The SaaS market has changed dramatically in the past two decades, but we haven’t done much to keep up with the changes.
We’ve seen inside more SaaS data than anyone else out there. But here's how we are screwing SaaS up from the Founder and CEO of ProfitWell, Patrick Campbell.
WSO2CON 2024 - Designing Event-Driven Enterprises: Stories of Transformation
Patrick Campbell- 2019 APPEALIE SaaS Conference Featured Speaker
1. Brought to you by
How we keep screwing SaaS up.
SEPTEMBER 2019
2. Brought to you by
The SaaS market has changed dramatically in the past two
decades, but we haven’t done much to keep up with the changes.
NONE OF US ARE PERFECT, BUT WE CAN BE BETTER
3. Brought to you by
“Listen large, bearded, preachy man…
…who the hell are you?”
4. Brought to you by
PROFITWELL
Free financial metrics for
subscription businesses.
8. Brought to you by
The SaaS market has changed dramatically in the past two
decades, but we haven’t done much to keep up with the changes.
NONE OF US ARE PERFECT, BUT WE CAN BE BETTER
52. UNIT ECONOMICS AREN’T WHAT THEY USED TO BE
Customer acquisition cost has increased significantly
Customer acquisition cost has increased significantly over the years due to market saturation of
marketing vying for consumer attention.
BLENDED
CAC
RELATIVE
TO
FOUR
YEARS
AGO
SOURCE: 2017 CAC STUDY
-10%
0%
10%
20%
30%
40%
50%
60%
70%
80%
6 YEARS AGO 5 YEARS AGO 4 YEARS AGO 3 YEARS AGO 2 YEARS AGO 1 YEAR AGO Today
B2B
B2C
WHEN MEASUREMENT WAS TAKEN
N
818
N = 818 companies
Brought to you by
54. CONSUMERS ARE GETTING HAMMERED
Number of Competitors in First Year in Business
Companies started more than a year ago had far fewer competitors in their space than companies
started today.
AVERAGE
#
OF
COMPETITORS
IN
THEIR
1ST
YEAR
AGE OF COMPANY
2016 SOFTWARE MARKET SURVEY
0
5
10
5 YEARS OLD 3 YEARS OLD 1 YEAR OLD
9.7
4.8
2.6
N = 1432 software founders and executives
Brought to you by
56. THE MARKET IS DROPPING OUT BENEATH US
Consumer Willingness to Pay has Declined Over Time
Software willingness to pay has declined significantly over the past few years due to increased options
and higher demands.
WTP
AS
%
OF
WTP
4
YEARS
AGO
SOURCE: 2017 CONSUMER WILLINGNESS TO PAY STUDY
0%
30%
60%
90%
120%
6 YEARS AGO 5 YEARS AGO 4 YEARS AGO 3 YEARS AGO 2 YEARS AGO 1 YEAR AGO TODAY
Core Functionality
B2B
B2C
WHEN MEASUREMENT WAS TAKEN
N = Varies by line, but minimum of 10,000 customer respondents per line
N
921k
Brought to you by
58. THE MARKET IS DROPPING OUT BENEATH US
Despite Amazing Advances, NPS is Actually Down Overall
Average NPS scores are actually falling pretty dramatically over the past five years, indicating either
we’re just getting worse at our jobs or consumers re expecting more
AVERAGE
NPS
SCORE
YEARS AGO
SOURCE: 2017 SAAS STUDY
0
7
13
20
27
33
40
5 YEARS AGO 3 YEARS AGO 1 YEAR AGO
10.2
19.5
33.8
N = 1,784 software companies
N
1,784
Brought to you by
63. Brought to you by
Buyers are the central tenet of your business
POINT OF CONVERSION
DRIVE CUSTOMERS
OFFER PRODUCT A
JUSTIFY PRICE A
OFFER PRODUCT B
JUSTIFY PRICE B
OFFER PRODUCT C
JUSTIFY PRICE C
$ $
$
67. WE FOCUS ON THE WRONG FUNDAMENTALS
Impact of Improving Each Pillar of Your Business
Monetization and retention based growth far outpaces acquisition based growth. This impact is getting
greater over time.
