For Entrepreneurs Blog

2014-15 Bridge Group SaaS Inside Sales Research Survey

saas-inside-sales-benchmarks

The Bridge Group is known for publishing insightful studies that aid SaaS Sales & Marketing leaders to build and optimize their inside sales strategies. They are working on the 5th round of their SaaS inside sales research and would like our help completing a 6-7 minute survey. Your answers will remain anonymous, and in return the research promises action-oriented guidance on compensation benchmarks, selling strategies, productivity and performance best practices, and more.

If you are able, please take a few moments to fill out the survey:

2014-15 Bridge Group SaaS Inside Sales Research Survey

As we saw with my own SaaS survey results published last month, when we all contribute, we can get powerful information to fuel our businesses.

To see results from a previous round of this survey, check out The Bridge Group’s 2012 Inside Sales Compensation and Metrics report.

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2014 Pacific Crest Saas Survey- Part 2

Last week I shared the results from Part 1 of our survey  in which 300+ SaaS companies shared data on their growth and go-to-market strategies. This week we dive into the results from Part 2 of the survey where we compare application delivery methods, operational costs and gross margins, contract terms, churn rates, capital requirements and accounting methods. This being our 3rd annual SaaS survey, we’re able to share this year’s results and look at how key metrics have changed.  I look forward to hearing your comments below.

Continued…

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2014 Pacific Crest SaaS Survey – Part 1

For the third year in a row, we worked together with Pacific Crest Securities, an investment banking firm with a specific focus on SaaS, to survey 306 SaaS companies. This represents nearly double the # of respondents from last year, giving us deeper benchmarking data and insights to share on the growth and operations of the companies in this space.

We also welcome this year the participation of OpenView, an expansion stage venture capital firm specializing in B2B Software, who brought additional support.

I want to extend my personal thanks to the many readers of this blog who participated in the survey. My thanks also go out to David Spitz and his team at Pacific Crest Securities (@dspitz and @PacCrestSec, respectively on Twitter) for their hard work on the survey. Part 1 of the results of the survey, which focuses on growth rates and go-to-market trends, are posted below. Part 2 of the results, which compare application delivery methods, operational costs and gross margins, contract terms, churn rates, capital requirements and accounting methods, can be found in  Part 2 of the SaaS Survey. Continued…

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Using Outbound Prospecting to reach highly targeted prospects

As most of my readers know, I am a big fan of Inbound Marketing. However there are times when inbound leads aren’t either enough, or the right kinds of leads needed to reach your best potential customers. In those situations, one tool worth considering is the use of a dedicated sales team to do outbound prospecting (Cold Calling 2.0). I prepared the following presentation for a New York city CRO conference, with the goal of showing how this technique works, and discussing how it can be made to fit in with Inbound Marketing principles, where the customer gets value from the interaction.

 

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Growth Hacking Free Trials: Time to Wow! is the key to success

This article is part of a series titled “The Art & Science of Growth Hacking” that will be published over time. My thanks to Gail Goodman, the founder and CEO of Constant Contact for introducing me to this concept.

Free trials and freemium products are two of the best ways to sell your product. They help the buyer address key concerns such as:

  • Will this actually work in my particular situation?
  • Will I get enough value to make the effort of using it worthwhile?

For a buyer, being able to get this level of proof is far better than having to trust what a web site or sales person has told them. Think about how you buy a car. How important is it to you to test drive the car before you part with tens of thousands of dollars?

Free trials (and freemium) also have another huge benefit for SaaS and consumer internet companies: the buyer does most of the work of selling themselves. If you have read any of my previous posts on the importance of CAC (Cost to Acquire a Customer), this can be a very powerful way to reduce CAC.

What is Wow!

Wow! is the moment in a free trial where your buyer suddenly sees the benefit they get from using your product, and says to themselves “Wow! This is great!”.  It’s also the moment where you have converted them into a fan who is likely to buy.

If you’re going to use free trial (or freemium) as a key part of sales funnel, it pays to understand exactly where in the free trial experience your buyer says “Wow!”. Then you will want to focus on the following set of questions:

  • How long does it takes to get to Wow!? (Time to Wow!)
    • Can we shorten the number of steps required to get to Wow!
  • What is the drop out rate of trial users on their way to Wow!?
    • Which step in the process has the highest drop out rate?
    • Why are users failing at that step, and can this be addressed?
  • Is the Wow! moment clear and strong enough?
    • What is the Wow! to Work Ratio?
  • Are different buyers interested in seeing different Wow! moments? (This is often the case in a product that has several modules.)
  • Are we providing the buyer with clear guidance on how to get to Wow!? Continued…
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That’s a nice little $40M ecommerce company you have there. Call me when it scales

It will surprise a lot of entrepreneurs to learn that building an e-commerce business with $10 million to $20 million in revenues is not that hard. It also surprises many to learn that it’s not actually that valuable. This is in stark contrast to, say, a SaaS business, which is very difficult to build to that level but valuable when you do. As I read this week’s board deck for one of our portfolio companies, JustFab, I was struck by one of the reasons this discrepancy exists: marketing leverage. Most retail businesses (traditional or online) have to spend marketing money to acquire a new customer at scale. Small e-commerce companies can be exempt from that – if you fill a niche and you have distinctive product-market fit with a set of customers, you can and should land them virally or cheaply. But as the business grows, you need channels of acquisition that you control beyond sitting around and hoping your customers tell their friends. Having a product that delights the user and drives high levels of customer satisfaction (which leads to high levels of referral) is crucial for building a killer business. It separates the great businesses from the good ones at scale, and in the early years, it is often sufficient to drive growth with no need for paid media. It is an important topic, but one for another day. What demands further inspection is the fact that many companies stall out when it comes time to transition off organic growth and add paid media as the primary growth vector as they scale. Customer acquisition costs money and this is where things get tricky in retail. What is the lifetime value of a retail customer? It’s a non-trivial question. In SaaS, for example, this far more predictable due to the subscription model. Continued…

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Building smarter software: Proactively deliver insights

Actionable Insights image

Three years ago I spent a lot of time looking at SaaS business intelligence companies. I loved what I saw in the demos: easy data connections, slick looking graphs, powerful drill down tools and custom dashboards made the tools look like no-brainers. And then I began my diligence calls. All of these bells and whistles were useful for data analysts I learned, but mostly worthless for regular users. Customers didn’t want to become data analysts, they wanted the software to do the work of the data analyst.

