[wmd2016] price intelligently >> patrick campbell "what you need to know to have the best...
TRANSCRIPT
![Page 1: [WMD2016] Price Intelligently >> Patrick Campbell "What you need to know to have the best pricing and positioning"](https://reader031.vdocument.in/reader031/viewer/2022021921/58f9b3d6760da3da068bd9ff/html5/thumbnails/1.jpg)
Utilizing your pricing for growth WMD 2016
@PriceIntel
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We live in a world where acquisition, as we know it, is dead.
@PriceIntel
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Who are you?
@PriceIntel
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Happy customers big and small
ProfitWellSaaS pricing
software and tech enabled services
Free financial metrics for subscription
businesses
@PriceIntel
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We’ve seen inside more software companies than anyone else on the planet.
@PriceIntel
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The market is becoming saturated and unit economics just aren’t what they used to be…
@PriceIntel
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The relative value of features is declining.All software is going to $0.
@PriceIntel
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“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
WTP
as
% of
WTP
4 Y
ears
Ago
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
@PriceIntel
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CAC is increasing over time.
@PriceIntel
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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
CAC
as %
of
CAC
4 Ye
ars
Ago
-15%
0%
15%
30%
45%
60%
4 Years Ago 3 Years Ago 2 Years Ago 1 Year Ago Today
B2B B2C
@PriceIntel
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We make matters worse by focusing on the wrong fundamentals
@PriceIntel
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Asked Founders/Executives
@PriceIntel
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What we find importantC-Level/Founder Growth Preferences
% o
f tot
al c
ompa
nies
0%
25%
50%
75%
100%
More logos Making more money per customer Keeping customers around longer
N = 1,432 SaaS companies
@PriceIntel
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There are clear winners and losers in this environment.
@PriceIntel
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Death correlates to acquisition focused teamsOf those companies who died, what was the makeup of their growth
% o
f Res
pond
ents
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
@PriceIntel
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Balanced growth velocity is much largerHow do growth rates compare to our two growth groups?
% o
f Res
pond
ents
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.
@PriceIntel
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The root cause here stems from a lack of buyer centricity.
@PriceIntel
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We don’t really know our buyers
@PriceIntel
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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
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We don’t know our buyers that wellWhich single category best describes your buyer personas?
% o
f Res
pond
ents
0%
25%
50%
75%
100%
Thought about them Central document Quantified buyer personasN = 1,647 SaaS companies
@PriceIntel
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We don’t do a lot of cust dev conversationsHow many cust dev conversations are you having per month?
% o
f Res
pond
ents
0%
25%
50%
75%
100%
# of cust dev conversations
Less than 10 11 to 25 26 to 50 51+
N = 1,647 SaaS companies
@PriceIntel
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We aren’t truly testing that muchHow many tests or experiments are you running each month?
% o
f Res
pond
ents
0%
25%
50%
75%
100%
# of tests/experiments
0 1 to 3 4 to 10 11+
N = 1,647 SaaS companies
@PriceIntel
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This should be scary.
@PriceIntel
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Everything aligns to the customer
Point of Conversion
Drive Customer #1
Offer Product #1
Offer Product #2
Drive Customer #2Drive Customer #3
Offer Product #3Justify price #1
Justify price #2
Justify price #3
@PriceIntel
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How do we fix this?
@PriceIntel
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Quantify your buyer personas
@PriceIntel
![Page 28: [WMD2016] Price Intelligently >> Patrick Campbell "What you need to know to have the best pricing and positioning"](https://reader031.vdocument.in/reader031/viewer/2022021921/58f9b3d6760da3da068bd9ff/html5/thumbnails/28.jpg)
Let’s walk through an example…
@PriceIntel
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ProfitWell
@PriceIntel
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“Oh you’re like….”
@PriceIntel
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“Oh you’re like….”
37 Other Competitors
(we know about)
@PriceIntel
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Go to the customer!
@PriceIntel
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For the love of God. Talk to your customer.
@PriceIntel
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Great. How do we do that?
@PriceIntel
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1
2
3
Your Process at a High Level
Buyer Personasand Design
1
Data CollectionAnd Segmentation
2
Data ConsolidationAnd Analysis
3
@PriceIntel
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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: $
@PriceIntel
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Experimental Design
@PriceIntel
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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
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Relative Preference AnalysisStatistical 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
![Page 40: [WMD2016] Price Intelligently >> Patrick Campbell "What you need to know to have the best pricing and positioning"](https://reader031.vdocument.in/reader031/viewer/2022021921/58f9b3d6760da3da068bd9ff/html5/thumbnails/40.jpg)
What do people value?
@PriceIntel
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“Please rank the following features on a scale of 1 to 10…”
Depth of your metrics
Beautiful Design
Actionability from your metrics
Accuracy of your metrics
0 0.25 0.5 0.75 1
@PriceIntel
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@PriceIntel
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What do your customers value the most?
More on: Relative Preference Analysis
@PriceIntel
![Page 44: [WMD2016] Price Intelligently >> Patrick Campbell "What you need to know to have the best pricing and positioning"](https://reader031.vdocument.in/reader031/viewer/2022021921/58f9b3d6760da3da068bd9ff/html5/thumbnails/44.jpg)
What do your customers value the most?
More on: Relative Preference Analysis
@PriceIntel
![Page 45: [WMD2016] Price Intelligently >> Patrick Campbell "What you need to know to have the best pricing and positioning"](https://reader031.vdocument.in/reader031/viewer/2022021921/58f9b3d6760da3da068bd9ff/html5/thumbnails/45.jpg)
What do your customers value the most?
More on: Relative Preference Analysis
@PriceIntel
![Page 46: [WMD2016] Price Intelligently >> Patrick Campbell "What you need to know to have the best pricing and positioning"](https://reader031.vdocument.in/reader031/viewer/2022021921/58f9b3d6760da3da068bd9ff/html5/thumbnails/46.jpg)
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
![Page 47: [WMD2016] Price Intelligently >> Patrick Campbell "What you need to know to have the best pricing and positioning"](https://reader031.vdocument.in/reader031/viewer/2022021921/58f9b3d6760da3da068bd9ff/html5/thumbnails/47.jpg)
Relative Preference AnalysisStatistical 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
![Page 48: [WMD2016] Price Intelligently >> Patrick Campbell "What you need to know to have the best pricing and positioning"](https://reader031.vdocument.in/reader031/viewer/2022021921/58f9b3d6760da3da068bd9ff/html5/thumbnails/48.jpg)
How much are they willing to pay?
@PriceIntel
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• 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
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How much are your customers willing to pay?
More on: Relative Price Sensitivity Meter
@PriceIntel
![Page 51: [WMD2016] Price Intelligently >> Patrick Campbell "What you need to know to have the best pricing and positioning"](https://reader031.vdocument.in/reader031/viewer/2022021921/58f9b3d6760da3da068bd9ff/html5/thumbnails/51.jpg)
WTP for SaaS MetricsWTP 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
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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
![Page 53: [WMD2016] Price Intelligently >> Patrick Campbell "What you need to know to have the best pricing and positioning"](https://reader031.vdocument.in/reader031/viewer/2022021921/58f9b3d6760da3da068bd9ff/html5/thumbnails/53.jpg)
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
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WTP for Churn RecoveryWTP 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
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WTP for Rev RecWTP 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
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A good entry point
Low CAC with constant value
Creates the Requirement
Path to Share of Wallet
ProfitWellFinancial 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
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12 hours total.
@PriceIntel
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12 hours total. $2089.
@PriceIntel
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You will be left behind if you think you can brute force your growth.
@PriceIntel