Patrick Campbell, CEO, Price Intelligently - Monetization: The Forgotten Growth Lever

Monetization: The Forgotten Growth LeverOctober 8, 2015

@PriceIntel

You’re focused too much on acquisition as a driver of growth.

@PriceIntel

1. You’re exceptionally inefficient with your growth

2. You’re leaving customers and revenue on the table

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Bold claim.

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

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All the financial data for 1012 SaaS companies.

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Qualitatively, two main camps of SaaS emerged.

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LTV Beasts.

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1. Small to no sales team

2. Typically low amounts of funding relative to their size

3. Focus on unit economics and buyer personas above all else

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CAC Fiends.

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1. Large sales teams

2. Raised more money than God

3. Unit economics not top of mind and vague buyer personas

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Is this real? Is this driven by our growth culture?

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Looked at 10,432 blog posts.

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We love our acquisition

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0%

25%

50%

75%

100%

Acquisition Monetization Retention

% o

f to

tal a

rtic

les

Category of growth articles written in 2014 and 2015

N = 10,432 blog posts written in 2014 and 2015

Acquisition isn’t the most effective channel

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If we improve each lever by the same amount, which lever causes the most growth?

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Impact of improving each growth lever

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3.32%

0%

5%

10%

15%


% im

pac

t on

th

e b

ott

om

lin

e

Impact of improving each lever by 1%

N = Data from 512 SaaS companies


@PriceIntel

3.32%

6.71%

0%

5%

10%

15%


% im

pac

t on

th

e b

ott

om

lin

e




@PriceIntel

3.32%

12.70%

6.71%

0%

5%

10%

15%


% im

pac

t on

th

e b

ott

om

lin

e



Improving retention and monetization has 2-4x the impact of focusing on acquisition.

@PriceIntel

1.683.23

11.09

0

5

10

15

No pricing function Yearly pricing review Continual price optimization

LTV/CAC vs. Pricing Commitment

Impact on efficiency

2015 survey of 96 SaaS companies with ARR greater than $5M

We’re like a dog chasing a car. We want customers, but don’t know what to do when

we get them.

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We focus on growth as a sledgehammer.

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How do we improve monetization?

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3 ways to better monetization

• Quantify you buyer personas

• Implement a pricing process

• Utilize a multi-price mindset

Quantify your buyer personas

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Persona-Pricing 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

Basic Plus Premium

$49 $149 $299

I only have one cool feature. The same cool feature. Yup, same one.

Oh! You can only get this here. Well…and here.

Huzzah! I’m the plan with absolutely everything.

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If you don’t know who you’re driving to this page, how do you know what to put on this

page?

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Implement a pricing process

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What’s the average amount of time spent on pricing amongst SaaS companies?

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~8 Hours. Total.

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Companies lack

Companies spend an average of 8 hours total on

pricing, but spend hundreds of

hours on acquisition.*

Commitment Expertise Process

No one is hired or trained to

manage the pricing process, getting handed

off to “whomever wants to take the

project.”

Pricing is treated as “argue, guess,

and check”, rather than a validation

process engrained in

customer development.

*2015 survey of 312 SaaS companies

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Pricing Isn’t Hard.

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It’s a process.

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Need to evaluate every 3 months and make changes every 6 months.

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Changing Your Pricing

Customer/Market Research

Communication Plan

Week: 1 2 3 4 5 6 7 8 9

Impact Analysis

Customer Advisory

Panel

ImplementChanges

Step:

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

Utilize a multi-price mindset

@PriceIntel

@PriceIntel

Basic Plus Premium

$49 $149 $299

I only have one cool feature.

The same cool feature. Yup, same one.

Oh! You can only get this here. Well…and here.

Huzzah! I’m the plan with absolutely everything.

Differentiate Features

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Pricing 101

Wistia

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A value metric is what you charge for, and should:

1. Align to your customer’s needs.

2. Grow with your customer.

3. Be easy to understand.

Pricing 101 @PriceIntel

Acquisition is important, but you need to monetize effectively.

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http://priceintelligently.com/TractionConf

Patrick [email protected]

Slides

@PriceIntel

@Patticus @PriceIntel

Patrick Campbell, CEO, Price Intelligently - Monetization: The Forgotten Growth Lever

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