%
IMPACT
ON
REVENUE
SOURCE: 2016 STUDY ON COMPANY UNIT ECONOMICS
0%
5%
10%
15%
20%
ACQUISITION MONETIZATION RETENTION
2.35%
3.32%
2008 - 2012 2013 - 2016
N
734
N = Data from 734 software companies
PILLAR OF THE BUSINESS
Brought to you by
68. WE FOCUS ON THE WRONG FUNDAMENTALS
Impact of Improving Each Pillar of Your Business
Monetization and retention based growth far outpaces acquisition based growth. This impact is getting
greater over time.
%
IMPACT
ON
REVENUE
SOURCE: 2016 STUDY ON COMPANY UNIT ECONOMICS
0%
5%
10%
15%
20%
ACQUISITION MONETIZATION RETENTION
9.32%
15.89%
2.35%
6.71%
12.7%
3.32%
2008 - 2012 2013 - 2016
N
1.4k
N = Data from 1.4k software companies
PILLAR OF THE BUSINESS
Brought to you by
69. WE FOCUS ON THE WRONG FUNDAMENTALS
Impact of Improving Each Pillar of Your Business
Monetization and retention based growth far outpaces acquisition based growth. This impact is getting
greater over time.
%
IMPACT
ON
REVENUE
SOURCE: 2016 STUDY ON COMPANY UNIT ECONOMICS
0%
5%
10%
15%
20%
ACQUISITION MONETIZATION RETENTION
9.32%
15.89%
2.35%
6.71%
12.7%
3.32%
2008 - 2012 2013 - 2016
N
1.4k
N = Data from 1.4k software companies
PILLAR OF THE BUSINESS
Brought to you by
77. -50%
-40%
-30%
-20%
-10%
0%
10%
20%
30%
40%
50%
-0.5 -0.4 -0.3 -0.2 -0.1 0 0.1 0.2 0.3 0.4 0.5
Revenue Drivers
THE MARKET IS DROPPING OUT BENEATH US
Measuring consumer sentiment to what we’re building
DEVIATION
FROM
MEDIAN
WTP
RELATIVE PREFERENCE MAGNITUDE
78. THE MARKET IS DROPPING OUT BENEATH US
Measuring consumer sentiment to what we’re building
Relative Value of Attributes
• Taste
• Country of Origin
• Temperature
79. THE MARKET IS DROPPING OUT BENEATH US
Measuring consumer sentiment to what we’re building
Relative Value of Attributes
• Taste
• Country of Origin
• Temperature
Willingness to Pay
• Price elasticity for a cup of coffee
80. -50%
-40%
-30%
-20%
-10%
0%
10%
20%
30%
40%
50%
-0.5 -0.4 -0.3 -0.2 -0.1 0 0.1 0.2 0.3 0.4 0.5
Revenue Drivers
THE MARKET IS DROPPING OUT BENEATH US
Measuring consumer sentiment to what we’re building
DEVIATION
FROM
MEDIAN
WTP
RELATIVE PREFERENCE MAGNITUDE
Taste
81. -50%
-40%
-30%
-20%
-10%
0%
10%
20%
30%
40%
50%
-0.5 -0.4 -0.3 -0.2 -0.1 0 0.1 0.2 0.3 0.4 0.5
Revenue Drivers
THE MARKET IS DROPPING OUT BENEATH US
Measuring consumer sentiment to what we’re building
DEVIATION
FROM
MEDIAN
WTP
RELATIVE PREFERENCE MAGNITUDE
Taste
Temperature
Country of Origin
82. -50%
-40%
-30%
-20%
-10%
0%
10%
20%
30%
40%
50%
-0.5 -0.4 -0.3 -0.2 -0.1 0 0.1 0.2 0.3 0.4 0.5
Revenue Drivers
THE MARKET IS DROPPING OUT BENEATH US
Measuring consumer sentiment to what we’re building
