Patrick Campbell — How to Build Actual Customer-Driven Product (Turing Festival 2016)
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Transcript of Patrick Campbell — How to Build Actual Customer-Driven Product (Turing Festival 2016)
![Page 1: Patrick Campbell — How to Build Actual Customer-Driven Product (Turing Festival 2016)](https://reader031.fdocuments.net/reader031/viewer/2022021922/58eea5511a28ab64088b4687/html5/thumbnails/1.jpg)
How to build actual customer drivenproduct
Turing Festival 2016
@PriceIntel
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Building product is getting harder, not easier…and it’s going to increase in
difficulty.
@PriceIntel
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The age of throwing shit against the wall and seeing what sticks is over.
@PriceIntel
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Who in the world are you?
@PriceIntel
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Happy customers big and small
ProfitWellSaaS pricing
software and tech enabled services
Free financial metrics for
subscription businesses
@PriceIntel
![Page 7: Patrick Campbell — How to Build Actual Customer-Driven Product (Turing Festival 2016)](https://reader031.fdocuments.net/reader031/viewer/2022021922/58eea5511a28ab64088b4687/html5/thumbnails/7.jpg)
We’ve seen inside more software companies than anyone else on the planet.
@PriceIntel
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The market is becoming saturated.
@PriceIntel
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Our world is more competitive, making switching costs easier.
@PriceIntel
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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 C
om
pet
ito
rsHow many competitors did you have during the following periods?
@PriceIntel
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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
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The relative value of features is declining, making a race to the bottom
for feature based pricing.
@PriceIntel
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“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 a
s %
of
WT
P 4
Yea
rs A
go
Willingness to pay over time relative to WTP 4 years ago
Core Features Single Sign On Integrations Analytics
@PriceIntel
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CAC is increasing over time.
@PriceIntel
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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
CA
C 4
Yea
rs A
go
Blended CAC relative to four years ago
B2B B2C
@PriceIntel
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“Good”, “Customer driven” product is becoming exceptionally more
important
@PriceIntel
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We’re really ill equipped for the transition.
@PriceIntel
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We don’t really know our buyers
@PriceIntel
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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
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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 software companies
@PriceIntel
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We don’t do a lot of cust devconversations
0%
25%
50%
75%
100%
Less than 10 11 to 25 26 to 50 51+
% o
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esp
on
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#ofcust dev conversations
How many cust dev conversations are you having per month?
N = 1,647 software companies
@PriceIntel
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We don’t send any cust dev surveys
0%
25%
50%
75%
100%
0 1 2 3+
% o
f R
esp
on
den
ts
#ofcust dev surveys
How many cust dev surveys are you sending each month?
N = 1,647 software companies
@PriceIntel
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We aren’t truly testing that much
0%
25%
50%
75%
100%
0 1 to 3 4 to 10 11+
% o
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esp
on
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#oftests/experiments
How many tests or experiments are you running each month?
N = 1,647 software companies
@PriceIntel
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We’re obsessed with acquisition.Like stalker level obsessed.
@PriceIntel
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Looked at 25,679 blog posts.
@PriceIntel
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We love talking about acquisition
0%
25%
50%
75%
100%
Acquisition Monetization Retention
% o
f to
tal
art
icle
s
Category of growth articles written from 2014 to 2106
N = 25,679 blog posts written between 2014 to 2016
@PriceIntel
![Page 27: Patrick Campbell — How to Build Actual Customer-Driven Product (Turing Festival 2016)](https://reader031.fdocuments.net/reader031/viewer/2022021922/58eea5511a28ab64088b4687/html5/thumbnails/27.jpg)
Looked at 6,324 B2B companies
@PriceIntel
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We love building for acquisition
0%
25%
50%
75%
100%
Acquisition Monetization Retention
% o
f to
tal
com
pa
nie
s
Category of B2B SaaS companies
N = 6,324 companies currently active
@PriceIntel
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These are just the acquisition companies
@PriceIntel
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Asked Founders/Executives
@PriceIntel
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What’s most important?
