More Related Content Similar to Competing in the Next SaaS Wave Similar to Competing in the Next SaaS Wave (20) 1. © 2013 Amity
Customer Success:
Competing in the Next SaaS Wave
An analysis of the Pacific Crest 2013 SaaS Survey
Executive Summary
What the Survey Tells Us
The Next Wave: From Enterprise SaaS
to Personal SaaS
2. Executive Summary
There is a move towards lower-cost acquisition channels, which
leads to:
• smaller deal sizes;
• shorter billing periods; and,
• significant increases in churn.
Trial-based selling is becoming standard.
Customer cash flow is at increasing risk.
High growth companies are more effective at renewals and
upselling.
A new wave is hitting the SaaS industry, and …
What the 2013 Survey Told Us
© 2013 Amity
Customer Success is now the key to long-term
growth and profitability.
3. © 2013 Amity
Pacific Crest, along with David Skok of Matrix
Partners, has conducted an annual survey of private
SaaS companies since 2010. Pacific Crest is an
investment banking firm with a strong focus on SaaS.
David Skok is a highly respected authority in the
SaaS industry.
What the Survey Tells Us
The key takeaways about:
1. Customer Acquisition
2. New Customers vs Customer Base
3. Churn
Links to Paul’s in-depth analysis, as
well as the original survey, are
available on the last slide.
4. 100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
FieldSales InsideSales InternetSales Channel Sales Mixed
Primary Mode of Distribution(1)
2012GrowthRate
44%
26%
90%
80%
50%
Use of Low Cost Acquisition Channel is Accelerating
The SaaS Industry’s growth is
accelerating.
Driven by broad adoption of
the cloud, and mobile.
41% median growth last year,
47% expected this year.
90% 2012 growth rate was
experienced by companies who
mainly use internet distribution.
‘Land and expand’ and organic growth gaining momentum.
© 2013 Amity
Use of low cost acquisition is expanding across deal sizes.
Model is splitting into high- and low-cost strategies.
Trials generate one third of all new ACV.
1/4 to 2/3 of respondents use trials of some sort.
Average Deal Size is getting much smaller.
SMB and VSB fastest growing segments.
2011 Median: $37.5K
2012 Median: $24K
2013 Median: $20K
5. 40%
35%
30%
25%
20%
15%
10%
5%
0%
Less than
$2MM
$2MM-
$5MM
$5MM-
$10MM
$10MM-
$15MM
$15MM-
$25MM
$25MM-
$40MM
$40MM-
$60MM
2012 GAAP Revenue
= Bottom 50% Growers
= Top 50% Growers
%NewACVfromUpsells
Greater
than
$60MM
6%5%
10%
13%
15%
25% 25%
10%
15%
18%
15% 15%
30%
35% 35% 35%
Upsell to Existing
Customer
$1.00
$0.90
$0.80
$0.70
$0.60
$0.50
$0.40
$0.30
$0.20
$0.10
$0.00
NewACVfrom
NewCustomer
Renewals
$0.92
$0.17 $0.14
Leveraging the Existing Customer Base
Renewal commission is now standard practice:
50% paid in 2012, increased to 76% in 2013.
Highest growth companies rely on upsells.
© 2013 Amity
ROI: 109% 588% 714%
Renewal/upsell is highly profitable:
Acquiring new customers
is expensive.
On average, companies are realizing
20% of new ACV from upsells.
The fastest-growing companies report
significantly higher % than the slower
growers.
7. Implications for Customer Success
Successful companies are cultivating their existing customer base.
Trial-based acquisition and organic growth requires a Customer
Success approach, not traditional Sales.
Managing churn is a critical success factor for today’s SaaS company.
SaaS companies are differentiating on their ability to provide
personalized service.
In fact, the whole SaaS industry is evolving from an enterprise focus to
a personal focus . . .
Customer Success is now the key to long-term growth and profitability.
© 2013 Amity
9. High CAC methods:
Outbound
Field sales
High touch
Forklift model
Invisible,
disempowered
users
Buyer-focused
SaaS 1.0: Enterprise SaaS
SaaS delivery, product model
Product-focused SaaS
businesses use front office
automation to manage
customer acquisition.
Seat-based pricing
Heavy adoption
of traditional
CRM
Management
platforms
Large contracts,
long billing cycles
Competition:
SaaS vs
on-premise apps
High
switching
costs
Value based on
cost savings
© 2013 Amity
10. SaaS 2.0: Personal SaaS
SaaS delivery, service model
USE
Higher churn
Moving into VSB &
professional
Commission
on growth
Buyer &
user focused
Lower CAC methods:
Inbound marketing
Inside sales
Lower touch
Smaller contracts,
shorter billing
cycles
Digital
engagement
platform
SaaS-native value
proposition
Visible, engaged
users
Self-service,
trials,
freemium
DISCOVER
Consumption
pricing
Competition:
SaaS vs. SaaS
Lower
switching costs Bottom-up
organic growth
Traditional
CRM
inadequate
Land & Expand/
Team-by-team
adoption
The
model has evolved.
Personal SaaS leverages the
entire customer journey.
