Lessons learned from 3k SaaS Companies - Patrick Campbell, CEO, Price Intelligently
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Transcript of Lessons learned from 3k SaaS Companies - Patrick Campbell, CEO, Price Intelligently
Lessons learned from 3k SaaS companiesSaaStock 2016
@PriceIntel
We live in a world where acquisition as we know it is dead
@PriceIntel
@PriceIntel
Single feature
SaaS
WE’RE LIVING IN A DIFFERENT PRODUCT ERA
@PriceIntel
Single feature
SaaS
Multifeature
SaaS
WE’RE LIVING IN A DIFFERENT PRODUCT ERA
@PriceIntel
Single feature
SaaS
Multifeature
SaaSAutomation
WE’RE LIVING IN A DIFFERENT PRODUCT ERA
@PriceIntel
Single feature
SaaS
Multifeature
SaaSAutomation Consolidation
WE’RE LIVING IN A DIFFERENT PRODUCT ERA
@PriceIntel
Single feature
SaaS
Multifeature
SaaSAutomation Consolidation
Workflow & Anti-Active
Usage Products
WE’RE LIVING IN A DIFFERENT PRODUCT ERA
Our world is now pin pointed on customer value for growth.
@PriceIntel
Who are you?
@PriceIntel
Happy customers big and small
ProfitWellSaaS pricing software
and tech enabled services
Free financial metrics for subscription
businesses
@PriceIntel
We’ve seen inside more SaaS companies than anyone else on the planet.
@PriceIntel
The market is becoming saturated and unit economics just aren’t what they used to be…
@PriceIntel
Our world is more competitive, making switching costs easier.
@PriceIntel
Competition is growing
N = 289 SaaS companies, +/- 3.44% MoE at 95% level
0
2
4
6
8
10
12
5 Years Ago 3 Years Ago 1 Year Ago Today
# o
f Co
mp
etit
ors
How many competitors did you have during the following periods?
@PriceIntel
Competition is here
0%
10%
20%
30%
40%
50%
0 to 2 3 to 5 6 to 10 11+
% o
f R
esp
on
den
ts
How many competitors do you current have? (Companies around for less than 1 year)
N = 547 software companies
@PriceIntel
The relative value of features is declining.All software is going to $0.
@PriceIntel
“Differentiation” isn’t what is used to be…
N = Varies by line, but minimum of 10,000 customer respondents per line
0%
25%
50%
75%
100%
125%
4 Years Ago 3 Years Ago 2 Years Ago 1 Year Ago Today
WT
P as
% o
f WT
P 4
Year
s A
go
Willingness to pay over time relative to WTP 4 years ago
Core Features Single Sign On Integrations Analytics
@PriceIntel
CAC is increasing over time.
@PriceIntel
Acquiring a customer is getting pricier
N = Varies by line, but minimum of 453 companies per data point
-‐25%
0%
25%
50%
75%
4 Years Ago 3 Years Ago 2 Years Ago 1 Year Ago Today
CA
C a
s %
of C
AC
4 Y
ears
Ago
Blended CAC relative to four years ago
B2B B2C
@PriceIntel
We make matters worse by focusing on the wrong fundamentals
@PriceIntel
We’re obsessed with acquisition.Like stalker level obsessed.
@PriceIntel
Looked at 25,679 blog posts.
@PriceIntel
We love talking about acquisition
0%
25%
50%
75%
100%
Acquisition Monetization Retention
% o
f to
tal a
rtic
les
Category of growth articles written from 2014 to 2106
N = 25,679 blog posts written between 2014 to 2016
@PriceIntel
Looked at 6,324 B2B companies
@PriceIntel
We love building for acquisition
0%
25%
50%
75%
100%
Acquisition Monetization Retention
% o
f to
tal c
om
pan
ies
Category of B2B SaaS companies
N = 6,324 companies currently active
@PriceIntel
Asked SaaS Founders/Executives
@PriceIntel
What’s most important?
0%
25%
50%
75%
100%
More logos Making more money per customer
Keeping customers around longer
% o
f to
tal c
om
pan
ies
C-Level/Founder Growth Preferences
N = 1,432 SaaS companies, +/- 2.19% MoE at 95% level
@PriceIntel
What’s most important?
N = 1,218 SaaS companies, +/- 2.61% MoE at 95% level
0%
25%
50%
75%
100%
Acquisition Monetization Retention
% o
f to
tal c
om
pan
ies
C-Level/Founder Spend Their Time
@PriceIntel
There are clear winners and losers in this environment.
@PriceIntel
SaaS Death correlates to acquisition focused teams
0%
25%
50%
75%
100%
Less than $2.5M ARR $2.51M to $5M ARR $5.01M+ ARR
% o
f R
esp
on
den
ts
Of those companies who died, what was the makeup of their growth
Primarily Acquisition Growth Balanced Growth
N = Minimum of 30 companies per category who died over the past 4 years
@PriceIntel
Balanced growth velocity is much larger
0%
25%
50%
2012 2013 2014 2015
% o
f R
esp
on
den
ts
How do growth rates compare to our two growth groups?
Primarily Acquisition Growth Balanced Growth
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.
@PriceIntel
Our focus will kill us.
@PriceIntel
The root cause here stems from a lack of buyer centricity.