DEVIATION
FROM
MEDIAN
WTP
RELATIVE PREFERENCE MAGNITUDE
Taste
Temperature
Country of Origin
83. -50%
-40%
-30%
-20%
-10%
0%
10%
20%
30%
40%
50%
-0.5 -0.4 -0.3 -0.2 -0.1 0 0.1 0.2 0.3 0.4 0.5
Revenue Drivers
2017 SOFTWARE MARKET SURVEY
WE’RE BUILDING THE WRONG PRODUCT
Calculating the expected impact of product on growth
DEVIATION
FROM
MEDIAN
WTP
RELATIVE PREFERENCE MAGNITUDE
Differentiable Features
High Value/High WTP
84. -50%
-40%
-30%
-20%
-10%
0%
10%
20%
30%
40%
50%
-0.5 -0.4 -0.3 -0.2 -0.1 0 0.1 0.2 0.3 0.4 0.5
Revenue Drivers
2017 SOFTWARE MARKET SURVEY
WE’RE BUILDING THE WRONG PRODUCT
Calculating the expected impact of product on growth
DEVIATION
FROM
MEDIAN
WTP
RELATIVE PREFERENCE MAGNITUDE
Differentiable Features
High Value/High WTP
Add-Ons
Low Value/High WTP
85. -50%
-40%
-30%
-20%
-10%
0%
10%
20%
30%
40%
50%
-0.5 -0.4 -0.3 -0.2 -0.1 0 0.1 0.2 0.3 0.4 0.5
Revenue Drivers
2017 SOFTWARE MARKET SURVEY
WE’RE BUILDING THE WRONG PRODUCT
Calculating the expected impact of product on growth
DEVIATION
FROM
MEDIAN
WTP
RELATIVE PREFERENCE MAGNITUDE
Differentiable Features
High Value/High WTP
Add-Ons
Low Value/High WTP
Core Features
High Value/Low WTP
86. -50%
-40%
-30%
-20%
-10%
0%
10%
20%
30%
40%
50%
-0.5 -0.4 -0.3 -0.2 -0.1 0 0.1 0.2 0.3 0.4 0.5
Revenue Drivers
2017 SOFTWARE MARKET SURVEY
WE’RE BUILDING THE WRONG PRODUCT
Calculating the expected impact of product on growth
DEVIATION
FROM
MEDIAN
WTP
RELATIVE PREFERENCE MAGNITUDE
Differentiable Features
High Value/High WTP
Add-Ons
Low Value/High WTP
Core Features
High Value/Low WTP
Trash Land
Low Value/Low WTP
103. • Don’t discount over ~20%
DATA WE’VE SEEN TO BE
HELPFUL
Brought to you by
— SAAS
IN
THE
NEW
ECONOMY
104. • Don’t discount over ~20%
• Support, Brand, Design all drive WTP now
DATA WE’VE SEEN TO BE
HELPFUL
Brought to you by
— SAAS
IN
THE
NEW
ECONOMY
105. • Don’t discount over ~20%
• Support, Brand, Design all drive WTP now
• Credit card failures make up 20-40% of your churn. Fix them.
DATA WE’VE SEEN TO BE
HELPFUL
Brought to you by
— SAAS
IN
THE
NEW
ECONOMY
106. • Don’t discount over ~20%
• Support, Brand, Design all drive WTP now
• Credit card failures make up 20-40% of your churn. Fix them.
• You should consider freemium (15-20% higher retention, lower
CAC)
DATA WE’VE SEEN TO BE
HELPFUL
Brought to you by
— SAAS
IN
THE
NEW
ECONOMY
108. Brought to you by
The SaaS market has changed dramatically in the past two
decades, but we haven’t done much to keep up with the changes.
NONE OF US ARE PERFECT, BUT WE CAN BE BETTER
109. Brought to you by
Free Benchmark Audits
patrick@profitwell.com