Presentation slides form SaaStock 2019

1. A Model for SaaS Scaling
OCTOBER 2019
@ProfitWell

2. I’ve been having an existential crisis.
@ProfitWell

4. How much can you actually impact growth?
@ProfitWell

7. We invented a market power index for SaaS growth.
@ProfitWell

8. Here’s what we found.
@ProfitWell

9. “I’m sorry. Who are you? You’re not wearing a blazer.”
@ProfitWell

10. We plug into your subscription management system
and automate revenue growth.
@ProfitWell

11. Brought to you by
PROFITWELL
Free financial metrics for
subscription businesses.

12. Churn
Attribution
Financial
Unit
Demographics
Price
Survey
Willingness to
In-App Usage
Drastically reduce churn
RETAINTM
Audit proof revenue recognition
RECOGNIZED
Proprietary pricing software for
monetizationPRICE

13. We’re sitting on more SaaS data
than anyone on the planet.
@ProfitWell

14. For Slides
Patrick@profitwell.com
@ProfitWell

15. Let’s jump back in.
@ProfitWell

16. How much can you actually impact growth
and on what axes?
@ProfitWell

17. Let’s first understand our history.
@ProfitWell

18. Prehistoric SaaS
@ProfitWell

19. 1960s to the 1990s
@ProfitWell

20. 1960s to the 1990s

21. Speed. Stability. Evangelism.
@ProfitWell

22. PRODUCT - market fit
@ProfitWell

23. How much could you impact growth?
@ProfitWell

24. Let’s look at our FPC Index
@ProfitWell

25. FPCINDEXOFCOMPANYVALUATION
SOURCE: 2017 CONSUMER WILLINGESS
TO PAY
TIME
FPC Index of 0 = Complete Market Control
@ProfitWell

26. FPCINDEXOFCOMPANYVALUATION
SOURCE: 2017 CONSUMER WILLINGESS
TO PAY
TIME
FPC Index of 1 = Market Has No Control
@ProfitWell

27. How much could you impact growth
in the 1960s-1990s SaaS?
@ProfitWell

28. A bit.
@ProfitWell

29. GROWTH INEQUALITY STUDY
In Pre-historic SaaS, Market Spend Mattered - FPC Index of .3
FPCINDEXOFCOMPANYVALUATION
SOURCE: 2017 CONSUMER WILLINGESS
TO PAY
0
1
Year 0 Year 1 Year 2 Year 3 Year 4 Year 5 Year 6
@ProfitWell

30. GROWTH INEQUALITY STUDY
In Pre-historic SaaS, Market Spend Mattered - FPC Index of .3
FPCINDEXOFCOMPANYVALUATION
SOURCE: 2017 CONSUMER WILLINGESS
TO PAY
0
1
Year 0 Year 1 Year 2 Year 3 Year 4 Year 5 Year 6
@ProfitWell

31. GROWTH INEQUALITY STUDY
In Pre-historic SaaS, Market Spend Mattered - FPC Index of .3
FPCINDEXOFCOMPANYVALUATION
SOURCE: 2017 CONSUMER WILLINGESS
TO PAY
0
1
Year 0 Year 1 Year 2 Year 3 Year 4 Year 5 Year 6
@ProfitWell

32. FPC Index of .3 (out of 1)
“You had some control over your fate”
@ProfitWell

33. Upper Index Spent 14x More on Sales and Marketing
@ProfitWell

34. Advice
“Spend money like it’s water”
@ProfitWell

35. SaaS Golden Age
@ProfitWell

36. Late 1990s to 2013
@ProfitWell

37. We got great at building.
@ProfitWell

44. Products for everything…
@ProfitWell

48. We got lucky with distribution.
@ProfitWell

54. Our idols were minted during this age.
@ProfitWell

55. “We’re all geniuses.”
@ProfitWell

56. How much could you impact growth?
@ProfitWell

57. Not much.
@ProfitWell

58. GROWTH INEQUALITY STUDY
In Golden Age, Market Mattered and That’s It - FPC of .1
FPCINDEXOFCOMPANYVALUATION
SOURCE: 2017 CONSUMER WILLINGESS
TO PAY
0
1
Year 0 Year 1 Year 2 Year 3 Year 4 Year 5 Year 6
@ProfitWell

59. FPC Index of .1
“Market Gets Most of the Credit for Growth”
@ProfitWell

60. Advice
“Spend money like it’s water. Valuations are insane.”
@ProfitWell

61. Everything was great…
@ProfitWell

62. …until it wasn’t.
@ProfitWell

63. Post Gilded Age SaaS
@ProfitWell

64. @ProfitWell
Our SaaS Market Requires Real Strategic Work
Now
COMPETITION
12x

65. @ProfitWell
CACCOMPETITION
12x +70%
Our SaaS Market Requires Real Strategic Work
Now

66. @ProfitWell
CACCOMPETITION WTP ➡
12x +70% -80%
Our SaaS Market Requires Real Strategic Work
Now

