The CFO Summit at Subscribed 2015 was an exclusive half day event bringing together modern CFOs from some of the hottest businesses in the world. Through an intimate and highly interactive forum, they discussed the likes of market trends, operational benchmarks and how other CFOs are transforming their businesses through their evolving strategic leadership role.
2. Summit Intro
“Share data,
unblemished and
unbiased, in an effort to
provide transparency and
define best practices, but
also create a network for
ongoing collaboration
that lives on long past
this afternoon.”
#subscribed15
3. Today
1: 30 – 2:30
Metrics + Trends for 2015: Unveiling the Survey
Zuora | Pivotal
2:45 – 3:30
The Path to IPO: The CFO’s Perspective
Zuora | Box | Zendesk | Hubspot
3:45 – 4:30
How Wall Street Values Subscription Businesses
Cannacord | KPMG
4:30– 5:00
Closing Remarks + Libations
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9. of companies believe their customers
are switching to new consumption
models.
4 / 5
83%
73%
84%
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10. Businesses are Responding
US 13%28%
AU 24%43%
UK 25%23%
Over half of companies are in the process of
changing or have changed the way they
price and deliver their goods and services.
51%
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11. “Innovation is the
hottest word in
business…
…but most of the discussion centers
around products and services. The
more profound challenge for most
companies now is imagining a new
business model, a new answer to the
fundamental question, how do we make
money?”
- Fortune Magazine
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13. “…vast majority (81%) felt they worked at companies that
viewed their finance operation as a ‘strategic business
partner,’ involving the CFO in top-level decision making
as never before…”
- Fortune Magazine
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14. 10%0% 5% 15% 20% 25% 30% 35% 40%
38%
26%
Traditional tasks
19%
20%
Directly assisting the board/audit committee
18%
24%
Business strategy and other commercial work
15%
16%
Market and shareholder information
10%
14%
Enhancing the efficiency of the finance function
Current
3 years time
How CFOs are allocating their tasks…
…today and tomorrow.
Survey
15. “There’s been an evolution in America in terms of the CFO. The
CFO is increasingly being called upon to weigh in on much more
strategic decisions involving the company, including everything
from transactions to providing assessments of emerging markets
and analyses that go far beyond looking at the books and
determining whether there will be enough cash to support
investment.”
- Fortune Magazine
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16. “CFOs’ responsibilities go well beyond finance into balancing
compliance and risk management with business-performance
goals. They have an important role to play in reading and
understanding evolving business drivers and helping their
companies seize opportunities. CFOs now spend more time on
strategy and operating issues and less on budgeting and
accounting.”
- Business Week
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17. o b s o l e t e .
Your business model is
everything you think you know
Assume this:
doesn’t work anymore.
about staying competitive
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19. The old model
Build a widget. Sell the widget. Recognize your revenue.
simple.
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20. The new model
Build a widget. Recognize your revenue.
complex.
Sell the widget.
Acquire customers &
monetize relationships.
free trial
paid
subscriptions
add on
upgrade
renewal
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21. The new model
Build a widget. Recognize your revenue.
complex.
Sell the widget.
Acquire customers &
monetize relationships.
free trial
paid
subscriptions
add on
upgrade
renewal
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23. no worries.
ting close and audits
ht insight into your
marter decisions.
ew every day.
mplex customer
terate and test
uple of clicks.
wing.
Price
Collect
Measure
Acquire
Nurture
Iterate
Bill
Account
Scale
SUCCESS
CYCLE
The
Metrics
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24. The
Metrics
no worries.
ting close and audits
ht insight into your
marter decisions.
ew every day.
mplex customer
terate and test
uple of clicks.
wing.
Price
Collect
Measure
Acquire
Nurture
Iterate
Bill
Account
Scale
SUCCESS
CYCLE
Growth Efficiency Index
Cost to acquire customers
in comparison to new ACV
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25. The
Metrics
no worries.
ting close and audits
ht insight into your
marter decisions.
ew every day.
mplex customer
terate and test
uple of clicks.
wing.
Price
Collect
Measure
Acquire
Nurture
Iterate
Bill
Account
Scale
SUCCESS
CYCLE
Retention Rate
Lost ARR from customers
churning or downselling
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26. The
Metrics
no worries.
ting close and audits
ht insight into your
marter decisions.
ew every day.
mplex customer
terate and test
uple of clicks.
wing.
Price
Collect
Measure
Acquire
Nurture
Iterate
Bill
Account
Scale
SUCCESS
CYCLE
Recurring Profit
Cost to service your customer
base and organization
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27. The
Metrics
no worries.
ting close and audits
ht insight into your
marter decisions.
ew every day.
mplex customer
terate and test
uple of clicks.
wing.
Price
Collect
Measure
Acquire
Nurture
Iterate
Bill
Account
Scale
SUCCESS
CYCLE
One-time Charges
Any non-recurring revenue and
costs (e.g. hardware / services)
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29. THIS DOESN’T
MEAN WE HAVE
A HALL PASS.
THERE STILL
NEEDS TO BE
AN OWNER.
“The benchmark for these
metrics don’t exist in the
public domain. They are not
GAAP.”
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34. Growth is best measured by GEI.
$100M Growth Exp.
1.5 GEI
=
$65M ARR
Growth
Therefore, if GEI is 1.5 and $100M is
spent on growth:
Growth Expense
ARR Growth
=
Growth
Efficiency
Index (GEI)
Growth Expense
GEI
=ARR
Growth
#subscribed15
35. • incurred to maximize ACV
• traditionally sales & marketing efforts
• sometimes customer success
• incurred to support the organization
• traditionally COGs, R&D, admin functions
GROWTH SPEND NON-GROWTH SPEND
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36. The model interpreted…
COGS,
G&A,
R&D
50%
Recurring
Profit
Margin
Sales,
Marketing,
Customer
Success
BREAK EVEN
0%
100%
50%
ARR Non-Growth
Expense
Growth
Expense
BREAK EVEN INVEST IN
FIELD &
GROW
FASTER
Sales,
Marketing,
Customer
Success
OR
With a GEI of 1.0 and
churn at 15%, you’ll have
35% growth while
maintaining break even.
