8. THE
SALES
CASE:
WE
HAVE
DONE
GREAT!
LET’S
INVEST
MORE
IN
SALES
IN
EUR'000 Q1 Q2 VARIANCE BUDGET VARIANCE
REVENUES
1.350
1.854
37%
1.685
10%
BOOKINGS
1.600
3.130
96%
2.087
50%
SALES
&
MARKETING
COST 450 570 27% 500 14%
10/10/12
9. BOOKINGS?
IN
EUR'000 BOOKINGS
BIG
5
YEAR
DEAL
1.780
TWO
NEW
3
YEAR
DEALS
576
SEVEN
RENEWALS
672
UPSELLING
ON
3
RENEWALS
102
TOTAL
3.130
10/10/12
10. CFO:
BOOKINGS
RECURRING
(ARR)
IN
EUR'000 BOOKINGS 1
OFF ARR
BIG
5
YEAR
DEAL
1.780
1360
84
TWO
NEW
3
YEAR
DEALS
576
192
SEVEN
RENEWALS
672
-‐
DISCOUNT
ON
RENEWALS
-‐168
UPSELLING
ON
3
RENEWALS
102
102
CLOSING
Q2
3.130
1.360
210
10/10/12
11. CHURN:
DID
WE
LOOSE
ANY?
CUSTOMER
RENEWAL
REPORT
Q2
2012
# ANNUAL
REVENUES
'000 DISCOUNTS
'000 UPSELLING
'000 TOTAL
ANNUAL
REVENUES
CUSTOMERS
UP
FOR
RENEWAL -‐15
-‐2.040
-‐2.040
CUSTOMERS
RENEWED 7
840
-‐168
102
774
CUSTOMERS
LOST -‐8
-‐1.200
-‐168
102
-‐1.266
CUSTOMER
SUPPORT
EXPECTS
TO
LOOSE
ANOTHER
16
CUSTOMERS
IN
Q3
AND
Q4!
10/10/12
12. THE
CASE
BASED
ON
SAAS
METRICS:
WE
HAVE
DONE
TERRIBLE!
IN
EUR'000 BOOKINGS 1
OFF ARR CUSTOMERS AVG
ARR
OPENING
Q1
6.000
50 120
BIG
5
YEAR
DEAL
1.780
1360
84
1
TWO
NEW
3
YEAR
DEALS
576
192
2
SEVEN
RENEWALS
672
-‐
0
DISCOUNT
ON
RENEWALS
-‐168
0
UPSELLING
ON
3
RENEWALS
102
102
0
CHURN
-‐1.200
-‐8
CLOSING
Q2
3.130
1.360
5.010
45
111
10/10/12
14. WE
ARE
LOOSING
MONEY!
BANKRUPT
IF
WE
CONTINUE
THIS
WAY!
3 .000
2 .500
Recurring
Contribution/Acquisition
Cost
2 .000
1 .500
Recurring
Contribution
Annualized
C AC
1 .000
5 00
-‐
Q1 Q2 Q3 Q4
Time
10/10/12
15. TIME
FOR
DRAMATIC
CHANGE
• RECURRING
REVENUES
DROP
• RECURRING
CONTRIBUTION
PER
CUSTOMER
DROPS
(ARR
DROP
PLUS
ACS
NOT
100%
FLEXIBLE)
• SALES
IS
INEFFECTIVE
AND
WAY
TOO
EXPENSIVE!
MINIMIZE
SALES
COST
AND
FIX
ORGANIZATION
FIRST
10/10/12
18. SaaS
Profitability;
Churn
pushes
out
the
Time
to
Profit
Achieving
SaaS
Profitability;
25%
and
35%
Churn
6 00.000
5 00.000
Recurring
Contribution/Acquisition
Cost
4 00.000
Recurring
Contribution
2 5%
3 00.000
Recurring
Contribution
3 5%
Recurring
Contribution
2 00.000 Customer
Acquisition
Cost
1 00.000
Time
to
Time
to
Profit
Profit
-‐
1
2
3
4
5
6
7
8
9
1 0
Time
10/10/12
19. SaaS
Profitability;
Growth
pushes
out
the
Time
to
Profit
Achieving
SaaS
Profitability;
20%
growth
of
acquisition
rate
1 .600.000
1 .400.000 CONTROL
YOUR
CAC!
