is important to look at each component of the CLV of each customer to maximize it.
The gross profit is crucial to ensure that the company retains most of the gross profit from the subscription. The Cost of SaaS Services should be below 20% as is achieved by major SaaS companies including Salesforce, NetSuite, and Workday.
Churn is the most significant determinant of the long term value of the customer. If churn is high (greater than 10% for B2B, greater than 20% for B2C) the revenue will diminish quickly.
Cost of Capital must also be taken into account. To have a realistic assessment of customer value, you must take into account that revenue down the road is worth much less than money today. Use a realistic cost of capital value in the calculation.
increasing the recurring revenue is key, and this is inherent in a Subscription , “Land and Expand” strategy of upselling and cross selling into the customer base.
These factors in the Customer Equity are both necessary to gain a reliable estimate, but also guide the most important aspects of maximizing the customer value.
For more insight, Google SaaS Customer Lifetime Value for my article on the subject.
Since the Customer Equity is a predictive metric, it can only be derived based on past results and management judgment.
Since it is predictive, it is not guaranteed, but also should not be ignored because it is the core of the value of a subscription company. In fact, if you estimate the Customer Equity of large Subscription companies such as Salesforce, this value can explain a great deal of their high market valuations.
It is important to look at each component of the CLV of each customer to maximize it.
The gross profit is crucial to ensure that the company retains most of the gross profit from the subscription. The Cost of SaaS Services should be below 20% as is achieved by major SaaS companies including Salesforce, NetSuite, and Workday.
Churn is the most significant determinant of the long term value of the customer. If churn is high (greater than 10% for B2B, greater than 20% for B2C) the revenue will diminish quickly.
Cost of Capital must also be taken into account. To have a realistic assessment of customer value, you must take into account that revenue down the road is worth much less than money today. Use a realistic cost of capital value in the calculation.
increasing the recurring revenue is key, and this is inherent in a Subscription , “Land and Expand” strategy of upselling and cross selling into the customer base.
These factors in the Customer Equity are both necessary to gain a realizable estimate, but also guide the most important aspects of maximizing the customer value.
For more insight, Google SaaS Customer Lifetime Value for my article on the subject.
Since the Customer Equity is a predictive metric, it can only be derived based on past results and management judgment.
Since it is predictive, it is not guaranteed, but also should not be ignored because it is the core of the value of a subscription company. In fact, if you estimate the Customer Equity of large Subscription companies such as Salesforce, this value can explain a great deal of their high market valuations.
It is important to look at each component of the CLV of each customer to maximize it.
The gross profit is crucial to ensure that the company retains most of the gross profit from the subscription. The Cost of SaaS Services should be below 20% as is achieved by major SaaS companies including Salesforce, NetSuite, and Workday.
Churn is the most significant determinant of the long term value of the customer. If churn is high (greater than 10% for B2B, greater than 20% for B2C) the revenue will diminish quickly.
Cost of Capital must also be taken into account. To have a realistic assessment of customer value, you must take into account that revenue down the road is worth much less than money today. Use a realistic cost of capital value in the calculation.
increasing the recurring revenue is key, and this is inherent in a Subscription , “Land and Expand” strategy of upselling and cross selling into the customer base.
These factors in the Customer Equity are both necessary to gain a realizable estimate, but also guide the most important aspects of maximizing the customer value.
For more insight, Google SaaS Customer Lifetime Value for my article on the subject.
Since the Customer Equity is a predictive metric, it can only be derived based on past results and management judgment.
Since it is predictive, it is not guaranteed, but also should not be ignored because it is the core of the value of a subscription company. In fact, if you estimate the Customer Equity of large Subscription companies such as Salesforce, this value can explain a great deal of their high market valuations.
It is important to look at each component of the CLV of each customer to maximize it.
The gross profit is crucial to ensure that the company retains most of the gross profit from the subscription. The Cost of SaaS Services should be below 20% as is achieved by major SaaS companies including Salesforce, NetSuite, and Workday.
Churn is the most significant determinant of the long term value of the customer. If churn is high (greater than 10% for B2B, greater than 20% for B2C) the revenue will diminish quickly.
Cost of Capital must also be taken into account. To have a realistic assessment of customer value, you must take into account that revenue down the road is worth much less than money today. Use a realistic cost of capital value in the calculation.
increasing the recurring revenue is key, and this is inherent in a Subscription , “Land and Expand” strategy of upselling and cross selling into the customer base.
These factors in the Customer Equity are both necessary to gain a realizable estimate, but also guide the most important aspects of maximizing the customer value.
For more insight, Google SaaS Customer Lifetime Value for my article on the subject.
Since the Customer Equity is a predictive metric, it can only be derived based on past results and management judgment.
Since it is predictive, it is not guaranteed, but also should not be ignored because it is the core of the value of a subscription company. In fact, if you estimate the Customer Equity of large Subscription companies such as Salesforce, this value can explain a great deal of their high market valuations.
It is important to look at each component of the CLV of each customer to maximize it.
The gross profit is crucial to ensure that the company retains most of the gross profit from the subscription. The Cost of SaaS Services should be below 20% as is achieved by major SaaS companies including Salesforce, NetSuite, and Workday.
Churn is the most significant determinant of the long term value of the customer. If churn is high (greater than 10% for B2B, greater than 20% for B2C) the revenue will diminish quickly.
Cost of Capital must also be taken into account. To have a realistic assessment of customer value, you must take into account that revenue down the road is worth much less than money today. Use a realistic cost of capital value in the calculation.
increasing the recurring revenue is key, and this is inherent in a Subscription , “Land and Expand” strategy of upselling and cross selling into the customer base.
These factors in the Customer Equity are both necessary to gain a realizable estimate, but also guide the most important aspects of maximizing the customer value.
For more insight, Google SaaS Customer Lifetime Value for my article on the subject.
So lets start by looking at standard GAAP financial statements.
These are the median expenses of public purchase software and subscription companies.
Note the much higher growth and valuation of Subscription companies. Also the expenses are higher as a percent of current revenue, because the revenue is deferred.
But this doesn’t tell us what is good or bad over the long haul.
We can see the core profitability by still using GAAP, but separating the Recurring Profits from the Cost of acquiring new revenue.
BUT ITS STILL GAAP.
Now we add in key metrics that are Subscription specific as footnotes.
Then we benchmark these metrics with those in the pier group, particularly the three key metrics
So we can see if our core business is profitable, if we are growing efficiently, and if the company’s Customer Equity is increasing a appropriately to our spending.