Len madigan saas - 19 nov 2013 version finale

SAAS : MODÈLE D'AFFAIRES ET PRICINGLen Madigan2013.11.19

2 ©2013 bolti systems Company Confidential

SaaS…

« En 2013, 82% des nouvelles entreprises dans

le domaine de logiciels appliquent le modèle

SaaS. »


Objectifs – Aujourd’hui

• Elaborer un cadre ainsi que certains stratégies et métriques d’une entreprise « SaaS »

• Favoriser une échange entres les participants concernant leur propres objectifs et stratégies SaaS


Bio - Len Madigan B.Comp.Sci., MBA

• SaaS Business and Operations Leader (2004-2012)• Business modelling and selling• Implementing, scaling and operating 24/7

• GM, North American Messaging – Nokia

• VP, Operations – OZ Communications• Revenues: 195% CAGR over 4 years• Subscribers: 8 million monthly active users• Hosted systems: 1B transactions processed per

month• Service availability: 99.95%


Pricing

Trial vs. Freemium

Metrics

Getting Customers

Where to Begin?

Churn

Upselling

Product Offering

etc…


1. Participant Worksheet

2. What to Sell

3. How to Acquire Customers

4. Pricing and Revenues

5. Group Discussion / Review of Worksheets

Agenda


Credits

• The following sources were used to create content for this presentation and are excellent references for SaaS business planning:• Lean Analytics – A. Croll and B. Yoskovitz• Forentrepreneurs.com – D. Skok• The Entrepreneur’s Guide to Customer Development – B. Cooper and P.

Vlaskovits

1. Participant Worksheet


GOAL OBJECTIVESteps on Staircase

STRATEGIESHow to Get There

Participant Work SheetNOTES

GOSPA Framework - Ref: Business Coach for Professionals.com

10 ©2013 bolti systems Company ConfidentialCopyright © 2013 Bolti Systems Inc.

10

Cause and EffectCredit: R. Ganoza

2. What to Sell


Success !

80% of users say your service is “must-have” = Success

50% of users churn within a few months = Failure

“Get close to your customers” = Cliché

…. But it increases the chance of your customers staying


What’s Wrong With This Picture?

“I need to work on my

virality”SaaS Manager

A: Nothing… if your customers are staying…


Getting Customers Who Stay – Interview Them

Their Problems

Tell Your Story – Why It Matters

Have Them Rank Problems/Solutions

Find out About Related Problems

Their Purchasing Process

Steps

Criteria

ConcernsConcerns


To Do #1 - Measure Responses Vs. Expectations

Problem

• % who have this need• % who are aware of having this need• % who have a related problem

Solution• % who try product• % willing to pay• % churn

Your Estimate Reality(What it has to be)

Do Not Build (too much)Until You

Know


To Do #2 – Measure Usage

• See where value is• See how they get to

the value• Segment your

customers

Spend 20% of Development Effort Instrumenting Your Product

You Own the SaaS BoxLook At the Data Inside!


Recap – What to Sell

Measure – Be Sure Customers Want Your Product

Build It

Measure Usage to Refine Offer

3. How to Acquire Customers


Your View of the World

SEO

SEM

EM

CAMPAIGNS

VISITORS

TRIALS

CLOSED DEALS

ROI

Conversion %

Conversion %

Their View of the World

What’s the real cost?

What’s their uptime?

They want my credit card # ?

They’ll spam me

How secure is it?

Will I get locked in?

What’s the payback?

What if they get hacked?

How will we integrate it?

Ref: D. Skok, forentrepreneurs.com


Don’t just organize a sales process (left hand side)

Organize your teams so they address the customer’s concerns

(right hand side)

How? Give Potential Customers:- ROI tool

- Testimonials- White Paper on security

- List of employee certifications- Access to Live Chat

etc.


Who’s Knocking on Your Door?

20 % Serious EvaluatorsConvince them it’s the right

choice

20% Casual Evaluators

Turn Them Into Serious Evaluators

60% Curious VisitorsConvince them to evaluate

Source: Lean Analytics


No Touch InsideSales

Channel Sales

Field Sales

Cust

omer

Acq

uisi

tion

Cost

(CAC

)Which Sales Model to Pick?

Pick a Sales Model that Aligns with Customer Buying Process

Not Only the One You Can Afford


Recap – How to Acquire

Pick the “best” campaigns

Organize your teams to address customer concerns

Pick sales model that aligns with customer buying process

4. Pricing & Revenues


Lifetime Value of Customer (LTV) & Customer Acquisition Cost (CAC)

• L Lifetime gross profit from customer

• Cost (lead gen & selling) to acquire the customer*=

Cost / # signed deals

LTV

CAC

*excludes selling mgmt and marketing


Some CAC/LTV Drivers

LTVCAC

• Virality• Inbound mktg• Touch-less

conversion

• Field sales• Outbound

marketing

• Churn

• Scalable pricing• Upsell

Ref: D. Skok, forentrepreneurs.com


Scalable Pricing – Getting More as You deliver more value

Starter ProEnterprise

Users

Features

Depth of Usage

• # transactions• # projects• # Gbytes• # calls to support line

Strategy: add Cross-sell

Axis

Freemium

Strategy: Allow self-upsell

Best In Class Companies…• Grow rev/customer by

20% per year

• Convert 0.6% of free users to paying (month)

• Convert 2.3% of paying users to a higher tier (month)



Monthly Recurring Revenue & Churn

Month 1 Month 2 Month 3 Month 4 Month 30

Bookings $ 10,000 $ 12,000 $ 14,000 $ 16,000 $70,000

MRR Added This Month $ 10,000 $ 12,000 $ 14,000 $ 16,000 $70,000

MRR Prior Months $ - $ 10,000 $ 21,750 $ 35,206 $910,076

Churn at 2.5% $ - -$ 250 -$ 544 -$ 880 -$22,753

Total MRR $ 10,000 $ 21,750 $ 35,206 $ 50,326 Monthly Churn / MRR Added ---- 2.1% 5.5% 32.5%

# of abandons during month# customers at beginning of month

CHURN


Impact of Churn on Monthly Recurring Revenue

1 4 7 10 13 16 19 22 25 28 31 34 37 40 43 46 49 52 55 58 $-

$1,000,000

$2,000,000

$3,000,000

$4,000,000

$5,000,000

$6,000,000

$7,000,000

$8,000,000

MRR at 2.5%MRR at 5%MRR at -2.5%

$1.827 M

$2.612 M

$7.439 M

MRR

5%

2.5%

-2.5%

Churn %


Churn Strategies

• Strategy 1 - Track segments separately• Power users vs. casual users• Unpaid users vs. paying customers

• Strategy 2 - Measure churn at various intervals• Different root causes

• Strategy 3 - Keep churned users in mind • Consider nurturing them back to paid use • In event of feature or price changes

Source: Lean Analytics



Churn is a Lagging Indicator --Customer Engagement is a Good Predictor

• Strategy #1 – Use Customer Engagement metrics to identify and address at-risk customers• Not behaving as you’d expect• Blocked at a certain stage• Changing patterns

• Strategy #2 - Use Customer Engagement data to find “great” customers, then figure out:• Why are they behaving that way• How to get more of them


Recap – Pricing and Revenues

Develop multi-axis pricing

Ensure LTV >> CAC

Implement Churn and Upsell strategies from Day 1

5. Group Discussion / Review of Worksheets

Merci

[email protected](514) 262-8756

www.bolti.com