Patrick Campbell of ProfitWell talks at BoS Conference USA 2016.
See all talks here: http://businessofsoftware.org/2016/07/all-talks-from-business-of-software-conferences-in-one-place-saas-software-talks/
6. Happy customers big and small
ProfitWell
SaaS pricing
software and tech
enabled services
Free financial metrics
for subscription
businesses
@PriceIntel
7. We’ve seen inside more software companies
than anyone else on the planet.
@PriceIntel
9. Our world is more competitive, making
switching costs easier.
@PriceIntel
10. Competition is growing
N = 289 SaaS companies, +/- 3.44% MoE at 95% level
0
2
4
6
8
10
12
5 Years Ago 3 Years Ago 1 Year Ago Today
#ofCompetitors How many competitors did you have during the following periods?
@PriceIntel
11. Competition is here
0%
10%
20%
30%
40%
50%
0 to 2 3 to 5 6 to 10 11+
%ofRespondents
How many competitors do you current have?
(Companies around for less than 1 year)
N = 547 software companies
@PriceIntel
12. The relative value of features is declining,
making a race to the bottom for feature based
pricing.
@PriceIntel
13. “Differentiation” isn’t what is used to be…
N = Varies by line, but minimum of 10,000 customer respondents per line
0%
25%
50%
75%
100%
125%
4 Years Ago 3 Years Ago 2 Years Ago 1 Year Ago Today
WTPas%ofWTP4YearsAgo
Willingness to pay over time relative to WTP 4 years ago
Core Features Single Sign On Integrations Analytics
@PriceIntel
15. Acquiring a customer is getting pricier
N = Varies by line, but minimum of 453 companies per data point
-25%
0%
25%
50%
75%
4 Years Ago 3 Years Ago 2 Years Ago 1 Year Ago Today
CACas%ofCAC4YearsAgo
Blended CAC relative to four years ago
B2B B2C
@PriceIntel
19. 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
20. We don’t know our buyers that well
0%
25%
50%
75%
100%
Thought about them Central document Quantified buyer personas
%ofRespondents
Which single category best describes your buyer personas?
N = 1,647 software companies
@PriceIntel
21. We don’t do a lot of cust dev conversations
0%
25%
50%
75%
100%
Less than 10 11 to 25 26 to 50 51+
%ofRespondents
# of cust dev conversations
How many cust dev conversations are you having per month?
N = 1,647 software companies
@PriceIntel
22. We don’t send any cust dev surveys
0%
25%
50%
75%
100%
0 1 2 3+
%ofRespondents
# of cust dev surveys
How many cust dev surveys are you sending each month?
N = 1,647 software companies
@PriceIntel
23. We aren’t truly testing that much
0%
25%
50%
75%
100%
0 1 to 3 4 to 10 11+
%ofRespondents
# of tests/experiments
How many tests or experiments are you running each month?
N = 1,647 software companies
@PriceIntel
26. We love talking about acquisition
0%
25%
50%
75%
100%
Acquisition Monetization Retention
%oftotalarticles
Category of growth articles written from 2014 to 2106
N = 25,679 blog posts written between 2014 to 2016
@PriceIntel
28. We love building for acquisition
0%
25%
50%
75%
100%
Acquisition Monetization Retention
%oftotalcompanies
Category of B2B SaaS companies
N = 6,324 companies currently active
@PriceIntel
31. What’s most important?
0%
25%
50%
75%
100%
More logos Making more money per
customer
Keeping customers around
longer
%oftotalcompanies
C-Level/Founder Growth Preferences
N = 1,432 SaaS companies, +/- 2.19% MoE at 95% level
@PriceIntel
32. What’s most important?
N = 1,218 SaaS companies, +/- 2.61% MoE at 95% level
0%
25%
50%
75%
100%
Acquisition Monetization Retention
%oftotalcompanies
C-Level/Founder Spend Their Time
@PriceIntel
33. If we improve each lever by the same amount,
which lever causes the most growth?
