1. SAAS : MODÈLE D'AFFAIRES ET
PRICING
Len Madigan
2013.11.19

2. SaaS…
« En 2013, 82% des
nouvelles entreprises dans
le domaine de logiciels
appliquent le modèle
SaaS. »
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3. Objectifs – Aujourd’hui
• Elaborer un cadre ainsi que certains stratégies et métriques
d’une entreprise « SaaS »
• Favoriser une échange entres les participants concernant
leur propres objectifs et stratégies SaaS
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4. Bio - Len Madigan
B.Comp.Sci., MBA
• SaaS Business and Operations Leader (2004-2012)
• Business modelling and selling
• Implementing, scaling and operating 24/7
• GM, North American Messaging – Nokia
• VP, Operations – OZ Communications
•
•
•
•
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Revenues:
Subscribers:
Hosted systems:
Service availability:
©2013 bolti systems
Company Confidential
195% CAGR over 4 years
8 million monthly active users
1B transactions processed per month
99.95%

5. Where to Begin?
Product Offering
Pricing
Getting
Customers
Trial vs. Freemium
Churn
Metrics
etc…
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Company Confidential
Upselling

6. Agenda
1.
2.
Pricing and Revenues
5.
Company Confidential
How to Acquire
Customers
4.
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What to Sell
3.
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Participant Worksheet
Group Discussion /
Review of Worksheets

7. Credits
• The following sources were used to create content for this
presentation and are excellent references for SaaS business
planning:
• Lean Analytics – A. Croll and B. Yoskovitz
• Forentrepreneurs.com – D. Skok
• The Entrepreneur’s Guide to Customer Development – B. Cooper and P.
Vlaskovits
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8. 1. Participant Worksheet

9. Participant Work Sheet
GOAL
OBJECTIVE
Steps on Staircase
GOSPA Framework - Ref: Business Coach for Professionals.com
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STRATEGIES
How to Get There
NOTES

10. 2. What to
Sell
Cause and Effect
Copyright © 2013 Bolti
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Company Confidential
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Credit: R. Ganoza

11. Success !
80% of users say your service is “must-have”
= Success
50% of users churn within a few months
= Failure
“Get close to your customers”
= Cliché
…. But it increases the chance of your customers staying
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12. What’s Wrong With This Picture?
“I need to
work on my
virality”
SaaS Manager
A: Nothing… if your customers are staying…
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13. Getting Customers Who Stay – Interview Them
Tell Your Story – Why It Matters
Their Problems
Have Them Rank
Problems/Solutions
Find out About Related Problems
Steps
Their Purchasing
Process
Criteria
Concerns
Concerns
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14. To Do #1 - Measure Responses Vs. Expectations
Your Estimate
(What it has to be)
Problem
• % who have this need
• % who are aware of having this need
• % who have a related problem
Solution
• % who try product
• % willing to pay
• % churn
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Reality
Do Not Build
(too much)
Until You
Know

15. To Do #2 – Measure Usage
Spend 20% of Development Effort
Instrumenting Your Product
• See where value is
• See how they get to
the value
• Segment your
customers
You Own the SaaS Box
Look At the Data Inside!
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16. Recap – What to Sell
Measure – Be Sure Customers Want Your Product
Build It
Measure Usage to Refine Offer
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17. 3. How to Acquire Customers

18. Your View of the
World
Their View of
the World
CAMPAIGNS
S
E
O
S
E
M
What’s the real cost?
E
M
What’s their uptime?
ROI
VISITORS
They want my credit card # ?
They’ll spam me
How secure is it?
TRIALS
Conversion %
Will I get locked in?
What’s the payback?
What if they get hacked?
CLOSED DEALS
Conversion %
How will we integrate it?
Ref: D. Skok, forentrepreneurs.com
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19. Don’t just organize a sales process
(left hand side)
Organize your teams so they address
the customer’s concerns
(right hand side)
How? Give Potential Customers:
- ROI tool
- Testimonials
- White Paper on security
- List of employee certifications
- Access to Live Chat
etc.
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20. Who’s Knocking on Your Door?
20 % Serious Evaluators
20% Casual Evaluators
Convince them it’s the right
choice
Turn Them Into Serious
Evaluators
Convince them to evaluate
60% Curious Visitors
Source: Lean Analytics
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21. Customer Acquisition Cost (CAC)
Which Sales Model to Pick?
Pick a Sales Model that Aligns with
Customer Buying Process
Not Only the One You Can Afford
No Touch
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Inside
Sales
Channel
Sales
Field
Sales

