state of saas - saasfest 2016
TRANSCRIPT
The State of SaaS SaaSFest 2016
#SAASFEST16 Brought to you by your friends at@PriceIntel
Today is all about change.
#SAASFEST16 Brought to you by your friends at@PriceIntel
Today is all about change, and how you’re going to evolve.
#SAASFEST16 Brought to you by your friends at@PriceIntel
SaaS 1.0
#SAASFEST16 Brought to you by your friends at@PriceIntel
SaaS 1.0: Function, Connection, and Infrastructure
#SAASFEST16 Brought to you by your friends at@PriceIntel
SaaS 1.0
#SAASFEST16 Brought to you by your friends at@PriceIntel
SaaS 2.0
#SAASFEST16 Brought to you by your friends at@PriceIntel
SaaS 2.0: Customer, Market, and Product
#SAASFEST16 Brought to you by your friends at@PriceIntel
Who in the world are you?
#SAASFEST16 Brought to you by your friends at@PriceIntel
ProfitWell
SaaS pricing software and tech enabled
services
Free financial metrics for subscription
businesses
Price Intelligently
Happy customers big and small
#SAASFEST16 Brought to you by your friends at@PriceIntel
We’ve seen inside more software companies than anyone else on the
planet.
#SAASFEST16 Brought to you by your friends at@PriceIntel
We live in a world where acquisition, as we know it,
is dead.
#SAASFEST16 Brought to you by your friends at@PriceIntel
The market is saturated, and unit economics just aren’t
what they used to be…
#SAASFEST16 Brought to you by your friends at@PriceIntel
Competition is now rampant.
#SAASFEST16 Brought to you by your friends at@PriceIntel
Q: How many competitors did you have in your first year of business?
A: Companies started more than a year ago had far fewer competitors in their space than companies started today.
N = 1432 software founders and executives
Aver
age
# o
f Com
petit
ors i
n th
eir f
irst
year
of b
usin
ess
0
3
5
8
10
5 years old 3 years old 1 year old
9.7
4.82.6
#SAASFEST16 Brought to you by your friends at@PriceIntel
Q: How many competitors do you have now?
A: Older companies increased competition over time, likely due to attracting new entrants, as well as decreased barrier to entry
N = 1432 software founders and executives
Curr
ent A
vera
ge N
umbe
r of C
ompe
titor
s
0
3
7
10
13
5 years old 3 years old 1 year old
10.2511.7512.15
#SAASFEST16 Brought to you by your friends at@PriceIntel
The relative value of features is declining. All software is going to $0.
#SAASFEST16 Brought to you by your friends at@PriceIntel
N = Varies by line, but minimum of 10,000 customer respondents per line
WTP
as %
of W
TP 4
Yea
rs A
go
0%
30%
60%
90%
120%
4 Years Ago 3 Years Ago 2 Years Ago 1 Year Ago Today
Core Features Single Sign On Integrations Analytics
Q: How has software willingness to pay (WTP) evolved over time?
A: Software willingness to pay has declined significantly over the past few years due to increased options and higher demands.
#SAASFEST16 Brought to you by your friends at@PriceIntel
CAC is steadily increasing over time.
#SAASFEST16 Brought to you by your friends at@PriceIntel
Q: How has customer acquisition cost (CAC) evolved over time?
A: Customer acquisition cost has increased significantly over the years due to market saturation of marketing vying for consumer attention.
Blen
ded
CAC
as %
of b
lend
ed C
AC 4
Ye
ars A
go
-15%
0%
15%
30%
45%
60%
4 Years Ago 3 Years Ago 2 Years Ago 1 Year Ago Today
B2B B2C
N = 437 companies per line
#SAASFEST16 Brought to you by your friends at@PriceIntel
We make matters worse by focusing on the wrong fundamentals.
#SAASFEST16 Brought to you by your friends at@PriceIntel
Q: Which pillar of your business is the most important to your growth?
A: Founders and software executives overwhelmingly put their support behind acquisition based growth.
N = 1432 software founders and executives
% o
f tot
al re
spon
dent
s
0%
25%
50%
75%
100%
More logos Making more money per customer Keeping customers around longer
#SAASFEST16 Brought to you by your friends at@PriceIntel
There are clear winners and losers in this environment.
#SAASFEST16 Brought to you by your friends at@PriceIntel
Q: What was the growth focus of companies that died in the past couple of years?
A: Of 90 companies that died in the past 3 years, the majority of them were focused on acquisition based growth.
N = 90 companies that went out of business or were fire sold in the past 36 months
% o
f Com
pani
es
0%
25%
50%
75%
100%
Less than $10M ARR $10.01M to $25M ARR $25.01M+ ARR
Primarily Acquisition Growth Balanced Growth
#SAASFEST16 Brought to you by your friends at@PriceIntel
Q: How does growth compare between acquisition based companies and their balanced counterparts?
A: Acquisition based growth companies grow at a smaller rate than those with a balanced growth approach (growth from all three pillars of 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.
% o
f Com
pani
es
0%
14%
28%
41%
55%
2012 2013 2014 2015
Primarily Acquisition Growth Balanced Growth
#SAASFEST16 Brought to you by your friends at@PriceIntel
Q: How does growth compare between perpetual and subscription software companies?
A: Subscription software company growth is outpacing that of perpetual based software companies.
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.
% o
f Com
pani
es
0%
14%
28%
41%
55%
2012 2013 2014 2015
Perpetual Subscription
#SAASFEST16 Brought to you by your friends at@PriceIntel
Q: If we improve each area of a software business equally, what’s the relative impact on revenue?
