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


@PriceIntel

Single feature

SaaS

Multifeature

SaaSAutomation


@PriceIntel

Single feature

SaaS

Multifeature

SaaSAutomation Consolidation


@PriceIntel

Single feature

SaaS

Multifeature

SaaSAutomation Consolidation

Workflow & Anti-Active

Usage Products


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%


% 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%


% 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.

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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?


@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?


@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?


@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

pac

t on

th

e b

ott

om

lin

e

Impact of improving each lever by 1%


@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



@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


@PriceIntel

What works for growth

3.32%

12.70%

6.71%

0%

5%

10%

15%


% im

pac

t on

th

e b

ott

om

lin

e


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:

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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

[email protected]

@PriceIntel

Lessons learned from 3k SaaS Companies - Patrick Campbell, CEO, Price Intelligently

Technology

Transcript of Lessons learned from 3k SaaS Companies - Patrick Campbell, CEO, Price Intelligently