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5 Tenets to Success SaaS Metrics February 25, 2015
Housekeeping Q&A panel on your right Recording for colleagues who can’t make it All attendees will receive slides Twitter hashtag #customersuccess
Our Speakers Lincoln Murphy Customer Success Evangelist firstname.lastname@example.org @lincolnmurphy David Spitz Managing Director Software Investment Banking email@example.com @dspitz
Can measure churn Can’t
1. Why are metrics like LTV, CAC, and Churn more important in SaaS?
Traditional Perpetual License Software SaaS “One and Done” Revenues minus costs essentially tell the story LTV and CAC Dollar Retention Land and Expand VS. John
LTV CAC ? ARR ? Gross Margin Churn $ Cost to Acquire a Customer
Results from 2014 Pacific Crest Private SaaS Company Survey Results 156 respondents Note: Survey responses as of June / July 2014 Annual Gross Dollar Churn “What percentage of total ACV on a dollar basis churns in a given year (excluding upsells)?” # of Responses Annual Gross Dollar Churn
243 respondents Note: Survey responses as of June / July 2014 Median ? 103% 100%+ Net Retention (Upsells greater than churn) Net Churn (Churn greater than upsells) Net Dollar Retention (Including Upsells and Expansions) “How much do you expect your ACV from existing customers to change, including the effect of both churn and upsells?” Results from 2014 Pacific Crest Private SaaS Company Survey Results # of Responses
Respondents: New ACV from New Customer: 159, Upsell to Existing Customer: 151, Renewals: 153 Note: Survey responses as of June / July 2014 Results from 2014 Pacific Crest Private SaaS Company Survey Results Customer Acquisition Cost “How much do you spend on a fully-loaded sales & marketing cost basis to acquire $1 of ACV from a customer?”
Source: SuccessFactors Roadshow Presentation Cohort Analysis Example – SuccessFactors IPO Roadshow Slide
2. Isn’t Customer Success more about a “relationship?”
Relationship thinking is crucial
Relationship based on the customer’s success
3. So I have benchmarks… How do I use them? What are the implications for my business?
182 and 181 respondents, respectively Note: Survey responses as of June / July 2014 Results from 2014 Pacific Crest Private SaaS Company Survey Results Median 2013 GAAP Rev Growth ? 29% Median 2014E GAAP Rev Growth ? 33% GAAP Revenue Growth “How fast did you grow GAAP revenues in 2013? How fast will you grow GAAP revenues in 2014?”
Source: Capital IQ and company filings Note: Pricing as of February 23, 2015 Public SaaS Company Revenue Multiples as a Function of Growth
Huge Impact to Sustained Differences in Churn Cohort Performance with +3% Monthly Churn Cohort Performance with -3% Monthly Churn Source: www.forentrepreneurs.com “SaaS Metrics 2.0”
4. How do we think about benchmarking customers?
5. How do we get started?
Benchmarking Yourself Against Others Peers Investors Analysts Pacific Crest’s SaaS Survey SaaS Capital’s Survey Gainsight SuccessIndex
6. Bonus – what should I NOT do?
Case Study: XYZ Corp. Question: How attractive is this?
Case Study: XYZ Corp. (cont’d)
Q&A Lincoln Murphy Customer Success Evangelist firstname.lastname@example.org @lincolnmurphy David Spitz Managing Director Software Investment Banking email@example.com @dspitz
Thank You! February 25, 2015