Patrick Campbell (Co-Founder & CEO, Price Intelligently)

1. Utilizing your pricing for growth
WMD 2016
@PriceIntel

2. http://www.priceintelligently.com/wmd
patrick@priceintelligently.com
@PriceIntel

3. We live in a world where acquisition,
as we know it, is dead.
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4. Who are you?
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5. Happy customers big and small
ProfitWell
SaaS pricing
software and tech
enabled services
Free financial metrics
for subscription
businesses
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6. We’ve seen inside more software companies
than anyone else on the planet.
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7. The market is becoming saturated and unit
economics just aren’t what they used to be…
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8. The relative value of features is declining.
All software is going to $0.
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9. “Differentiation” isn’t what is used to be…
N = Varies by line, but minimum of 10,000 customer respondents per line
Willingness to pay over time relative to WTP 4 years ago
WTPas%ofWTP4YearsAgo
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
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10. CAC is increasing over time.
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11. Acquiring a customer is getting pricier
N = Varies by line, but minimum of 453 companies per data point
Blended CAC relative to four years ago
CACas%ofCAC4YearsAgo
-15%
0%
15%
30%
45%
60%
4 Years Ago 3 Years Ago 2 Years Ago 1 Year Ago Today
B2B B2C
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12. We make matters worse by focusing on the
wrong fundamentals
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13. Asked Founders/Executives
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14. What we find important
C-Level/Founder Growth Preferences
%oftotalcompanies
0%
25%
50%
75%
100%
More logos Making more money per customer Keeping customers around longer
N = 1,432 SaaS companies
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15. There are clear winners and losers in this
environment.
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16. Death correlates to acquisition focused teams
Of those companies who died, what was the makeup of their growth
%ofRespondents
0%
25%
50%
75%
100%
Less than $2.5M ARR $2.51M to $5M ARR $5.01M+ ARR
Primarily Acquisition Growth Balanced Growth
N = Minimum of 30 companies per category who died over the past 4 years
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17. Balanced growth velocity is much larger
How do growth rates compare to our two growth groups?
%ofRespondents
0%
60%
2012 2013 2014 2015
Primarily Acquisition Growth Balanced 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.
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18. The root cause here stems from a lack of
buyer centricity.
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19. We don’t really know our buyers
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20. Buyer Personas
Table Stakes Tony
• Valued features:
• SFDC Integration
• Chrome extension
• Least valued features
• Analytics
• API access
• WTP = ~$10/month
• CAC = ~$22
• LTV: $160
Advanced Arnie
• Valued features:
• Analytics
• API Access
• Least valued features
• Chrome extension
• Premium support
• WTP = ~$25/month
• CAC = ~$56
• LTV: $325
@PriceIntel

21. We don’t know our buyers that well
Which single category best describes your buyer personas?
%ofRespondents
0%
25%
50%
75%
100%
Thought about them Central document Quantified buyer personas
N = 1,647 SaaS companies
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22. We don’t do a lot of cust dev conversations
How many cust dev conversations are you having per month?
%ofRespondents
0%
25%
50%
75%
100%
# of cust dev conversations
Less than 10 11 to 25 26 to 50 51+
N = 1,647 SaaS companies
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23. We aren’t truly testing that much
How many tests or experiments are you running each month?
%ofRespondents
0%
25%
50%
75%
100%
# of tests/experiments
0 1 to 3 4 to 10 11+
N = 1,647 SaaS companies
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24. This should be scary.
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25. Everything aligns to the customer
Point of Conversion
Drive Customer #1
Offer Product #1
Offer Product #2
Drive Customer #2
Drive Customer #3
Offer Product #3
Justify price #1
Justify price #2
Justify price #3
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26. How do we fix this?
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27. Quantify your buyer personas
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28. Let’s walk through an example…
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29. ProfitWell
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30. “Oh you’re like….”
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31. “Oh you’re like….”
37 Other
Competitors
(we know about)
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32. Go to the customer!
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33. For the love of God. Talk to your customer.
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34. Great. How do we do that?
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35. 1
2
3
Your Process at a High Level
Buyer Personas
and Design
1
Data Collection
And Segmentation
2
Data Consolidation
And Analysis
3
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36. Persona-Product Fit
Startup Steve
• Valued features:
•
•
• Least valued features
•
•
• WTP = ~$/month
• CAC = ~$
• LTV: $
Miderprise Marty
• Valued features:
•
•
• Least valued features
•
•
• WTP = ~$/month
• CAC = ~$
• LTV: $
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37. Experimental Design
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38. What type of info do we want?
• Demographic Information
– How often do you look at your metrics? Team size? Revenue?...
• Feature/Packaging Information
– Which metrics? What features? Value props?...
• Pricing Information
– How much are they willing to pay? What frequency do they want to pay?...
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39. Relative Preference Analysis
Statistical methodology to measure
preferences for features, intention, and
value propositions
Your Customer Development Toolkit
Price Sensitivity Analysis
Proven model for gauging customer’s
willingness to pay and price sensitivity
Experimental Design
Properly segmenting and breaking down the data.
How do we ask the questions?
@PriceIntel