22. Recap – How to Acquire
Pick the “best” campaigns
Organize your teams to address customer concerns
Pick sales model that aligns with customer buying process
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23. 4. Pricing & Revenues

24. Lifetime Value of Customer (LTV) & Customer
Acquisition Cost (CAC)
•
LTV L
Lifetime gross profit from customer
CAC
Cost (lead gen & selling) to acquire the customer*
=
Cost / # signed deals
*excludes selling mgmt and marketing
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25. Some CAC/LTV Drivers
• Virality
• Inbound mktg
• Touch-less
conversion
CAC
• Churn
LTV
• Field sales
• Outbound
marketing
• Scalable pricing
• Upsell
Ref: D. Skok, forentrepreneurs.com
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26. Scalable Pricing – Getting More as You deliver
more value
Best In Class Companies…
• Grow rev/customer by
20% per year
Users
Strategy: add
Cross-sell
Axis
• Convert 0.6% of free
users to paying
(month)
Strategy: Allow self-upsell
Freemium
Starter
Enterprise
Pro
Features
Depth
of Usage
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•
•
•
•
# transactions
# projects
# Gbytes
# calls to support line
• Convert 2.3% of paying
users to a higher tier
(month)

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28. Monthly Recurring Revenue & Churn
CHURN
# of abandons during month
# customers at beginning of month
Month 1
Month 2
Month 3
Month 4
Month 30
Bookings
10,000
$
12,000
$
14,000 $
16,000
$70,000
MRR Added This Month
$
10,000
$
12,000
$
14,000 $
16,000
$70,000
MRR Prior Months
$
-
$
10,000
$
21,750 $
35,206
$910,076
Churn at 2.5%
$
-
-$
250
-$
544 -$
880
-$22,753
Total MRR
Monthly Churn / MRR
Added
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$
$
$
21,750
$
35,206 $
50,326
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10,000
----
2.1%
5.5%
32.5%

29. Impact of Churn on Monthly Recurring Revenue
Churn %
$8,000,000
-2.5%
MRR
$7.439 M
$7,000,000
$6,000,000
$5,000,000
MRR at 2.5%
$4,000,000
MRR at 5%
MRR at -2.5%
$3,000,000
2.5%
$2.612 M
5%
$1.827 M
$2,000,000
$1,000,000
$1 3 5 7 9 11 13 15 17 19 21 23 25 27 29 31 33 35 37 39 41 43 45 47 49 51 53 55 57 59
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30. Churn Strategies
• Strategy 1 - Track segments separately
• Power users vs. casual users
• Unpaid users vs. paying customers
• Strategy 2 - Measure churn at various intervals
• Different root causes
• Strategy 3 - Keep churned users in mind
• Consider nurturing them back to paid use
• In event of feature or price changes
Source: Lean Analytics
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32. Churn is a Lagging Indicator -Customer Engagement is a Good Predictor
• Strategy #1 – Use Customer Engagement metrics to identify
and address at-risk customers
• Not behaving as you’d expect
• Blocked at a certain stage
• Changing patterns
• Strategy #2 - Use Customer Engagement data to find “great”
customers, then figure out:
• Why are they behaving that way
• How to get more of them
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33. Recap – Pricing and Revenues
Develop multi-axis pricing
Ensure LTV >> CAC
Implement Churn and Upsell strategies from Day 1
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34. 5. Group Discussion / Review of
Worksheets

35. Merci
len.madigan@bolti.com
(514) 262-8756
www.bolti.com