0%
25%
50%
75%
100%
More logos Making more money per customer
Keeping customers around longer
% o
f to
tal
com
pa
nie
s
C-Level/Founder Growth Preferences
N = 1,432 SaaS companies, +/- 2.19% MoE at 95% level
@PriceIntel
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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
com
pa
nie
s
C-Level/Founder Spend Their Time
@PriceIntel
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If we improve each lever by the same amount, which lever causes the most
growth?
@PriceIntel
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Impact of improving each growth lever
3.32%
0%
5%
10%
15%
Acquisition Monetization Retention
% i
mp
act
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
![Page 35: Patrick Campbell — How to Build Actual Customer-Driven Product (Turing Festival 2016)](https://reader031.fdocuments.net/reader031/viewer/2022021922/58eea5511a28ab64088b4687/html5/thumbnails/35.jpg)
Impact of improving each growth lever
3.32%
6.71%
0%
5%
10%
15%
Acquisition Monetization Retention
% i
mp
act
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
![Page 36: Patrick Campbell — How to Build Actual Customer-Driven Product (Turing Festival 2016)](https://reader031.fdocuments.net/reader031/viewer/2022021922/58eea5511a28ab64088b4687/html5/thumbnails/36.jpg)
Impact of improving each growth lever
3.32%
12.70%
6.71%
0%
5%
10%
15%
Acquisition Monetization Retention
% i
mp
act
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
![Page 37: Patrick Campbell — How to Build Actual Customer-Driven Product (Turing Festival 2016)](https://reader031.fdocuments.net/reader031/viewer/2022021922/58eea5511a28ab64088b4687/html5/thumbnails/37.jpg)
Improving retention and monetization has 2-4x the impact of focusing on
acquisition.
@PriceIntel
![Page 38: Patrick Campbell — How to Build Actual Customer-Driven Product (Turing Festival 2016)](https://reader031.fdocuments.net/reader031/viewer/2022021922/58eea5511a28ab64088b4687/html5/thumbnails/38.jpg)
What we find important
0%
25%
50%
75%
100%
More logos Making more money per customer
Keeping customers around longer
% o
f to
tal
com
pa
nie
s
C-Level/Founder Growth Preferences
N = 1,432 SaaS companies
@PriceIntel
![Page 39: Patrick Campbell — How to Build Actual Customer-Driven Product (Turing Festival 2016)](https://reader031.fdocuments.net/reader031/viewer/2022021922/58eea5511a28ab64088b4687/html5/thumbnails/39.jpg)
What works for growth
3.32%
12.70%
6.71%
0%
5%
10%
15%
Acquisition Monetization Retention
% i
mp
act
on
th
e b
ott
om
lin
e
Impact of improving each lever by 1%
N = Data from 512 companies
@PriceIntel
![Page 40: Patrick Campbell — How to Build Actual Customer-Driven Product (Turing Festival 2016)](https://reader031.fdocuments.net/reader031/viewer/2022021922/58eea5511a28ab64088b4687/html5/thumbnails/40.jpg)
This should be scary.
@PriceIntel
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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
![Page 42: Patrick Campbell — How to Build Actual Customer-Driven Product (Turing Festival 2016)](https://reader031.fdocuments.net/reader031/viewer/2022021922/58eea5511a28ab64088b4687/html5/thumbnails/42.jpg)
How do we fix our customer development?
@PriceIntel
![Page 43: Patrick Campbell — How to Build Actual Customer-Driven Product (Turing Festival 2016)](https://reader031.fdocuments.net/reader031/viewer/2022021922/58eea5511a28ab64088b4687/html5/thumbnails/43.jpg)
3 ways to better monetization
• Quantify your buyer personas
• Implement a customer development process
@PriceIntel
![Page 44: Patrick Campbell — How to Build Actual Customer-Driven Product (Turing Festival 2016)](https://reader031.fdocuments.net/reader031/viewer/2022021922/58eea5511a28ab64088b4687/html5/thumbnails/44.jpg)
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: $325
@PriceIntel
![Page 45: Patrick Campbell — How to Build Actual Customer-Driven Product (Turing Festival 2016)](https://reader031.fdocuments.net/reader031/viewer/2022021922/58eea5511a28ab64088b4687/html5/thumbnails/45.jpg)
If you don’t know who you’re driving to your product, how do you know what
build?