40. What do people value?
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41. “Please rank the following
features on a scale of 1 to 10…”
Depth of your metrics
Beautiful Design
lity from your metrics
curacy of your metrics
0 0.25 0.5 0.75 1
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42. @PriceIntel

43. What do your customers
value the most?
More on: Relative Preference Analysis
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44. What do your customers
value the most?
More on: Relative Preference Analysis
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45. What do your customers
value the most?
More on: Relative Preference Analysis
@PriceIntel

46. Persona-Product Fit
Startup Steve
• Valued features:
• Price
• Design
• Least valued features
• Actionabiltiy
• Depth
• WTP = ~$/month
• CAC = ~$
• LTV: $
Miderprise Marty
• Valued features:
• Accuracy
• Uptime
• Least valued features
• Price
• Design
• WTP = ~$/month
• CAC = ~$
• LTV: $
@PriceIntel

47. Relative Preference Analysis
Statistical methodology to measure
preferences for features, intention, and
value propositions
Your Customer Development Toolkit
Price Sensitivity Analysis
Proven model for gauging customer’s
willingness to pay and price sensitivity
Experimental Design
Properly segmenting and breaking down the data.
How do we ask the questions?
@PriceIntel

48. How much are they willing to pay?
@PriceIntel

49. • At what (monthly) price point does [PRODUCT] become too
expensive that you’d never consider purchasing it?
• At what (monthly) price point does [PRODUCT] start to become
expensive, but you’d still consider purchasing it?
• At what (monthly) price point does [PRODUCT] a really good
deal?
• At what (monthly) price point does [PRODUCT] too cheap that
you question the quality of it?
More on: Relative Price Sensitivity Meter
How much are your
customers willing to pay?
@PriceIntel

50. How much are your customers willing to
pay?
More on: Relative Price Sensitivity Meter
@PriceIntel

51. WTP for SaaS Metrics
WTP for a SaaS Metrics Solution
WTP
$0
$75
$150
$225
$300
Size of Company (MRR)
$0 - $50k $51k - $100k $101k - $250k $251k - $500k $501k+
N = 234 companies
@PriceIntel

52. Persona-Product Fit
Startup Steve
• Valued features:
• Price
• Design
• Least valued features
• Actionabiltiy
• Depth
• WTP = ~$50/month
• CAC = ~$
• LTV: $
Miderprise Marty
• Valued features:
• Accuracy
• Uptime
• Least valued features
• Price
• Design
• WTP = ~$150-250/month
• CAC = ~$
• LTV: $
@PriceIntel

53. Persona-Product Fit
Startup Steve
• Valued features:
• Price
• Design
• Least valued features
• Actionabiltiy
• Depth
• WTP = ~$50/month
• CAC = ~$500-600
• LTV: $600
Miderprise Marty
• Valued features:
• Accuracy
• Uptime
• Least valued features
• Price
• Design
• WTP = ~$150-250/month
• CAC = ~$3000
• LTV: $1500
@PriceIntel

54. WTP for Churn Recovery
WTP for a Recovering Churn
WTP
$0
$1,125
$2,250
$3,375
$4,500
Size of Company (MRR)
$0 - $50k $51k - $100k $101k - $250k $251k - $500k $501k+
N = 234 companies
@PriceIntel

55. WTP for Rev Rec
WTP for a Revenue Recognition
WTP
$0
$875
$1,750
$2,625
$3,500
Size of Company (MRR)
$0 - $50k $51k - $100k $101k - $250k $251k - $500k $501k+
N = 234 companies
@PriceIntel

56. A good entry point
Low CAC with
constant value
Creates the
Requirement
Path to Share
of Wallet
ProfitWell
Financial metrics for the subscription economy
100% accurate
SaaS metrics for
free integrating 1-
click with your
billing system
Central fulcrum to
cust success, sales,
finance, marketing e-
team, and rest of
stakeholders
Allows interface to
clearly point to
problems and
reinforce value of
paid add-ons
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57. 12 hours total.
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58. 12 hours total. $2089.
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59. You will be left behind if you think you can
brute force your growth.
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60. http://www.priceintelligently.com/wmd
patrick@priceintelligently.com
@PriceIntel