Keynote by Patrick Campbell, CEO at Price Intelligently, from #SaaStock17, Growth Stage, RDS, Dublin Ireland, Tuesday 19th September 2017

1. Brought to you by
The State of SaaS
SEPTEMBER 2017

2. Brought to you by
We’re ill prepared for the speed of the market.
This has dire consequences for your business.
HOW RECURRING REVENUE IS CHANGING

3. Brought to you by
Who in the world are you?

4. Churn Insights
Attribution Data
Financial Data
Unit Economics
Demographics
Price Sensitivity
Survey Data
Willingness to Pay
In-App Usage Data
Drastically reduce churnRETAINTM
Actionable insights to make you
smarter about your business
SAAS METRICS
Proprietary pricing software for
monetization
MONETIZE

5. We’ve seen inside more software
companies than anyone else on the planet.

6. Brought to you by
We’re in SaaS’s adolescence.

8. Competition is rampant.

9. 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#OFCOMPETITORSINTHEIR1STYEAR
AGE OF COMPANY
2016 SOFTWARE MARKET SURVEY Brought to you by
0
5
10
5 YEARS OLD 3 YEARS OLD 1 YEAR OLD
9.7
4.8
2.6
N = 1432 software founders and executives

10. CONSUMERS ARE GETTING HAMMERED
Number of Competitors Today
Older companies increased competition over time, likely due to attracting new entrants, as well as
decreased barrier to entry
AVERAGE#OFCOMPETITORSTODAY
AGE OF COMPANY
SOURCE: 2016 MRR CHURN STUDY Brought to you by
0
5
10
15
5 YEARS OLD 3 YEARS OLD 1 YEAR OLD
10.25
11.75
12.15
N = 1432 software founders and executives
N
1432

11. Sales & Marketing channels are plentiful.

12. MARKETING CHANNELS ARE PLENTIFUL
Number of Sales & Marketing Channels Utilized
Sales & Marketing channel utilization has expanded rapidly, giving the rise of more opportunities to
acquire customers from numerous different places.
AVERAGE#OFCHANNELSUTILIZED
YEARS AGO
SOURCE: 2017 MARKETING STUDY Brought to you by
0
5
10
15
15 YEARS OLD 10 YEARS OLD 5 YEARS OLD 3 YEARS OLD 1 YEAR OLD TODAY
13.89
13.22
12.43
8.31
4.72
2.31
N = 1168 software founders and executives
N
1168

13. Our customers have benefitted immensely.

14. CONSUMERS ARE GETTING HAMMERED
Time Taken to Fully Onboard Product in an Organization
Over time, implementation time has gone down substantially, providing a leading indicator of how easy
switching between products is becoming.
AVERAGE#OFHOURSTOIMPLEMENTSOFTWARE
YEARS AGO
SOURCE: 2017 SAAS STUDY
Brought to you by
0
10
20
30
40
50
60
10 YEARS AGO 5 YEARS AGO 1 YEAR AGO
6.8
46.4
56.7
N = 894 software companies
N
894

15. There are some not so amazing consequences.

16. CAC is Steadily Increasing Over Time

17. 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.
BLENDEDCACRELATIVETOFOURYEARSAGO
SOURCE: 2017 CAC STUDY Brought to you by
-18%
0%
18%
35%
53%
70%
5 YEARS AGO 4 YEARS AGO 3 YEARS AGO 2 YEARS AGO 1 YEARS AGO Today
B2B
B2C
WHEN MEASUREMENT WAS TAKEN
N
743
N = 743 companies

18. The relative value of features is declining.

19. 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.
WTPAS%OFWTP4YEARSAGO
SOURCE: 2017 CONSUMER WILLINGNESS TO PAY STUDY Brought to you by
0%
30%
60%
90%
120%
5 YEARS AGO 4 YEARS AGO 3 YEARS AGO 2 YEARS AGO 1 YEAR AGO TODAY
Core Features
Single Sign On
Integrations
Analytics
WHEN MEASUREMENT WAS TAKEN
N = Varies by line, but minimum of 10,000 customer respondents per line
N
921k

20. Consumers are so ungrateful.

21. 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
AVERAGENPSSCORE
YEARS AGO
SOURCE: 2017 SAAS STUDY
Brought to you by
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

22. Brought to you by
What once worked is no longer working.

23. Our playbook was acquire, acquire, acquire.

24. WE MAKE MATTER SO MUCH WORSE
Which Pillar is the Most Important in Your Business
Founders and software executives overwhelmingly put their support behind acquisition based growth
instead of caring about monetization or retention.
%OFTOTALRESPONDENTS
PILLAR OF THE BUSINESS
2017 SOFTWARE MARKET SURVEY Brought to you by
0%
50%
100%
MORE LOGOS MORE $ PER CUSTOMER KEEP CUSTOMER LONGER
21.1%
7.58%
71.32%
N = 1578 software founders and executives
N
1578