A: Monetization and retention based growth far outpaces acquisition based growth.
% im
pact
on
reve
nue
0%
2%
5%
7%
9%
12%
14%
Acquisition Monetization Retention
3.32%
N = Data from 734 software companies
#SAASFEST16 Brought to you by your friends at@PriceIntel
Q: If we improve each area of a software business equally, what’s the relative impact on revenue?
A: Monetization and retention based growth far outpaces acquisition based growth.
% im
pact
on
reve
nue
0%
2%
5%
7%
9%
12%
14%
Acquisition Monetization Retention
6.71%3.32%
N = Data from 734 software companies
#SAASFEST16 Brought to you by your friends at@PriceIntel
Q: If we improve each area of a software business equally, what’s the relative impact on revenue?
A: Monetization and retention based growth far outpaces acquisition based growth.
% im
pact
on
reve
nue
0%
2%
5%
7%
9%
12%
14%
Acquisition Monetization Retention
6.71%
12.7%
3.32%
N = Data from 734 software companies
#SAASFEST16 Brought to you by your friends at@PriceIntel
Q: If we improve each area of a software business equally, what’s the relative impact on revenue?
A: Monetization and retention based growth far outpaces acquisition based growth.
% im
pact
on
reve
nue
0%
3%
6%
9%
12%
15%
18%
Acquisition Monetization Retention
9.32%
15.89%
2.35%6.71%
12.7%
3.32%
2008 - 2012 2013 - 2016
N = Data from 734 software companies
#SAASFEST16 Brought to you by your friends at@PriceIntel
The root cause is we don’t know our buyers.
#SAASFEST16 Brought to you by your friends at@PriceIntel
Q: Which single category describes your buyer personas internally?
A: When asked, SaaS founders and executives indicated that their company’s buyer personas weren’t well defined or centralized.
% o
f res
pond
ents
0%
20%
40%
60%
80%
100%
Thought about them Central document Quantified buyer personas
6.6%36.6%
56.8%
N = 1,647 SaaS Founders and Executives
#SAASFEST16 Brought to you by your friends at@PriceIntel
Q: How many customer development conversations (non-sales) are you having per month?
A: SaaS founders and executives indicated that their companies are primarily only talking to less than 10 customers in a cust dev capacity per month.
% o
f res
pond
ents
0%
20%
40%
60%
80%
100%
10 or less 11 to 25 26 to 50 51+
3.9%10.1%17.7%
68.3%
N = 1,647 SaaS Founders and Executives
#SAASFEST16 Brought to you by your friends at@PriceIntel
Q: How many experiments are you running per month (including marketing experiments)?
A: SaaS founders and executives indicated that their companies are overwhelmingly running less than 10 experiments per month.
% o
f res
pond
ents
0%
20%
40%
60%
80%
100%
0 1 to 3 4 to 10 11+
2.7%12.1%37.8%47.8%
N = 1,647 SaaS Founders and Executives
#SAASFEST16 Brought to you by your friends at@PriceIntel
The is should be scary.
#SAASFEST16 Brought to you by your friends at@PriceIntel
Point of Conversion
Offer Product #1
Justify price #1 Offer Product #1
Justify price #1
Offer Product #1
Justify price #1
Drive Customer #1 Drive Customer #2 Drive Customer #3
Buyers are the central tenet of your business
#SAASFEST16 Brought to you by your friends at@PriceIntel
Recognizing the problem is step 1.
#SAASFEST16 Brought to you by your friends at@PriceIntel
Step 2 is learning how to solve the problem.
#SAASFEST16 Brought to you by your friends at@PriceIntel
#SAASFEST16 Brought to you by your friends at@PriceIntel
7:30 AM
8:30 AM
9:00 AM
9:30 AM
10:00 AM
10:30 AM
11:00 AM
11:30 AM
12:00 PM
12:30 PM
1:00 PM
Registration And Breakfast
Welcome And State Of SaaS Patrick Campbell
You’re Too Focused On Product/Market Fit Brian Balfour
Why Half Of You Will Go Out Of Business: The Move From Cloud First To Customer First David Cancel
Embracing Humility: 5 Ways You’re Probably Failing Your Customers And What You Can Do About It Tara Robertson
Consciously Cultivating Raving Fans Heidi Jannenga
Break
Retention Throughout The Entire Funnel Rob Walling
Building A SaaS Company Isn’t What It Used To Be: Your Competition Now Matters Hiten Shah
How Video Is The Future Of Marketing Naike Romain
Lunch
2:00 PM
2:30 PM
3:15 PM
3:45 PM
4:15 PM
4:45 PM
5:15 PM
5:45 PM
7:15 PM
An Actual, Practical Conversation Around Growth Suneet Bhatt
Turning Around A Company With Growth In 90 Days Drew Sanocki
The Hidden Talents Of Email (Yes, Email): Creating Customer-Centric Messages Justine Jordan
Modeling Freemium: Lessons Learned Along Insightly’s Journey Karl Laughton
Break
From Startup To IPO: Unconventional Lessons From The Pricing Trenches Brad Coffey
Pivoting To A New Market: A Real-World Lesson In Pricing and Personas John Marcus III
Forget Your Feelings: Here’s How To Quantify Your Buyer Personas Patrick Campbell
After Party Mija Cantina & Tequila Bar Faneuil Hall Marketplace 1 S Market St Boston, MA 02109
Two ground rules.
#SAASFEST16 Brought to you by your friends at@PriceIntel
Pitching.
#SAASFEST16 Brought to you by your friends at@PriceIntel
Follow the golden rule.
#SAASFEST16 Brought to you by your friends at@PriceIntel