pricing and retention woes. - saas north now€¦ · churn brought to you by 31% 34% 37% 35% 27%...

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Pricing and Retention woes.NOVEMBER 2018

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What we think works doesn’t actually work.This has dire consequences for your business.

HOW GROWTH IS CHANGING

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You

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Then we don’t do anything.

How many of you implemented the advice/tactic from the last great piece of content you consumed?

(N = 53.4k folks who work in tech)

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1 out of 10

(11.1%)

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Why?

We need a jolt.

Let’s shock your system a bit.

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We’re going to go through a ton of data.

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Everyone will be unhappy.

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“Listen large, bearded, preachy man……who the hell are you?”

Drastically reduce churnRETAINTM

Actionable, accurate insights to make you smarter about your business (for free)

SUBSCRIPTION METRICS

Proprietary pricing software for monetizationMONETIZE

We’ve seen inside more recurring revenue datathan anyone else out there.

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Our markets don’t care about your roadmap.

Consumers are getting hammered.

Businesses have lost their power.

CAC is Steadily Increasing Over Time

UNIT ECONOMICS AREN’T WHAT THEY USED TO BE

Customer acquisition cost has increased significantly

SOURCE: 2017 CAC

STUDY

-22%

0%

22%

44%

66%

88%

5 YEARS AGO 4 YEARS AGO 3 YEARS AGO 2 YEARS AGO 1 YEARS AGO Today

B2B B2C

743

N = 743 companies

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The relative value of features is declining.

THE MARKET IS DROPPING OUT BENEATH US

Consumer Willingness to Pay has Declined Over Time

SOURCE: 2017 CONSUMER WILLINGNESS TO PAY

STUDY

0%

30%

60%

90%

120%

5 YEARS AGO 4 YEARS AGO 3 YEARS AGO 2 YEARS AGO 1 YEAR AGO TODAY

Core Features

Single Sign On

Integrations

Analytics

N = Varies by line, but minimum of 10,000 customer respondents per line

921k

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Consumers are so ungrateful.


Despite Amazing Advances, NPS is Actually Down Overall

SOURCE: 2017 SAAS STUDY

34

20

10

0

7

13

20

27

33

40

5 YEARS AGO 3 YEARS AGO 1 YEAR AGO

N = 1,784 software companies

1,784

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Our response?

“Let’s spend money like it’s 2005”

Median expenses that go to acquisition?

Acquisition is just table stakes now.

WE FOCUS ON THE WRONG FUNDAMENTALS

Impact of Improving Each Pillar of Your Business

SOURCE: 2016 STUDY ON COMPANY UNIT

ECONOMICS

3%2%

0%

5%

10%

15%

20%

ACQUISITION

2008 - 2012 2013 - 2016

734

N = Data from 734 software companies

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WE FOCUS ON THE WRONG FUNDAMENTALS

Impact of Improving Each Pillar of Your Business

SOURCE: 2016 STUDY ON COMPANY UNIT

ECONOMICS

3%

13%

7%

2%

16%

9%

0%

5%

10%

15%

20%

ACQUISITION MONETIZATION RETENTION

2008 - 2012 2013 - 2016

1.4k

N = Data from 1.4k software companies

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EVERYTHING IS AMAZING AND NO ONE IS HAPPY 😩

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—R

ET

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TIO

N I

N T

HE

NE

W E

CO

NO

MY

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Everyone feel terrible yet?

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How do we optimize better?

“Maybe we should focus on the customer?”

“Steve Jobs didn’t talk to customers…I don’t need to either”

We’re building the wrong product.

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2017 SOFTWARE MARKET

SURVEY


Measuring consumer sentiment to what we’re building

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SURVEY



Relative Value of Attributes

• Taste

• Country of Origin

• Temperature

Willingness to Pay• Price elasticity for a cup of coffee

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SURVEY



Taste

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SURVEY



Taste

Temperatur

e

Country of Origin

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SURVEY

WE’RE BUILDING THE WRONG PRODUCT

Calculating the expected impact of product on growth

Differentiable Features

High Value/High WTP

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SURVEY




High Value/High WTP

Add-Ons

Low Value/High WTP

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SURVEY




High Value/High WTP

Add-Ons

Low Value/High WTP

Core Features

High Value/Low WTP

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SURVEY




High Value/High WTP

Add-Ons

Low Value/High WTP

Core Features

High Value/Low WTP

Trash Land

Low Value/Low WTP

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SURVEY



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SURVEY



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8-10 years


SURVEY



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SURVEY



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~2 years

CLEAR WINNERS AND LOSERS

Comparing Cust Dev Strategies of Companies

SOURCE: 2017 STUDY ON

CUST DEV

32%

45%

0%

25%

50%

75%

100%

2012

Minimal Customer Development

Aggressive Customer Development

687

N = Minimum of 687 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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CLEAR WINNERS AND LOSERS

Comparing Cust Dev Strategies of Companies


CUST DEV

32%

17%

45%

59%

0%

25%

50%

75%

100%

2012 2017

Minimal Customer Development

Aggressive Customer Development

687

N = Minimum of 687 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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#1 thing you can do for better retention.

Talk to your customers.

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Let’s go one layer easier.

Switch up to a value metric

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PC, just give me the super tactical stuff.

Force or optimize annuals

Time to Value

Support matters

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Fix your delinquencies

130+ reasons why a credit card fails

CHURN BENCHMARKS

Dlq churn accounts for 20-40% of churn in B2B/B2C


CHURN

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22%28%

32%

39%

78%72%

68%

61%

0%

25%

50%

75%

100%

Less than $5M ARR $5.01 to $10M ARR $10.01 to $50M ARR $50.01M+ ARR

Delinquent Churn Active Churn

489

N = Minimum of 489 companies per segment pulled from the middle 2/3 of companies in terms of churn. This, along with a dampening model was used to control for outlier spikes in churn rate.

CHURN BENCHMARKS

Average Recovery Rates are Poor Across the Board


CHURN

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31%34%

37% 35%

27% 29% 28%32%

0%

25%

50%

75%

100%

Less than $5M ARR $5.01 to $10M ARR $10.01 to $50M ARR $50.01M+ ARR

B2B B2C

208

N = Minimum of 208 companies per segment pulled from the middle 2/3 of companies in terms of churn. This, along with a dampening model was used to control for outlier spikes in churn rate.

Only 1 out of 5 of these are legit churn.

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Enough? Everyone get some value?

LET’S RECAP

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—R

ET

EN

TIO

N I

N T

HE

NE

W E

CO

NO

MY

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What we think works doesn’t actually work.This has dire consequences for your business.

HOW GROWTH IS CHANGING

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Fundamentals > Best Practices

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A lot of you aren’t going to focus on any of this.

You

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This breaks my heart, because you have everything to win.

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You just have to put in the work.

[email protected]

pricing and retention woes. - saas north now€¦ · churn brought to you by 31% 34% 37% 35% 27%...

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