25. Pricing is an afterthought.

26. WE FOCUS ON THE WRONG FUNDAMENTALS
How much time per year do you spend on your pricing
%OFTOTALRESPONDENTS
HOURS PER YEAR
2016 SOFTWARE MARKET SURVEY
0%
50%
100%
10 hours or less 11 - 50 hours 51 - 100 hours 101+ hours
3.28%5.21%
19.2%
72.31%
N = 1432 software founders and executives
N
1432
Founders and software executives overwhelmingly indicated that their organizations are spending very
little time on their pricing each year.
Brought to you by

27. N = 1432 software founders and executives
WE FOCUS ON THE WRONG FUNDAMENTALS
How much time per year do you spend on your pricing
Founders and software executives overwhelmingly indicated that their organizations are spending very
little time on their pricing each year.
%OFTOTALRESPONDENTS
HOURS PER YEAR
2016 SOFTWARE MARKET SURVEY
0%
50%
100%
10 hours or less 11 - 50 hours 51 - 100 hours 101+ hours
6.74%8.32%
49.82%
35.12%
3.28%5.21%
19.2%
72.31%
Pricing Custodian Supplies
N
1432
N = 1432 software founders and executives
Brought to you by

28. Runaway sales is ruining our jobs.

29. MONETIZATION BENCHMARKS
Discounting Impact on Renewal Willingess to Pay
When we discount over 30%, we’re setting ourselves up for failure when it comes time for renewal.
WILLINGNESSTOPAYATRENEWALAS%OFORIGINALCONTRACT
N
941
Q3 = 75TH PERCENTILE
Q3 = 50TH PERCENTILE (MEDIAN)
Q4 = 25TH PERCENTILE
SOURCE: 2017 SAAS UNIT ECONOMIC STUDY
N
50.6k
% DISCOUNT GIVEN ON INITIAL CONTRACT
N = 50.6k Customers of B2B and B2C Products
Brought to you by

30. Acquisition is now table stakes.

31. 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.
%IMPACTONREVENUE
SOURCE: 2016 STUDY ON COMPANY UNIT ECONOMICS Brought to you by
0%
5%
10%
15%
20%
ACQUISITION MONETIZATION RETENTION
3.32%
2008 - 2012 2013 - 2016
N
734
N = Data from 734 software companies
PILLAR OF THE BUSINESS

32. 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.
%IMPACTONREVENUE
SOURCE: 2016 STUDY ON COMPANY UNIT ECONOMICS Brought to you by
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

33. 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.
%IMPACTONREVENUE
SOURCE: 2016 STUDY ON COMPANY UNIT ECONOMICS Brought to you by
0%
5%
10%
15%
20%
ACQUISITION MONETIZATION RETENTION
2.35%
6.71%
12.7%
3.32%
2008 - 2012 2013 - 2016
N
734
N = Data from 734 software companies
PILLAR OF THE BUSINESS

34. 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.
%IMPACTONREVENUE
SOURCE: 2016 STUDY ON COMPANY UNIT ECONOMICS Brought to you by
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
734
N = Data from 734 software companies
PILLAR OF THE BUSINESS

35. It was ok to be lazy
with customer development.

36. WE FOCUS ON THE WRONG FUNDAMENTALS
Customer Development Conversations Per Month
SaaS founders and executives indicated that their companies are primarily only talking to less than 10
customers in a cust dev capacity per month.
%OFTOTALRESPONDENTS
# OF CUSTOMER DEVELOPMENT CONVERSATION PER MONTH
2016 SOFTWARE MARKET SURVEY Brought to you by
0%
50%
100%
10 or less 11 to 25 26 to 50 51+
3.9%
10.1%
17.7%
68.3%
N = 1647 software founders and executives
N
1647

37. WE FOCUS ON THE WRONG FUNDAMENTALS
Experiments and Tests Per Month
SaaS founders and executives indicated that their companies are overwhelmingly running less than 10
experiments per month.
%OFTOTALRESPONDENTS
# OF EXPERIMENTS OR TESTS PER MONTH
2016 SOFTWARE MARKET SURVEY Brought to you by
0%
50%
100%
0 1 to 3 4 to 10 11+
2.71%
12.1%
37.81%
47.8%
N = 1647 software founders and executives
N
1647

38. Yet, we’re building the wrong product.

39. -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 Brought to you by
THE MARKET IS DROPPING OUT BENEATH US
Measuring consumer sentiment to what we’re building
DEVIATIONFROMMEDIANWTP
RELATIVE PREFERENCE MAGNITUDE

40. -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 Brought to you by
WE’RE BUILDING THE WRONG PRODUCT
Calculating the expected impact of product on growth
DEVIATIONFROMMEDIANWTP
RELATIVE PREFERENCE MAGNITUDE
Differentiable Features
High Value/High WTP