@PriceIntel
34. Impact of improving each
growth lever
3.32%
0%
5%
10%
15%
Acquisition Monetization Retention
%impactonthebottomline
Impact of improving each lever by 1%
N = 578 SaaS companies, +/- 2.89% MoE at 95% level
@PriceIntel
35. Impact of improving each
growth lever
3.32%
6.71%
0%
5%
10%
15%
Acquisition Monetization Retention
%impactonthebottomline
Impact of improving each lever by 1%
N = 578 SaaS companies, +/- 2.89% MoE at 95% level
@PriceIntel
36. Impact of improving each
growth lever
3.32%
12.70%
6.71%
0%
5%
10%
15%
Acquisition Monetization Retention
%impactonthebottomline
Impact of improving each lever by 1%
N = 578 SaaS companies, +/- 2.89% MoE at 95% level
@PriceIntel
37. Improving retention and monetization has 2-4x
the impact of focusing on acquisition.
@PriceIntel
38. What we find important
0%
25%
50%
75%
100%
More logos Making more money per
customer
Keeping customers around
longer
%oftotalcompanies
C-Level/Founder Growth Preferences
N = 1,432 SaaS companies
@PriceIntel
39. What works for growth
3.32%
12.70%
6.71%
0%
5%
10%
15%
Acquisition Monetization Retention
%impactonthebottomline
Impact of improving each lever by 1%
N = Data from 512 companies
@PriceIntel
58. 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?...
@PriceIntel
59. 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
61. “Please rank the following
features on a scale of 1 to 10…”
0 0.2 0.4 0.6 0.8 1
Accuracy of your metrics
Actionability from your metrics
Beautiful Design
Depth of your metrics
@PriceIntel
63. What do your customers
value the most?
More on: Relative Preference Analysis
@PriceIntel
64. What do your customers
value the most?
More on: Relative Preference Analysis
@PriceIntel
65. What do your customers
value the most?
More on: Relative Preference Analysis
@PriceIntel
66. Your Experimental Design
More on: Relative Preference Analysis
Main Category
Support
• Phone
• Live Chat
• Email
• …
@PriceIntel
67. Your Experimental Design
More on: Relative Preference Analysis
Main Category
Support
• Phone
• Live Chat
• Email
• …
Data in
Integrations
Metric Types
Data out
Integrations
Action Tools
@PriceIntel
68. Your Experimental Design
More on: Relative Preference Analysis
Main Category
Support
• Phone
• Live Chat
• Email
• …
Data in
Integrations
Metric Types
Data out
Integrations
Action Tools
All Demographics and Personas
@PriceIntel
69. 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
70. 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
72. Basic Plus Premium
$49 $149 $299
I only have one cool
feature.
The same cool feature. Yup, same one.
Oh! You can only get
this here.
Well…and here.
Huzzah! I’m the plan
with absolutely
everything.
@PriceIntel
73. • 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
74. How much are your
customers willing to pay?
More on: Relative Price Sensitivity Meter
@PriceIntel
75. WTP for SaaS Metrics
$0
$50
$100
$150
$200
$250
$300
$0 - $50k $51k - $100k $101k - $250k $251k - $500k $501k+
WTP
Size of Company (MRR)
WTP for a SaaS Metrics Solution
N = 234 companies
@PriceIntel
76. 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
77. 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
78. WTP for Churn Recovery
$0
$500
$1,000
$1,500
$2,000
$2,500
$3,000
$3,500
$4,000
$4,500
$0 - $50k $51k - $100k $101k - $250k $251k - $500k $501k+
WTP
Size of Company (MRR)
WTP for a Recovering Churn
N = 234 companies
@PriceIntel
79. WTP for Rev Rec
$0
$500
$1,000
$1,500
$2,000
$2,500
$3,000
$3,500
$0 - $50k $51k - $100k $101k - $250k $251k - $500k $501k+
WTP
Size of Company (MRR)
WTP for a Revenue Recognition
N = 234 companies
@PriceIntel
80. 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
@PriceIntel
81. Our current monetization path
ProfitWell
Financial metrics for the subscription economy
Retain Rec Revenue
Delinquent credit
card recovery
through email, in-
app snippet, and
optimization
Algorithmically
solved 2-3 days of
work amongst
accounting and
finance team
@PriceIntel
85. Need to evaluate every 3 months and make
changes every 6 months.
@PriceIntel
86. Changing Your Pricing
Customer/Market Research
Communication
Plan
Week:
1 2 3 4 5 6 7 8 9
Impact
Analysis
Customer Advisory
Panel
Implement
Changes
Step:
@PriceIntel
87. Your Pricing Committee
Main Decision Maker
(could be a member of the committee, as well)
Main Coordinator Typically in Product or Marketing
Product Leadership Corp Dev/Finance
Sales Leadership Marketing Leadership
@PriceIntel