This document summarizes a seminar about improving customer satisfaction and experience for SaaS businesses. It discusses: 1) Why customer service is important for SaaS businesses, as poor service can lead to lost revenue from decreased spending, fewer customers, and higher support costs. 2) The link between customer service and SaaS business performance, as SaaS relies on recurring revenue that is sensitive to usage and satisfaction. Key metrics like monthly recurring revenue, churn, and organic growth are impacted. 3) Best practices for maximizing customer experience, such as considering it throughout the entire customer lifecycle and having customer data inform product development, sales, and account management.

1. MLTC Breakfast SeminarSaaS Business Model SeriesImproving Customer Satisfaction and the Customer Experience by Leveraging OperationsJune 7, 2011 Skip Besthoff Castile Ventures

2. Agenda Why do we care about Customer Service? What are the linkages between Customer Service and overall SaaS business performance? What are Best Practices to maximize Customer Experience?

3. I. Why do we care about Customer Service?

4. What Is SaaS? sometimes referred to as "on-demand software," is a software delivery model in which software and its associated data are hosted centrally … and are typically accessed by users using a thin client, normally using a web browser over the Internet. … the supplying or supplier of utilities or commodities, as water, electricity, or gas, required or demanded by the public Definition of ‘Software-as-a-Service’ (wikipedia) Definition of ‘Service’ (dictionary.com)

5. SaaS Is A True Utility Thinking about using SaaS as a true utility, what are the impacts of poor customer service? Lost revenue Current customers spend less (fewer $ per seat due to some form of metered billing) Fewer seats from existing customers (lower organic growth) Fewer new customers (lower brand equity / reputation) Higher support costs More people / hours

6. II. What are the linkages between Customer Service and overall SaaS business performance?

7. SaaSVersus Traditional Software Model Revenue Model Term Investment Implementation Cost/ Switching Barrier Cash Flow Traditional Large, up front license and maintenance Long (5-10 years +) Heavy ($ millions) High Up front; Disconnected from usage and customer satisfaction SaaS Per user per month Meter or transaction-based Short to Medium (months – 1year) Light (negligible) Low Meter or transaction-based; Highly sensitive to usage and customer satisfaction

9. Churn: Dollars lost on a monthly basis

11. COGS

14. III. What are Best Practices to maximize Customer Experience?

16. Trials

17. ExplorationExpansion and Upsell Sales Implementation/ Training

19. High ease of use; UI matters

20. Efficient

22. Examples Of Best Practices Product Development Applications ‘fully instrumented’ (i.e. tracks all user activity) Become predictive over time Sales Track MRR, not bookings (i.e. reps get paid on usage) Account Management Leverage tools such as FAQs, wikis, crowdsourcing Multichannel: web, chat, phone, social

23. Thank you Skip Besthoff General Partner Castile Ventures 930 Winter Street, Suite 500 Waltham, MA 0245 781-890-0060 www.castileventures.com 15