But only if deals are
collected upfront and
you’re cash flow positive.
But, if your GEI is 2.0
you’re growth will slow to
10% to break event.
“
“
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47. Pipeline
• How do you drive pipe
• How much do you need
• Quality vs. Quantity
• How long does it last
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48. PIPELINE: What does your funnel look like?
Of those, 76% clarified that as
ORGANIC
(website, free trials)
INBOUND
is the largest individual source of
pipe (46% listed as primary
source)
40%
Investing in your website pays
off – more than 40% of
website visits were unique for
majority of respondents
46%
76%
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51. web visits
IB leads
new S1 pipeline
S2 accepted
bookings
ratios
total to unique
web to IB leads
IB lead to IB opp
S1 to S2
win ration
%
%
%
%
%
%
%
PIPELINE: Report on what the funnel looks like
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52. Pipe Score w/ Targets IBLeads MQLs #New opps $ New Opps
IB lead to S1
Conv Rate IB Leads MQLs # New Opps $ New Opps
IB Lead to S1
Conv Rate
Inbound Organic
Inbound Paid
Events / Other
Outbound
AE
TOTAL
QTD Actuals Plan
PIPELINE: Expose, communicate, align
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54. New Pipe Creation Workable Pipe (Current QTR) Workable Pipe (Nextt QTR)
Pipe Score w/
Targets
New Opps
(S!)
New Opps
(S1)
Accept
Opps (S2)
Accept
Opps (S2)
Acceptance
Rate Quota
Workable
Opps (S1-8)
Workable
Coverage Quota
Workable
Opps (S1-8)
Workable
Coverage
Northwest
Northwest
Northwest
Northwest
NoAM Enterprise
EMEA
APAC
ROW total
West
East
Commercial Total
ZBR / Other
Total
Previous Week Total
Previous QTR Total
WoW Delta
PIPELINE: Transition to acquire
55. Acquire
• How do you model
• How do you compensate
• How do you drive efficiency in
your Sales Org?
• Accelerate, digest or pull back
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56. 77%of respondents sell
primarily through a
direct sales approach 52%use a self
service model
65%offer their prospects a
free trial period
20%However, only 47% said less than
20% convert from free trial to
customer
ACQUIRE: Selling Approach
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57. ACQUIRE: How do you organize
Sales team segmentation stack rank:
Industry
Verticals31%
Customer
Rev26%
#
Employees21%
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59. ACQUIRE
What percentage of your total sales opportunities close?
1-2%
3-5%
6-10%
>10%
5%
37%
21%
36%
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60. ACQUIRE: How to model ramp
30 days 60 days 90 days > 4 mos
21%
24%
41%
14%
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61. ACQUIRE: How to model sales cycle
10 days4%
30 days16%
60 days32%
120 days29%
19%
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62. ACQUIRE: How to model quota attainment
> 40 %
12% 10%
40 – 60%
39%
60 – 80%
31%
80 – 100%
7%
> 100%
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63. ACQUIRE: What’s your overassign
$100M
in quota on the street
35% >$90MEXPECT
36% $80-90MEXPECT
25% $70-80MEXPECT
2% $50-70MEXPECT
2% < $50MEXPECT
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64. ACQUIRE: What is OTE to quota?
16% < 150k
26% < 200k
35% < 250k
13% < 300k
10% > 300k
$1M
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65. ACQUIRE: What’s your quota based on?
19%
18%
48%
15%
MRR
TCV
ACV
Other
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66. ACQUIRE: What are your commission rates?
9% 5%
35% 6- 10%
37% 11 - 15%
12% 20%
CHEAPSKATES
THE NORM
THE NORM
BREAKING THE BANK
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RATESRESPONSES
67. ACQUIRE: Expose, communicate, align
Current Qtr (Current Week)
Current
Week
Capacity
Corporate Street
Closed
#Deals $ACV
RVP / AVP
Commit Best Case
Technical Buy Off
# Deals $ACV
In Contracts
# Deals $ACV
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68. Deploy
• Profit or break even
• What KPIs should you hold the
implementation team accountable to
• Alignment between Sales
Professional Services
• When does subscription start
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69. DEPLOY
Have an implementation
component to their
solution
Charge less than 10%
of initial year ACV for
the implementation
75% commence the
subscription on contract
signing
Of customers go live
within 30 days of
contract signing
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70. Run
• Churn is the Achilles heel of any
subscription business
• Who owns renewals
• Support versus customer success
• SLAs and uptime commitments
• How does a company learn from
service tickets
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71. RUN: Are your customers committed?
15%Monthly
4%Semi-Annual
73%1-2 years
> 2 years
7%
Contract Terms
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73. Expand
• Who owns the upsell
• Sales efficiency depends on farming
the existing base
• New usage, new divisions, new
products…can all be leveraged as
upsell strategy
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74. EXPAND
Upsells are important – over
40%
20%
>60%
14%
of respondents
generate more than
of their bookings from upsells
of companies are changing
pricing
At least annually
Only every 3 years
Sales reps are the key – companies generating higher upsells assign reps to manage
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76. Conclusion
“As CFOs we have an opportunity
and challenge. Own the business
model and drive strategic decisions
within our organizations.”
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78. Conclusion
“Let’s make it interactive and
informational. Have a goal of exiting
with at least five new CFO contacts
you can collaborate with post
summit.”
#subscribed15