Patrick Campbell

Utilizing your pricing for growth Pipeline Summit 2016

@PriceIntel

http://www.priceintelligently.com/pipeline

[email protected]

@PriceIntel

We live in a world where acquisition as we know it is dead

@PriceIntel

Who are you?

@PriceIntel

Happy customers big and small

ProfitWell SaaS pricing

software and tech enabled services

Free financial metrics for subscription

businesses

@PriceIntel

We’ve seen inside more software 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

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

WTP

as

% o

f WTP

4 Y

ears

Ago

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

Asked Founders/Executives

@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 tot

al c

ompa

nies

C-Level/Founder Spend Their Time

@PriceIntel

There are clear winners and losers in this environment.

@PriceIntel

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 Res

pond

ents

Of those companies who died, what was the makeup of their growth

Primarily Acquisi5on 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 Res

pond

ents

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

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 Res

pond

ents

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 Res

pond

ents

# of cust dev conversa5ons

How many cust dev conversations are you having per month?


@PriceIntel

We aren’t truly testing that much

0%

25%

50%

75%

100%

0 1 to 3 4 to 10 11+

% o

f Res

pond

ents

# of tests/experiments

How many tests or experiments are you running each month?


@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%


% im

pact

on

the

botto

m li

ne

Impact of improving each lever by 1%

N = 578 SaaS companies, +/- 2.89% MoE at 95% level

@PriceIntel


3.32%

6.71%

0%

5%

10%

15%


% im

pact

on

the

botto

m li

ne



@PriceIntel


3.32%

12.70%

6.71%

0%

5%

10%

15%


% im

pact

on

the

botto

m li

ne



@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 tot

al c

ompa

nies

C-Level/Founder Growth Preferences


@PriceIntel

What works for growth

3.32%

12.70%

6.71%

0%

5%

10%

15%


% im

pact

on

the

botto

m li

ne


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 #2 Drive Customer #3

Offer Product #3 Justify price #1

Justify price #2

Justify price #3

@PriceIntel

How do we fix this?

@PriceIntel

Quantify your buyer personas

@PriceIntel

If you don’t know who you’re driving to your product, how do you know what build?

@PriceIntel

Let’s walk through an example…

@PriceIntel

ProfitWell

@PriceIntel

“Oh you’re like….”

@PriceIntel

“Oh you’re like….”

37 Other Competitors

(we know about)

@PriceIntel

Persona-Product Fit

Startup Steve

•  Valued features: •  • 

•  Least valued features •  • 

•  WTP = ~$/month •  CAC = ~$ •  LTV: $

Miderprise Marty



•  WTP = ~$/month •  CAC = ~$ •  LTV: $

@PriceIntel

Go to the customer!

@PriceIntel

For the love of God. Talk to your customer.

@PriceIntel

Great. How do we do that?

@PriceIntel

1

2

3

Your Process at a High Level

Buyer Personas and Design

1

Data Collection And Segmentation

2

1

2

3

4

Data Consolidation And Analysis

3

@PriceIntel

Persona-Product Fit

Startup Steve



•  WTP = ~$/month •  CAC = ~$ •  LTV: $

Miderprise Marty



•  WTP = ~$/month •  CAC = ~$ •  LTV: $

@PriceIntel

Experimental Design

@PriceIntel

What type of info do we want? •  Demographic Information

–  How often do you look at your metrics? Team size? Revenue?... •  Feature/Packaging Information

–  Which metrics? What features? Value props?...

•  Pricing Information –  How much are they willing to pay? What frequency do they want to

pay?...

@PriceIntel

Relative Preference Analysis Statistical methodology to measure preferences for features, intention, and value propositions

Your Customer Development Toolkit

Price Sensitivity Analysis Proven model for gauging customer’s willingness to pay and price sensitivity

Experimental Design Properly segmenting and breaking down the data.

How do we ask the questions?

@PriceIntel

What do people value?

