The Three Things EVERY Aspiring SaaS Company Should Know!
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Transcript of The Three Things EVERY Aspiring SaaS Company Should Know!
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3 Things Every Aspiring SaaS Company Should Know
Ashley Stirrup, SVP of Product & Solution Marketing – ServiceSource
Guest Speaker: Amy Konary, Research VP – IDC Research
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Agenda
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What’s happening in the SaaS market?
What does it take to build a SaaS business? What are the economic realities?
The 3 things every aspirational SaaS company must know.
Who has successfully made the transition to a SaaS business?
Q & A
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SaaS Market Snapshot Amy Konary
Research VP, Software Licensing and Provisioning
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© IDC Visit us at IDC.com and follow us on Twitter: @IDC 3
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$0
$50,000
$100,000
$150,000
$200,000
$250,000
$300,000
$350,000
$400,000
$450,000
$500,000
2012 2013 2014 2015 2016 2017
Software Revenue
$0
$50,000
$100,000
$150,000
$200,000
$250,000
$300,000
$350,000
$400,000
$450,000
$500,000
2012 2013 2014 2015 2016 2017
SaaS/PaaS Revenue Packaged Software Revenue
$0
$50,000
$100,000
$150,000
$200,000
$250,000
$300,000
$350,000
$400,000
$450,000
$500,000
2012 2013 2014 2015 2016 2017
SaaS/PaaS Revenue Packaged Software Revenue Revenue from companies with No SaaS/PaaS
5.9% Growth CAGR (2012-2017)
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XaaS Drives Revenue Growth How Does Cloud in the Portfolio Impact Revenue?
Source: IDC, 2014
2012-2017 CAGR
19.8%
8.1%
91.9% 83.5%
16.5%
9.1% -‐9.4%
3.9%
22.1%
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Key Stats: Importance of Cloud Traditional IT Dominates, but Public Cloud Drives New Growth
34% of replacement
apps spend (replacing
capability) was on SaaS
$1 for every $6 spent on
software was for SaaS delivered software
91% of new apps spend (new
capability) was on SaaS
84% of net new commercial apps will be developed specifically for cloud in 2014
31%+ of companies will source greater than 50% of total IT spend from the Public Cloud by 2016*
>80% of Global 2000 will still have >70% of IT onsite in 2016
Source: IDC, 2014
© IDC Visit us at IDC.com and follow us on Twitter: @IDC 5
$1 for every $5 spent on apps was for SaaS delivered apps
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Key Questions for SaaS ISVs
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Develop Rebuild?
Architecture Runtime Environment
Services Single-stack or
Composite?
How Is It Built?
Operate Ops Responsibilities
Hosting Solution Hardware Location
Patch and App Maintenance
How Is It Run?
Market Customer type
Business Model Monetization Strategy
Ongoing Support Marketplace
How Is It Consumed?
Target customer: Who will be the buyer? How will they access? Business Model: How will you make money? Manage costs? Monetization Strategy: Metrics? Terms? Ongoing Support: How do you grow accounts and keep customers? Marketplace: Who sells it? Who promotes it? How do you reinforce value?
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Monetization Strategy
• Move beyond “Wild West” • From user pricing to usage pricing • Process and structure, but with flexibility
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3 Things you must know
Small changes in retention, upsell and cross-sell can have a huge impact
Usage data can help you optimize how and when you reach out to customers
Roles and responsibilities are critical to getting the right outcomes
1.
2.
3.
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Accelerate time to profitability
On-boarding Adoption Training Upsell Cross-sell
Customer lifetime value
Time
Initial Sale
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SaaS economics R
even
ue
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Best-in-class Customer Lifecycle Management
Acquire Onboard Adopt Achieve
Customer Success
Intelligent Engagement
Upsell Cross-sell
Renew
Proactive Retain
Advocacy
Grow
Nurture
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Roles and responsibilities
Customer Success Manager
• On-boarding
• Adoption
• Retention
Renewal Sales Rep
• Renewals
• Up-selling
• Cross-selling
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Customer coverage models
Customer Success Manager
Renewal Sales Rep
Marketing
Automation System
Customers
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End user strategies
Customer Success
Nurturing and
advocacy
Feature training & adoption
High usage of key features
Not using the mobile app
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Maximize Customer Lifetime Value
Initial Sale
Renewals
Up-Sells
Cross-Sells
Usage Charges
TIME
90%+ of revenue is captured
after initial sale
CLV ($)
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Customer usage informs which growth levers to pull when
Initial Sale
Renewals
Up-Sells
Cross-Sells
Usage Charges
Before Sale
CLV
How best to drive
conversion?
Did the customer get good value
from the product or service?
What is time to value?
Is usage meeting
expectations?
Is the service underpriced
compared to usage?
What is the next best offer based
on value derived?
What are the right plans?
TIME
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Customer Lifecycle Management
Grow Retain Adopt
Increase adoption & retention
Grow incremental revenue
Predictive analytics for subscription businesses
*Based on internal studies, companies who worked with ServiceSource increased retention by 15 points
20% increase in sales productivity
15pt Increase in customer retention* Selling Services
Customer Success
Renewal management, workflow and analytics
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Who has successfully made the transition?
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3 Things you must know
Small changes in retention, upsell and cross-sell can have a huge impact
Usage data can help you optimize how and when you reach out to customers
Roles and responsibilities are critical to getting the right outcomes
1.
2.
3.
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20 ServiceSource Confidential Information
Thank you!
Q & A