© 2013 Amity
11. The Seven Cornerstones of the
New SaaS Business Model
2. Business Strategy
1. Economic Drivers
3. Value Proposition
4. Customer Acquisition
5. Customer Relationship
6. Customer Development
7. Business Application Stack
© 2013 Amity
12. 1. Economic Drivers
SaaS 1.0: Enterprise SaaS 2.0: Personal
Web adoption Consumerization of IT
Lower CapEx Affordable experimentation,
bottom-up growth
Ease of use Collaboration
Customer-vendor alignment User-vendor alignment
24/7 availability Multiple device access
Empowered users.
© 2013 Amity
2. Business Strategy
1. Economic Drivers
3. Value Proposition
4. Customer Acquisition
5. Customer Relationship
6. Customer Development
7. Business Application Stack
13. 2. Business Strategy
SaaS 1.0: Enterprise SaaS 2.0: Personal
Management platforms Execution platforms
Enterprise Departmental, team and
individuals
Quarterly product cycle Continuous product cycle
Field sales/professional
services
Self service
New logo acquisition Leverage customer base
Land, expand and organic growth.
© 2013 Amity
2. Business Strategy
1. Economic Drivers
3. Value Proposition
4. Customer Acquisition
5. Customer Relationship
6. Customer Development
7. Business Application Stack
14. 3. Value Proposition
SaaS 1.0: Enterprise SaaS 2.0: Personal
CapEx vs. OpEx Accept credit cards
Lower TCO Pay as you go
Configuration, not
customization
Self serve
Compliance Collaboration
System of record System of engagement
Collaborate and engage.
© 2013 Amity
2. Business Strategy
1. Economic Drivers
3. Value Proposition
4. Customer Acquisition
5. Customer Relationship
6. Customer Development
7. Business Application Stack
15. 4. Customer Acquisition
SaaS 1.0: Enterprise SaaS 2.0: Personal
High touch field sales Low touch inside sales and
self-service trials
Outbound Inbound
Pilots Free trials
Involve professional
services
Community and content
Complex contracts Cookie cutter terms of
service
Easy to try, easy to buy.
© 2013 Amity
2. Business Strategy
1. Economic Drivers
3. Value Proposition
4. Customer Acquisition
5. Customer Relationship
6. Customer Development
7. Business Application Stack
16. 5. Customer Relationship
SaaS 1.0: Enterprise SaaS 2.0: Personal
Cost center Build relationship equity
Call center Employee to person,
customer advocates
Break/fix Personal service
Cost reduction Outcome-driven
High complexity, involve IT Low complexity, avoid IT
Low complexity, high engagement.
© 2013 Amity
2. Business Strategy
1. Economic Drivers
3. Value Proposition
4. Customer Acquisition
5. Customer Relationship
6. Customer Development
7. Business Application Stack
17. 6. Customer Development
SaaS 1.0: Enterprise SaaS 2.0: Personal
Renewal cycle Continuous
Procurement Operating champion
Account management Customer success
Negotiated upgrades Organic upgrades
Depend on lock-in Continuously demonstrate
value
Continuous and organic.
© 2013 Amity
2. Business Strategy
1. Economic Drivers
3. Value Proposition
4. Customer Acquisition
5. Customer Relationship
6. Customer Development
7. Business Application Stack
18. 7. Business Application Stack
SaaS 1.0: Enterprise SaaS 2.0: Personal
Departmental silos Cross-department layers
Custom integration REST API
Business intelligence Customer intelligence
Product separate from
business systems
Product is the business
system platform
Managed by IT Managed by operating
department and team
Product and business alignment.
© 2013 Amity
2. Business Strategy
1. Economic Drivers
3. Value Proposition
4. Customer Acquisition
5. Customer Relationship
6. Customer Development
7. Business Application Stack
19. The 7 Cornerstones of SaaS 2.0
Personal, accessible, engaged, organic.
© 2013 Amity
2. Business Strategy
1. Economic Drivers
3. Value Proposition
4. Customer Acquisition
5. Customer Relationship
6. Customer Development
7. Business Application Stack
Empowered users
Land, expand and organic growth
Collaborate and engage
Easy to try, easy to buy
Low complexity, high engagement
Continuous and organic
Product and business alignment
20. 1. Generate Product Qualified Leads:
Lower barriers to evaluation and adoption.
2. Use Inbound Marketing and Inside Sales:
Focus on lower cost customer acquisition methods.
3. Align Product and Business:
Horizontal layers over Departmental silos.
4. Focus on Personal Customer Success:
High-engagement, personal service builds trust.
5. Scale Customer Engagement:
Enable employee-to-people engagement throughout the customer journey.
Easy to try, easy to buy, easy to engage.
© 2013 Amity
Competing in the Next SaaS Wave
21. helps SaaS companies keep and grow their customers
by:
Removing time-wasting complexity from the customer success process, and
Enabling customer-facing teams to spend more time engaging customers.
Customer Success. Simplified.
© 2013 Amity
provides
the only scalable
customer
engagement
platform purpose-
built for SaaS.
www.getamity.com
@getamity
22. For more information contact:
Paul Philp, Founder & CEO
paul@getamity.com
647.927.8574
Thank You!
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Crest Survey
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