2013 Totango Annual SaaS Metrics Survey
description
Transcript of 2013 Totango Annual SaaS Metrics Survey
3rd Annual SaaS Metrics Survey
2013
Methodology …………………………………….. 3 Survey Participant Profile ………………….. 5 Executive Summary …………………………… 9 Survey Results & Analysis ………………… 11
Contents
Methodology
Totango surveyed 257 executives at SaaS companies about the key performance indicators used to run their businesses. Similar surveys were also conducted in 2011 and 2012, giving Totango unique insights into SaaS trends.
Survey Participant Profile
32%
23%
18%
18%
9%
Title
C-‐Level
Director
VP
Manager
Other
24%
23%
14%
12%
10%
3%
14%
Job Function
Marke?ng
Customer Success / Account Mgmt
Sales
Products
Opera?ons
Customer Support
Other
54
89
48
21
33
0
10
20
30
40
50
60
70
80
90
100
<$1M $1-10M $10-50M $50-100M >$100M
Num
ber
of c
ompa
nies
Annual Revenue
Revenue Distribution
Note: Total does not add up to 257 companies (12 respondents did not complete this ques?on)
38
55 58
23 17
66
0
10
20
30
40
50
60
70
0-10% 10-25% 25-50% 50-75% 75-100% >100%
Num
ber
of c
ompa
nies
27
49 50
17 15
45
0
10
20
30
40
50
60
0-10% 10-25% 25-50% 50-75% 75-100% >100%
Num
ber
of c
ompa
nies
Annual Revenue Growth
All 257 respondents
Excluding companies <$1M in revenue (203 respondents)
Executive Summary
• The fastest growing companies in SaaS are the ones that have mastered controlling churn and driving upsell in their customer base.
Revenue from existing customers becomes more and more important to SaaS companies as they grow.
There is a clear relationship between revenue growth of SaaS companies and managing existing customers.
This underscores the importance of customer success and delivering recurring value to customers in the SaaS business model.
• SaaS companies are still heavily focused on tracking metrics around
new customer acquisition vs. existing customers.
This is changing however, with a growing recognition among SaaS executives on the need and importance of tracking key metrics on existing customers.
Survey Results & Analysis
15% 17% 19%
25% 14%
35%
34%
32%
31%
27% 37%
15%
2011 2012 2013
Not satisfied and learned to live with it
Not satisfied and investing to improve it
Good enough
Very pleased
State of SaaS Metrics: The state of business metrics within SaaS companies is improving, with a marked increase in executive satisfaction compared to earlier years. However, the overriding sentiment indicates that significant work still needs to be done.
Satisfaction with SaaS metrics
Executive focus on new customers vs. existing customers: SaaS vendors continue to place a heavier focus on acquiring new customers compared to managing revenue from existing customers (renewals and upsell).
51%
58%
87%
26%
27%
10%
23%
15%
3%
… upsell/add-on sales
… existing customer renewals
… new customer acquisition
High Medium Low
Level of executive priority and funding for
27%
41%
47%
53%
56%
64%
70%
49%
65%
69%
88%
Net Promoter Score (NPS)
Customer Lifetime Value (CLV)
Customer health
Add-on / expansion sales
Revenue per user
Product usage statistics
Churn
Customer Acquisition Cost (CAC)
Conversion rates (free to paying)
Number of new trial signups or free accounts
Website unique visitors
Which metrics do you track
Customer acquisition metrics
Existing customer metrics
The heavier focus on customer acquisition is also reflected in the metrics SaaS companies track. There is generally higher maturity and prevalence of customer acquisition metrics vs. existing customer metrics.
46%
49%
42%
33%
30%
28%
24%
37%
14%
9%
5%
Net Promoter Score (NPS)
Customer Lifetime Value (CLV)
Customer health
Add-on / expansion sales
Revenue per user
Product usage statistics
Churn
Customer Acquisition Cost (CAC)
Conversion rates (free to paying)
Number of new trial signups or free accounts
Website unique visitors Customer acquisition metrics
Existing customer metrics
However, there is clear recognition among SaaS executives on the need and importance of tracking metrics on existing customers. This is reflected in the significant number of executives who plan to begin measuring revenue-related metrics on existing customers.
Which metrics do you plan to track
18%
14%
8%
27%
33% 0-10%
10-25%
25-50%
>50%
No free trial/freemium
Free Trials and Freemium: The majority of SaaS vendors have a free trial or freemium offering as a way to acquire paying customers, though a significant number (33%) still do not. Of the companies that do, more than half derive >25% of their new business through trial and freemium conversions.
What percentage of new business comes from free trials and freemium
15%
26%
56%
73%
By product downgrade
By # users/licenses
By revenue
By # customers
Churn: The majority of SaaS vendors still measure churn at an aggregate level as a percentage of overall customers and associated revenue lost. Only a few companies look at churn at a more granular level such as product downgrades or reduction in licenses within accounts.
How do you measure churn
Note: Total adds up to more than 100% since each respondent could select mul?ple op?ons
38%
30%
17%
15%
0-5% churn
5-10% churn
10-15% churn
>15% churn
A sizable number of companies have high (>10%) and medium (5-10%) churn indicating that there is significant scope for SaaS vendors to impact growth and revenue by improving customer retention.
Annualized revenue churn
4% 2% 7%
28%
43%
16% >80% upsell
60-80% upsell
40-60% upsell
20-40% upsell
0-20% upsell
Decline/no increase
Upsell and add-on sales: Excluding customers who churn, the increase in revenue from existing customers is <20% for a majority of SaaS vendors.
Year-over-year revenue increase from existing customers
Impact of churn and upsell on growth: As a group, the fastest growing companies (>75% YoY revenue growth) have a significantly better record on churn and upsell, underscoring the critical role of managing revenue from existing customers in the SaaS business model.
Growth vs. Churn
29 28
43
35 25
17
29 28 23
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
<25% Growth 25-‐75% Growth >75% Growth
Respon
dents
Low Churn Medium Churn High Churn
Growth vs. Upsell
4 9
21 20
27
25
69
45 37
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
<25% Growth 25-‐75% Growth >75% Growth
Respon
dents
High Upsell Medium Upsell Low Upsell
Note: Low churn = <5%; Medium churn = 5-‐10%; High churn = >10% High upsell = >40%; Medium upsell = 2`0-‐40%; Low upsell = <20%
Customer engagement monitoring for cloud apps • Impact conversion rates • Reduce churn • Drive customer success • Increase customer lifetime value
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