41. -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 Brought to you by
WE’RE BUILDING THE WRONG PRODUCT
Calculating the expected impact of product on growth
DEVIATIONFROMMEDIANWTP
RELATIVE PREFERENCE MAGNITUDE
Differentiable Features
High Value/High WTP
Add-Ons
Low Value/High WTP

42. -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 Brought to you by
WE’RE BUILDING THE WRONG PRODUCT
Calculating the expected impact of product on growth
DEVIATIONFROMMEDIANWTP
RELATIVE PREFERENCE MAGNITUDE
Differentiable Features
High Value/High WTP
Add-Ons
Low Value/High WTP
Core Features
High Value/Low WTP

43. -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 Brought to you by
WE’RE BUILDING THE WRONG PRODUCT
Calculating the expected impact of product on growth
DEVIATIONFROMMEDIANWTP
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

44. -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 - N = 5K+ INPUTS FROM 1282 DIRECTOR, VP, OR C-LEVEL PRODUCT LEADERS Brought to you by
WE’RE BUILDING THE WRONG PRODUCT
What we think we're building
DEVIATIONFROMMEDIANWTP
RELATIVE PREFERENCE MAGNITUDE

45. -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 - N = COMPOSITE DATA FROM 1.2M CUSTOMER INPUTS Brought to you by
WE’RE BUILDING THE WRONG PRODUCT
What we're actually building
DEVIATIONFROMMEDIANWTP
RELATIVE PREFERENCE MAGNITUDE

46. Brought to you by
There are clear winners and losers
in this environment.

47. CLEAR WINNERS AND LOSERS
Comparing Cust Dev Strategies of Companies
Acquisition based growth companies grow at a smaller rate than those with a balanced growth
approach (growth from all three pillars of growth).
YOYGROWTHRATE
SOURCE: 2017 STUDY ON CUST DEV Brought to you by
0%
25%
50%
75%
100%
2012 2017
44.821%
31.72%
Minimal Customer Development
Aggressive Customer Development
N
687
N = Minimum of 687 companies per segment pulled from the middle 2/3 of companies in terms of
growth rate. This, along with a dampening model was used to control for outlier spikes in growth rate.

48. CLEAR WINNERS AND LOSERS
Comparing Cust Dev Strategies of Companies
Acquisition based growth companies grow at a smaller rate than those with a balanced growth
approach (growth from all three pillars of growth).
YOYGROWTHRATE
SOURCE: 2017 STUDY ON CUST DEV Brought to you by
0%
25%
50%
75%
100%
2012 2017
59.08%
44.821%
17.43%
31.72%
Minimal Customer Development
Aggressive Customer Development
N
687
N = Minimum of 687 companies per segment pulled from the middle 2/3 of companies in terms of
growth rate. This, along with a dampening model was used to control for outlier spikes in growth rate.

49. CLEAR WINNERS AND LOSERS
Comparing Growth Strategies of Companies
Acquisition based growth companies grow at a smaller rate than those with a balanced growth
approach (growth from all three pillars of growth).
YOYGROWTHRATE
SOURCE: 2016 STUDY ON GROWTH Brought to you by
0%
25%
50%
75%
100%
2012 2013 2014 2015
50.81%49.81%47.91%48.91%
25.71%27.1%
31.09%
34.67%
Primarily Acquisition Growth
Balanced Growth
N
512
N = Minimum of 512 companies per segment pulled from the middle 2/3 of companies in terms of
growth rate. This, along with a dampening model was used to control for outlier spikes in growth rate.

50. This should be scary.

51. 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
$ $$

52. Brought to you by
We’re not focusing on the
fundamentals.

53. Brought to you by
That doesn’t work anymore.

54. Brought to you by
You will be left behind.

55. Brought to you by
How do we fix this?

56. Stop being a maverick.

57. Brought to you by
Thankfully, there’s a community of support.

58. Help one another.

59. • SaaS Pricing Workshop - Today at 12:30: Pricing workshop
where we’ll walk through the steps to quantify your
personas and answer every pricing question you have
• SaaS Retention Workshop - Tomorrow at 12:30:
Retention workshop where we’ll walk through steps to
increase your retention at every product turn
WE’RE RUNNING SOME ROGUE
WORKSHOPS AT OUR BOOTH
Brought to you by
— HELPINGYOUGETBACKONTRACK

60. Brought to you by
€1,000,000
THIS WEEK, WE’RE ALSO GIVING AWAY

61. • Pricing Audits: Benchmark your business’s monetization
strategy and providing quantitatively where you should
work next.
• Retention Audits: Benchmark your business’s retention
strategy and providing quantitatively where you need
work.
• Retain Credit: We’ll reduce your churn for free.
€1,000,000
Brought to you by
— HELPINGYOUGETBACKONTRACK

62. Brought to you by
You just have to ask for help.
patrick@priceintelligently.com