67. @ProfitWell
CACCOMPETITION WTP ➡ FPC INDEX
12x +70% -80% .8
Our SaaS Market Requires Real Strategic Work
Now

68. You can now impact growth an insane amount.
@ProfitWell

69. GROWTH INEQUALITY STUDY
Post-Golden Age, Your Effort Matters - FPC of .8
FPCINDEXOFCOMPANYVALUATION
SOURCE: 2017 CONSUMER WILLINGESS
TO PAY
0
1
Year 0 Year 1 Year 2 Year 3 Year 4 Year 5 Year 6
@ProfitWell

70. GROWTH INEQUALITY STUDY
Post-Golden Age, Your Effort Matters - FPC of .8
FPCINDEXOFCOMPANYVALUATION
SOURCE: 2017 CONSUMER WILLINGESS
TO PAY
0
1
Year 0 Year 1 Year 2 Year 3 Year 4 Year 5 Year 6
@ProfitWell

71. GROWTH INEQUALITY STUDY
Post-Golden Age, Your Effort Matters - FPC of .8
FPCINDEXOFCOMPANYVALUATION
SOURCE: 2017 CONSUMER WILLINGESS
TO PAY
0
1
Year 0 Year 1 Year 2 Year 3 Year 4 Year 5 Year 6
@ProfitWell

72. “All about that L-T-V….”
@ProfitWell

73. High Growth and Scale Companies
Spend 3-4x the amount of time on LTV
@ProfitWell

74. @ProfitWell
Buyers are the central tenet of your business
POINT OF
CONVERSION
DRIVE CUSTOMERS
OFFER PRODUCT B
JUSTIFY PRICE B
EXPAND REVENUE
RETAIN
$ $$
OFFER PRODUCT B
JUSTIFY PRICE B
EXPAND REVENUE
RETAIN
OFFER PRODUCT B
JUSTIFY PRICE B
EXPAND REVENUE
RETAIN

75. Lifetime Value
@ProfitWell

76. ARPU & Retention
@ProfitWell

77. ARPU - how much money you’re making per user, account, etc
@ProfitWell

78. ARPU - how much money you’re making per user, account, etc
Retention - how long you’re keeping your customers around
@ProfitWell

79. ARPU

80. ARPU/ACV/ARPA
Easy (relatively)
• Value Metric Adjustments
• Price Increases
• Add-On Strategy
Hard(er)
• Changing Customer Proportion
• “Going up market”
• Feature Differentiation

81. ARPU/ACV/ARPA
Easy (relatively)
• Value Metric Adjustments
• Price Increases
• Add-On Strategy
Hard(er)
• Changing Customer Proportion
• “Going up market”
• Feature Differentiation

82. ARPU/ACV/ARPA
Easy (relatively)
• Value Metric Adjustments
• Price Increases
• Add-On Strategy
Hard(er)
• Changing Customer Proportion
• “Going up market”
• Feature Differentiation

83. ARPU/ACV/ARPA
Easy (relatively)
• Value Metric Adjustments
• Price Increases
• Add-On Strategy
Hard(er)
• Changing Customer Proportion
• “Going up market”
• Feature Differentiation

84. Adjust your pricing consistently.

85. Average amount of time it takes a SaaS
company to adjust pricing?

86. ~3 Years

87. How often do upper-quartile companies
change their pricing?

88. ~Every 3 Months

90. Get your value metric right

92. Percentage of Upper Quartile Companies
with a Value Metric?

93. Over 90%

95. Add-ons.

96. Avg % lift in LTV from just 1 add-on?

97. +18-48%
(2 - 6 Months)

98. Influencing Retention

99. Retention Consists of Three Main Parts
Active Churn
• Features
• Time to Value
• Right Subscriber
• Brand
• Term
Delinquent Churn
• Type of CCs
• Direct Debit
• Term
Expansion
• Add-Ons
• Upgrade Paths
• Proper Buyer Proportion
Gross Churn

100. Time, Research, and Iteration
Active Churn
• Features
• Time to Value
• Right Subscriber
• Brand
• Term
Delinquent Churn
• Type of CCs
• Direct Debit
• Term
Expansion
• Add-Ons
• Upgrade Paths
• Proper Buyer Proportion
Gross Churn

101. Super Tactical
Active Churn
• Features
• Time to Value
• Right Subscriber
• Brand
• Term
Delinquent Churn
• Type of CCs
• Direct Debit
• Term
Expansion
• Add-Ons
• Upgrade Paths
• Proper Buyer Proportion
Gross Churn

102. 40% of churn is mechanical

103. Force or optimize annuals or term.

104. Time to Value

106. Support

108. Payment Failures

111. Enough? Everyone get some value?
@ProfitWell

112. Brought to you by
Free Pricing and Retention Audits
patrick@profitwell.com

113. Want more?
@ProfitWell