@PriceIntel
![Page 46: Patrick Campbell — How to Build Actual Customer-Driven Product (Turing Festival 2016)](https://reader031.fdocuments.net/reader031/viewer/2022021922/58eea5511a28ab64088b4687/html5/thumbnails/46.jpg)
Let’s walk through an example…
@PriceIntel
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ProfitWell
@PriceIntel
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“Oh you’re like….”
@PriceIntel
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“Oh you’re like….”
37 Other Competitors
(we know about)
@PriceIntel
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Persona-Product Fit
Startup Steve
• Valued features: ••
• Least valued features••
• WTP = ~$/month• CAC = ~$• LTV: $
Miderprise Marty
• Valued features: ••
• Least valued features••
• WTP = ~$/month• CAC = ~$• LTV: $
@PriceIntel
![Page 51: Patrick Campbell — How to Build Actual Customer-Driven Product (Turing Festival 2016)](https://reader031.fdocuments.net/reader031/viewer/2022021922/58eea5511a28ab64088b4687/html5/thumbnails/51.jpg)
Go to the customer!
@PriceIntel
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For the love of God. Talk to your customer.
@PriceIntel
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Great. How do we do that?
@PriceIntel
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1
2
3
Your Process at a High Level
Buyer Personasand Design
1
Data CollectionAnd Segmentation
2
1
2
3
4
Data ConsolidationAnd Analysis
3
@PriceIntel
![Page 55: Patrick Campbell — How to Build Actual Customer-Driven Product (Turing Festival 2016)](https://reader031.fdocuments.net/reader031/viewer/2022021922/58eea5511a28ab64088b4687/html5/thumbnails/55.jpg)
Persona-Product Fit
Startup Steve
• Valued features: ••
• Least valued features••
• WTP = ~$/month• CAC = ~$• LTV: $
Miderprise Marty
• Valued features: ••
• Least valued features••
• WTP = ~$/month• CAC = ~$• LTV: $
@PriceIntel
![Page 56: Patrick Campbell — How to Build Actual Customer-Driven Product (Turing Festival 2016)](https://reader031.fdocuments.net/reader031/viewer/2022021922/58eea5511a28ab64088b4687/html5/thumbnails/56.jpg)
Experimental Design
@PriceIntel
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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
![Page 58: Patrick Campbell — How to Build Actual Customer-Driven Product (Turing Festival 2016)](https://reader031.fdocuments.net/reader031/viewer/2022021922/58eea5511a28ab64088b4687/html5/thumbnails/58.jpg)
Relative Preference AnalysisStatistical methodology to measure preferences for features, intention, and value propositions
Your Customer Development Toolkit
Price Sensitivity AnalysisProven model for gauging customer’s willingness to pay and price sensitivity
Experimental DesignProperly segmenting and breaking down the data.
How do we ask the questions?
@PriceIntel
![Page 59: Patrick Campbell — How to Build Actual Customer-Driven Product (Turing Festival 2016)](https://reader031.fdocuments.net/reader031/viewer/2022021922/58eea5511a28ab64088b4687/html5/thumbnails/59.jpg)
What do people value?
@PriceIntel
![Page 60: Patrick Campbell — How to Build Actual Customer-Driven Product (Turing Festival 2016)](https://reader031.fdocuments.net/reader031/viewer/2022021922/58eea5511a28ab64088b4687/html5/thumbnails/60.jpg)
“Please rank the following features on a scale of 1 to
10…”
0 0.2 0.4 0.6 0.8 1
Accuracyofyourmetrics
Actionabilityfromyourmetrics
BeautifulDesign
Depthofyourmetrics
@PriceIntel
![Page 61: Patrick Campbell — How to Build Actual Customer-Driven Product (Turing Festival 2016)](https://reader031.fdocuments.net/reader031/viewer/2022021922/58eea5511a28ab64088b4687/html5/thumbnails/61.jpg)
@PriceIntel
![Page 62: Patrick Campbell — How to Build Actual Customer-Driven Product (Turing Festival 2016)](https://reader031.fdocuments.net/reader031/viewer/2022021922/58eea5511a28ab64088b4687/html5/thumbnails/62.jpg)
What do your customers value the most?
