This presentation is from my talk at the 2017 SaaStr Annual Conference in San Francisco. It offers an overview of a simple model to understand a SaaS business and the key levers a CEO can pull to get the most impact. The presentation covers:
Optimizing the SaaS Funnel:
- Get inside your customer’s head
- Break down the funnel into microsteps
- Identify bottlenecks
- Use funnel math to make improvements
12 key levers within the funnel:
1) Product/Market fit
2) Top of the funnel flow
3) Conversion rate
4) CAC (customer acquisition cost)
5) Number of sales people
6) PPR (productivity per rep)
7) Getting enough leads
8) Pricing
9) Customer retention rate
10) Dollar retention rate
11) Months to recover CAC
12) Recruiting, onboarding & management
4. Search for Product/Market Fit
Scaling the Business
Search for Repeatable & Scalable
& Profitable Growth Model
The Three Phases of a Startup’s Lifecycle
5. Predictable, Repeatable, Scalable, Profitable Growth
Scaling the Business
Search for Product/Market Fit
Search for Repeatable & Scalable
& Profitable Growth Model
6. One Sign That You’re Getting There:
Bookings - (NOT Revenue or ARR!)
Quarters
30. JBOSS EXAMPLE
• Making $27,000 a month selling documentation
• Solution:
• Give away documentation
to get their email address
31. EXAMPLE:
DRIVING TRAFFIC TO YOUR WEB SITE
GETTING FOUND
Not going to find your site
unless:
- Top of Google search
- Referred to by an influencer
friction &
concerns
32.
33.
34. LESSONS FROM WEBSITE GRADER
• Free tools drive viral spread
• Low customer work required
• High value delivered
• Score leverages competitive urge, and acts as a trigger
• Builds trust through clear demonstration of expertise
52. Number of Sales People
One of the most common reasons for missing plan
Didn’t hire sales people fast enough
53. Sales Hiring
• You will need to build an in-house recruiting machine
See my blog post:
“Recruiting: The 3rd Crucial Startup Skill”
54. Two Metrics to Track
0
2
4
6
8
10
12
14
16
18
Q4-16 Q1-17 Q2-17 Q3-17 Q4-17
Number of Reps versus Plan
Reps Plan
$0
$500
$1,000
$1,500
$2,000
$2,500
Q4-16 Q1-17 Q2-17 Q3-17 Q4-17
Assigned Quota vs Plan & New ARR
Assigned Quota Plan Bookings
$k
55. Lost Bookings
due to slow
hiring
$0
$500
$1,000
$1,500
$2,000
$2,500
Q4-16 Q1-17 Q2-17 Q3-17 Q4-17
Assigned Quota vs Plan & New ARR
Assigned Quota Plan Bookings
$k $500k
56. Over
Assignment
of Quota
needed to
hit plan
=1/85%
$0
$500
$1,000
$1,500
$2,000
$2,500
Q4-16 Q1-17 Q2-17 Q3-17 Q4-17
Assigned Quota vs Plan & New ARR
Assigned Quota Plan Bookings
$k
85%
58. PPR: Sales Training and Onboarding
• Sales People: One of the most expensive resources
• Yet, typically little effort is put in to sales training in early days
• High payback
• Worth having the founders spend time to develop & deliver a lot of the material
67. Raw Lead
Marketing
Qualified Lead
Sales Accepted
Lead
Opportunity
Closed Deal
20%
80%
25%
20%
Closed Deal1
Opportunity5
Sales Accepted
Lead
20
Marketing
Qualified Lead
25
Raw Lead125
Reverse Funnel Math
68. Allows Us to Compute Leads Required per Rep
x
No. of
Closed Deals
=
Reverse Funnel
Conversion Rate
Marketing Qualified
Leads Required
69. This Becomes the Contract Between Sales & Marketing
Marketing Qualified
Leads Required Sales
Marketing
SDR’s
70. The Backend of the Funnel
Closed Deals
Loyal
Customers
who are
Advocates
Renew ExpandOnboard
It’s all about LTV
71. Top Factors Affecting Renewals
• On-boarded successfully?
• Champion still at the company?
• Customer getting meaningful business benefits?
• Is the product Sticky?
72. Dollar Renewal Rate is King
See my SaaStr 2016 presentation
Customer
Renewal Rate
>Dollar
Renewal Rate