Tuesday, December 21, 2010

Key take-away's from Breakfast Seminar: SaaS Business Model Update -- Creating and Managing Revenues

The session focused on the elements of a SaaS business model that create success and avoiding the elements that can do you in, exploring real life examples that impact at the bottom line. SaaS executives and venture capitalists shared their experiences with SaaS and shared tactics around specific areas such as retention, pricing and acquisition, where they have had the greatest success.

Key take-away's from MassTLC's Breakfast Seminar: SaaS Business Model Update -- Creating and Managing Revenues include:

David Skok, General Partner, Matrix Partners
David keynoted the event and provided a detailed framework for analyzing profitability, cashflow, and sales strategy in a SaaS business. One of the metrics that David presented was LTV -- (Customer) Lifetime Time Value -- an indicator of how well a SaaS business is performing. In plain speak, LTV relates to how much an average customer will return in value to the business over its predicted lifetime (aka monetization). He then compares LTV with CAC, which stands for customer acquisition cost (aka cost). He stressed that every SaaS company should target a CAC/LTV balance of: LTV > 3*CAC (and good SaaS business are in the 5+ range).

David also talked about the growth of a SaaS company. It's all about timing, don't invest too early and burn cash as growing a company spends a lot of money during growth phase. Don't attempt to grow when the company isn't ready. To get spending right, the company needs to understand these key phases of the company:

- Search for product/market fit
- Search for repeatable and scalable sales model
- Scaling the business

View David's presentation.

William Daly, Manager of Professional Services, Iron Mountain
William gave an introduction of Iron Mountain and talked about their first customer, a leading financial company they acquired. He highlighted how addressing the needs of their first customer changed their product/service offerings and business model. He ended the presentation emphasizing personal touch and connection goes a long way for any cloud providers.

View Bill's presentation.

Jim Kizielewicz, Chief Marketing Officer, Kronos
Jim started his presentation with an overview of Kronos product offerings. It has been challenging for Kronos transitioning from a license-driven business model to one that provides both SaaS and perpetual-licensing. Kronos came up with a creative strategy of first letting the customers select a product and then allowing them to pick a bundle for that product. Kronos bundles are designed with varying degree of ownership and management. Under a perpetual licensing scheme, the customer has full ownership of the software but must host and manage the system. On the other end (under SaaS), Kronos will host and manage the system for the company.

View Jim's presentation.

Drew Fortin, Sr. Manager, Internet Marketing, Compete
Gave a recount on one of Compete's past marketing campaigns on promoting new sales. A few years ago, the company started speaking their brand through a more streamlined online presence. The result created Compete Pulse, a series of white papers (to get white papers, users have to ask questions which turned out to be great), and expert educational content where partners in other domains are involved (Compete don't claim to be an expert in everything, refer to other partners who know their domains better).

Conversion jumped from 0.85% to 1.25% while number of free accounts increase. No change in product, just marketing alone increased sales in 30%.

View Drew's presentation.

Cory von Wallenstein, VP of Product Management, Dyn Inc.
Cory talked about his experience in combating churn rate (reducing attrition and improve retention) at Dyn. They changed their renewal policy by not asking people to renew on Friday, Saturday, and Sunday and deferring notifying the customers to the following week. This tactic raised customer renewal rate from 62% to 85%.

View Cory's presentation.

Thanks for all those who attended, stay tuned for our next event. Thanks to Sam Chow, co-founder of MobyFab for help with the notes!

1 comment:

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