More on: Relative Preference Analysis
@PriceIntel
![Page 63: Patrick Campbell — How to Build Actual Customer-Driven Product (Turing Festival 2016)](https://reader031.fdocuments.net/reader031/viewer/2022021922/58eea5511a28ab64088b4687/html5/thumbnails/63.jpg)
What do your customers value the most?
More on: Relative Preference Analysis
@PriceIntel
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What do your customers value the most?
More on: Relative Preference Analysis
@PriceIntel
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Your Experimental Design
More on: Relative Preference Analysis
Main Category
Support• Phone• Live Chat• Email• …
@PriceIntel
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Your Experimental Design
More on: Relative Preference Analysis
Main Category
Support• Phone• Live Chat• Email• …
Data in Integrations
Metric Types
Data out Integrations
Action Tools
@PriceIntel
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Your Experimental Design
More on: Relative Preference Analysis
Main Category
Support• Phone• Live Chat• Email• …
Data in Integrations
Metric Types
Data out Integrations
Action Tools
All Demographics and Personas
@PriceIntel
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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
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Relative Preference AnalysisStatistical methodology to measure preferences for features, intention, and value propositions
Your Customer Development Toolkit
Price Sensitivity AnalysisProven model for gauging customer’s willingness to pay and price sensitivity
Experimental DesignProperly segmenting and breaking down the data.
How do we ask the questions?
@PriceIntel
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How much are they willing to pay?
@PriceIntel
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Basic Plus Premium
$49 $149 $299
Ionlyhaveonecoolfeature. Thesame coolfeature. Yup,sameone.
Oh!Youcanonlygetthis here. Well…andhere.
Huzzah!I’mtheplanwithabsolutelyeverything.
@PriceIntel
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• 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
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How much are your customers willing to pay?
More on: Relative Price Sensitivity Meter
@PriceIntel
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WTP for SaaS Metrics
$0
$50
$100
$150
$200
$250
$300
$0 - $50k $51k - $100k $101k - $250k $251k - $500k $501k+
WT
P
Size of Company (MRR)
WTP for a SaaS Metrics Solution
N = 234 companies
@PriceIntel
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Persona-Product Fit
Startup Steve
• Valued features: • Price • Design
• Least valued features• Actionabiltiy• Depth
• WTP = ~$50/month• CAC = ~$• LTV: $
Miderprise Marty
• Valued features: • Accuracy • Uptime
• Least valued features• Price • Design
• WTP = ~$150-250/month• CAC = ~$• LTV: $
@PriceIntel
![Page 76: Patrick Campbell — How to Build Actual Customer-Driven Product (Turing Festival 2016)](https://reader031.fdocuments.net/reader031/viewer/2022021922/58eea5511a28ab64088b4687/html5/thumbnails/76.jpg)
Persona-Product Fit
Startup Steve
• Valued features: • Price • Design
• Least valued features• Actionabiltiy• Depth
• WTP = ~$50/month• CAC = ~$500-600• LTV: $600
Miderprise Marty
• Valued features: • Accuracy • Uptime
• Least valued features• Price • Design
• WTP = ~$150-250/month• CAC = ~$3000• LTV: $1500
@PriceIntel
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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+
WT
P
Size of Company (MRR)
WTP for a Recovering Churn
N = 234 companies
@PriceIntel
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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+
WT
P
Size of Company (MRR)
WTP for a Revenue Recognition
N = 234 companies
@PriceIntel
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A good entry point
Low CAC with constant
value
Creates the Requirement
Path to Share of Wallet
ProfitWellFinancial 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
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Our current monetization path
ProfitWellFinancial 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
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12 hours total.
@PriceIntel
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12 hours total. $2089.
@PriceIntel
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Implement a customer development process
@PriceIntel
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Your Cust Dev Process
Customer/Market Research
Communication
Plan
Week: 1 2 3 4 5 6 7 8 9
Impact
Analysis
Customer Advisory
Panel
Implement
Changes
Step:
@PriceIntel
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Customers matter.
@PriceIntel
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Building a company is getting harder; make it easier on yourself.
@PriceIntel