It then dawned on me that there’s a massive mismatch between the areas where vendors focus—namely graphics, dashboards, query and reporting tools—and the reality of customers’ needs. No one has time to dig through dashboards, graphs and reports. And customers don’t want to spend any time in your application unless they absolutely have to. Continued…

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Manage Customer Success to Reduce Churn

The health of a SaaS business is directly tied to its ability to retain its customers and prevent churn. To do this, they have to ensure that their customers are happy. That means making sure they get the promised business benefits they signed up for. This blog post discusses how to measure customer happiness, and how to actively manage your business to achieve it. It also looks at the newly emerging Customer Success function. Continued…

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2013 Pacific Crest SaaS Survey

We worked together with Pacific Crest, an investment banking firm with a specific focus on SaaS, to survey 155 SaaS companies on a variety of topics such as growth rates, CAC (cost to acquire a customer), gross margins, churn rates, etc. The goal of the survey is to provide useful operational and financial benchmarking data.

Continued…

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SaaS Metrics 2.0 – A Guide to Measuring and Improving what Matters

“If you cannot measure it, you cannot improve it” – Lord Kelvin

This article is a comprehensive and detailed look at the key metrics that are needed to understand and optimize a SaaS business. It is a completely updated rewrite of an older post.  For this version, I have co-opted two real experts in the field: Ron Gill, (CFO, NetSuite), and Brad Coffey (VP of Strategy, HubSpot), to add expertise, color and commentary from the viewpoint of a public and private SaaS company. My sincere thanks to both of them for their time and input.

SaaS/subscription businesses are more complex than traditional businesses. Traditional business metrics totally fail to capture the key factors that drive SaaS performance. In the SaaS world, there are a few key variables that make a big difference to future results. This post is aimed at helping SaaS executives understand which variables really matter, and how to measure them and act on the results.

The goal of the article is to help you answer the following questions:

  • Is my business financially viable?
  • What is working well, and what needs to be improved?
  • What levers should management focus on to drive the business?
  • Should the CEO hit the accelerator, or the brakes?
  • What is the impact on cash and profit/loss of hitting the accelerator?

Continued…

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Metrics and Compensation for SaaS Inside Sales

The Bridge Group have recently published a report titled:

Inside Sales for SaaS
Metrics and Compensation Report for B2B technology companies

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The report is based on a survey of 197 B2B technology companies, and covers topics such as:

  • Ramp and Retention
  • Compensation and Quota
  • Activity and Infrastructure
  • Inside Sales Management
  • Management’s top challenges

They kindly offered to provide a link for readers of this blog. If you are interested in downloading a copy, please click here to access the report.

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Using Surveys to Validate Key Startup Decisions

Summary

This article describes in detail how to use on-line survey tools to validate your key startup assumptions, and gain actionable insights into topics such as pricing, target demographics, messaging, etc. Continued…

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Pacific Crest’s 2011 SaaS Survey

Pacific Crest, an investment banking firm with a strong focus on SaaS, has surveyed a 70 SaaS companies with very interesting results. There is some great data on topics such as growth rates, cost of customer acquisition, churn/retention, expense models, capital efficiency, etc. The full survey, which was put together by David Spitz and his team (follow @dspitz on Twitter), can be found here. In this article, I include many of their slides, and the associated Pacific Crest commentary. In a few cases, I add my own commentary prefaced by my initials DRS. I highly recommend downloading the entire survey, and signing up to contribute your own data for the 2012 survey (which can also be done at the same link). I’d like to thank David Spitz of Pacific Crest for giving me permission to reprint their results below.

Details of the participating companies:

  • 70 private SaaS company respondents, participating anonymously and confidentially
  • Administered to CEOs and CFOs, May-July 2011
  • 69% multi-tenant/single instance
  • Diverse mix:
  • –$0-$60M+ in revenues (~$13M median)(1)
  • –25-250+ employees (~120 median)
  • –10-2,000+ customers (~480 median)
  • –$100s to $MMs median ACV (~$37.5K median)
  • –~50% horizontal apps, ~50% vertical apps, infrastructure, etc.
  • –Primarily U.S. headquartered Continued…
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Why Churn is SO critical to success in SaaS

Summary: Illustrates graphically why churn is a huge problem a SaaS company gets larger. It also looks at a very surprising factor that can massively accelerate SaaS growth: negative churn. (This article  is applicable to any recurring revenue business, not just SaaS.) Continued…

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Why Sales People shouldn’t Prospect – An interview with Aaron Ross

hi res aaron headshot 300dpi for sales bookIn this article I interview Aaron Ross, co-author of a new book, Predictable Revenue. Aaron discusses his experience at Salesforce.com starting a new group that used an innovative outbound prospecting approach (involving no cold calls) to create new leads. Aaron’s group came up with several important breakthroughs which enabled them add over $100m in incremental recurring revenues over a few short years. This article reviews some of those best practices which provide a recipe for others to make outbound prospecting a repeatable and predictable revenue generator.

Continued…

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