@PriceIntel

“Please rank the following features on a scale of 1 to 10…”

0 0.2 0.4 0.6 0.8 1

Accuracy of your metrics

Ac5onability from your metrics

Beau5ful Design

Depth of your metrics

@PriceIntel

@PriceIntel

What do your customers value the most?

More on: Relative Preference Analysis

@PriceIntel

Persona-Product Fit

Startup Steve

•  Valued features: •  Price •  Design

•  Least valued features •  Actionabiltiy •  Depth

•  WTP = ~$/month •  CAC = ~$ •  LTV: $

Miderprise Marty

•  Valued features: •  Accuracy •  Uptime

•  Least valued features •  Price •  Design

•  WTP = ~$/month •  CAC = ~$ •  LTV: $

@PriceIntel

Relative Preference Analysis Statistical methodology to measure preferences for features, intention, and value propositions

Your Customer Development Toolkit

Price Sensitivity Analysis Proven model for gauging customer’s willingness to pay and price sensitivity

Experimental Design Properly segmenting and breaking down the data.

How do we ask the questions?

@PriceIntel

How much are they willing to pay?

@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.

@PriceIntel

•  At what (monthly) price point does [PRODUCT] become too

expensive that you’d never consider purchasing it? •  At what (monthly) price point does [PRODUCT] start to become

expensive, but you’d still consider purchasing it?

•  At what (monthly) price point does [PRODUCT] a really good deal?

•  At what (monthly) price point does [PRODUCT] too cheap that you question the quality of it?

More on: Relative Price Sensitivity Meter

How much are your customers willing to pay?

@PriceIntel

How much are your customers willing to pay?

More on: Relative Price Sensitivity Meter

@PriceIntel

WTP for SaaS Metrics

$0

$50

$100

$150

$200

$250

$300

$0 - $50k $51k - $100k $101k - $250k $251k - $500k $501k+

WTP

Size of Company (MRR)

WTP for a SaaS Metrics Solution

N = 234 companies

@PriceIntel

Persona-Product Fit

Startup Steve



•  WTP = ~$50/month •  CAC = ~$ •  LTV: $

Miderprise Marty



•  WTP = ~$150-250/month •  CAC = ~$ •  LTV: $

@PriceIntel

Persona-Product Fit

Startup Steve



•  WTP = ~$50/month •  CAC = ~$500-600 •  LTV: $600

Miderprise Marty



•  WTP = ~$150-250/month •  CAC = ~$3000 •  LTV: $1500

@PriceIntel

WTP for Churn Recovery

$0

$500

$1,000

$1,500

$2,000

$2,500

$3,000

$3,500

$4,000

$4,500

$0 - $50k $51k - $100k $101k - $250k $251k - $500k $501k+

WTP


WTP for a Recovering Churn

N = 234 companies

@PriceIntel

WTP for Rev Rec

$0

$500

$1,000

$1,500

$2,000

$2,500

$3,000

$3,500

$0 - $50k $51k - $100k $101k - $250k $251k - $500k $501k+

WTP


WTP for a Revenue Recognition

N = 234 companies

@PriceIntel

A good entry point

Low CAC with constant value

Creates the Requirement

Path to Share of Wallet

ProfitWell Financial metrics for the subscription economy

100% accurate SaaS metrics for free integrating 1-

click with your billing system

Central fulcrum to cust success, sales, finance,

marketing e-team, and rest of

stakeholders

Allows interface to clearly point to problems and

reinforce value of paid add-ons

@PriceIntel

Our current monetization path

ProfitWell Financial metrics for the subscription economy

Retain Rec Revenue Delinquent credit

card recovery through email, in-app snippet, and

optimization

Algorithmically solved 2-3 days of

work amongst accounting and finance team

@PriceIntel

12 hours total.

@PriceIntel

12 hours total. $2089.

@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

http://www.priceintelligently.com/pipeline

[email protected]

@PriceIntel

Patrick Campbell

Sales

Transcript of Patrick Campbell