@PriceIntel
We don’t really know our buyers
@PriceIntel
Buyer Personas
Table Stakes Tony
• Valued features: • SFDC Integration• Chrome extension
• Least valued features• Analytics• API access
• WTP = ~$10/month• CAC = ~$22• LTV: $160
Advanced Arnie
• Valued features: • Analytics• API Access
• Least valued features• Chrome extension• Premium support
• WTP = ~$25/month• CAC = ~$56• LTV: $325
@PriceIntel
We don’t know our buyers that well
0%
25%
50%
75%
100%
Thought about them Central document Quantified buyer personas
% o
f R
esp
on
den
ts
Which single category best describes your buyer personas?
N = 1,647 SaaS companies
@PriceIntel
We don’t do a lot of cust dev conversations
0%
25%
50%
75%
100%
Less than 10 11 to 25 26 to 50 51+
% o
f R
esp
on
den
ts
# of cust dev conversations
How many cust dev conversations are you having per month?
N = 1,647 SaaS companies
@PriceIntel
We don’t send any cust dev surveys
0%
25%
50%
75%
100%
0 1 2 3+
% o
f R
esp
on
den
ts
# of cust dev surveys
How many cust dev surveys are you sending each month?
N = 1,647 SaaS companies
@PriceIntel
We aren’t truly testing that much
0%
25%
50%
75%
100%
0 1 to 3 4 to 10 11+
% o
f R
esp
on
den
ts
# of tests/experiments
How many tests or experiments are you running each month?
N = 1,647 SaaS companies
@PriceIntel
We don’t realize the power of balanced growth.
@PriceIntel
If we improve each lever by the same amount, which lever causes the most growth?
@PriceIntel
Impact of improving each growth lever
3.32%
0%
5%
10%
15%
Acquisition Monetization Retention
% im
pac
t on
th
e b
ott
om
lin
e
Impact of improving each lever by 1%
N = 578 SaaS companies, +/- 2.89% MoE at 95% level
@PriceIntel
Impact of improving each growth lever
3.32%
6.71%
0%
5%
10%
15%
Acquisition Monetization Retention
% im
pac
t on
th
e b
ott
om
lin
e
Impact of improving each lever by 1%
N = 578 SaaS companies, +/- 2.89% MoE at 95% level
@PriceIntel
Impact of improving each growth lever
3.32%
12.70%
6.71%
0%
5%
10%
15%
Acquisition Monetization Retention
% im
pac
t on
th
e b
ott
om
lin
e
Impact of improving each lever by 1%
N = 578 SaaS companies, +/- 2.89% MoE at 95% level
@PriceIntel
Improving retention and monetization has 2-4x the impact of focusing on acquisition.
@PriceIntel
What we find important
0%
25%
50%
75%
100%
More logos Making more money per customer
Keeping customers around longer
% o
f to
tal c
om
pan
ies
C-Level/Founder Growth Preferences
N = 1,432 SaaS companies
@PriceIntel
What works for growth
3.32%
12.70%
6.71%
0%
5%
10%
15%
Acquisition Monetization Retention
% im
pac
t on
th
e b
ott
om
lin
e
Impact of improving each lever by 1%
N = Data from 512 companies
@PriceIntel
This should be scary.
@PriceIntel
Everything aligns to the customer
Point of Conversion
Drive Customer #1
Offer Product #1
Offer Product #2
Drive Customer #2Drive Customer #3
Offer Product #3Justify price #1
Justify price #2
Justify price #3
@PriceIntel
How do we fix this?
@PriceIntel
Three ways to overcoming acquisition addiction
• Know your numbers
• Quantify your buyer personas
• Implement a customer development process
@PriceIntel
Know your numbers.
@PriceIntel
Know your numbers
ProfitWell.com
Quantify your buyer personas
@PriceIntel
Persona-Product Fit
Table Stakes Tony
• Valued features: • SFDC Integration• Chrome extension
• Least valued features• Analytics• API access
• WTP = ~$10/month• CAC = ~$22• LTV: $160
Advanced Arnie
• Valued features: • Analytics• API Access
• Least valued features• Chrome extension• Premium support
• WTP = ~$25/month• CAC = ~$56• LTV: $325
@PriceIntel
Go to the customer!
@PriceIntel
What do your customers value the most?
Needed: Relative Preference Analysis
@PriceIntel
How much are your customers willing to pay?
Needed: Price Sensitivity Analysis
@PriceIntel
For the love of God. Talk to your customer.
@PriceIntel
If you don’t know who you’re driving to your product, how do you know what build or how
to price?
@PriceIntel
Implement a customer development process
@PriceIntel
Your Cust Dev Process
Customer/Market Research
Communication Plan
Week: 1 2 3 4 5 6 7 8 9
Impact Analysis
Customer Advisory
Panel
ImplementChanges
Step:
@PriceIntel
Your Pricing Committee
Main Decision Maker(could be a member of the committee, as well)
Main Coordinator Typically in Product or Marketing
Product Leadership Corp Dev/Finance
Sales Leadership Marketing Leadership
@PriceIntel
We’re in a customer value centric world.
@PriceIntel
You will be left behind if you think you can brute force your growth.
@PriceIntel
Thankfully, there’s a community around you to help you grow, but you need to take the
first step.
@PriceIntel
Here’s how we’re going to help today
• SaaS Pricing Workshop – 1:30pm– Pricing workshop, where we’ll walk through the steps to quantify
your personas and answer every pricing question you’ve ever had
• SaaS Benchmarking Data Dump – 4pm– We have the world’s largest SaaS dataset, and we’ll be walking
through some key benchmarks and differences between companies doing well and those in trouble
@PriceIntel
@PriceIntel