Recurring
Contribution/Acquisition
Cost
1 .200.000
1 .000.000
CAC
=
2000
8 00.000
CAC
=
2750
Recurring
Contribution
6 00.000
CAC
=
1250
4 00.000
2 00.000
Time
to
Profit
-‐
1
2
3
4
5
6
7
8
9
1 0
Time
10/10/12
20. SaaS
Profitability;
Customer
Value:
effec4ve
upselling
improves
the
Time
to
Profit
Achieving
SaaS
Profitability;
20%
growth
of
acquisition
rate;
15%
Upsell
@
no
extra
cost
1 .800.000
1 .600.000
Recurring
Contribution/Acquisition
Cost
1 .400.000
1 .200.000
1 .000.000 CAC
=
2000
CAC
=
2750
8 00.000
Recurring
Contribution
6 00.000 RC
including
15%
Upsell
4 00.000
Time
to
Profit
2 00.000
-‐
1
2
3
4
5
6
7
8
9
1 0
Time
10/10/12
21. Managing
the
Cost
of
Acquisi4on:
Customer
Acquisi4on
Cost
Ra4o
Stop
invesLng
and
look
<
0.5
at
your
business
ARR
-‐/-‐
ACS
ConLnue
to
invest
in
0.5
>
=
<
1
Growth
CAC
>
1
ACCELERATE!
• ARR
=
Annual
Recurring
Revenues
per
customer
• ACS
=
Annual
Customer
Service
Cost
per
customer
• CAC
=
Customer
Acquisi4on
Cost
per
customer
10/10/12
22. OUR
CAC
RATIO
IS
0,18
IN
Q2!
Stop
invesLng
and
look
0,18
<
0.5
at
your
business
(210
-‐/-‐
105)
ConLnue
to
invest
in
0.5
>
=
<
1
Growth
570
>
1
ACCELERATE!
• ARR
=
Annual
Recurring
Revenues
per
customer
• ACS
=
Annual
Customer
Service
Cost
per
customer
• CAC
=
Customer
Acquisi4on
Cost
per
customer
10/10/12
23. FIX
THE
CACR!
WHAT
CAN
WE
DO?
ARR
-‐/-‐
ACS
Lower
Cost
of
Services
Minimize
Churn
Lower
CAC
Upselling
>
0.5
CAC
Control
the
Growth
and
watch
• ARR
=
Annual
Recurring
Revenues
per
customer
the
cash
flow!
• ACS
=
Annual
Customer
Service
Cost
per
customer
• CAC
=
Customer
Acquisi4on
Cost
per
customer
10/10/12
25. Research Methodology
Totango surveyed 134 executives at SaaS
companies about the key performance indicators
used to run their businesses. The same survey
was also conducted in 2011 giving Totango unique
insights into SaaS trends.
26. 68% of SaaS Executives are unhappy with the current metrics and
1 methods available to measure SaaS business progress, which is up
from 61% from last year.
68%
61%
2011 2012
27. 57% of SaaS Executives are planning to implement new Key
2 Performance Indicators to better measure and manage their
business in the next twelve months.
57%
28. There is a shift towards customer centric measurements,
3 designed to report on the success of existing customers: 5 out of the
top 6 new Key Performance Indicators are customer metrics.
Product
Usage
Analysis
39%
Churn
16%
CLV
13%
Campaign
performance
9%
Upsell
8%
NPS
5%
31. What
is
your
current
business?
1
Volume
2
3
Complexity
&
Price
(
CAC
&
TCS)
10
October
2012
32. What
is
your
future
SaaS
en
Cloud
business?
1
Volume
2
3
Complexity
&
Price
(
CAC
&
TCS)
10
October
2012
33. Who do you want to be ?
I want to deliver I want to extend
my application / and value to other
asset as a cloud providers clouds
service
I want to build and
operate a public
I want to resell a
cloud infrastructure portfolio of public
(IaaS and PaaS) CSP’s
Distributors
cloud services
Enterprises
Start-‐ups
ISV’s
SW-‐Resellers
Hosters/MSP’s
HW-‐Resellers
I want to help my
clients to design, I want to
Solu4ons
Providers
System
Integrators
build, manage their aggregate a
private cloud portfolio of public
Direct
Response
Centers
cloud services for
my clients
34. KEY
VALUE
DRIVERS
&
METRICS
for
SAAS
PROFITABILITY
• Customer
Related
(CACR)
– Recurring
Contribu4on
(Recurring
Revenues
-‐/-‐
Recurring
Cost
of
Services)
– Growth
– Reten4on
Rate
(nega4ve
=
Churn)
– Cost
of
Acquisi4on
• Opera4onal
Service
Cost
Related
(ACS)
– Recurring
Cost
of
Running
a
Service
including
Cost
of
Infrastructure
– Speed
(and
cost)
of
Deployment
• CASH
– Cash
Posi4on
on
short,
mid
and
long
term
– Monthly
Recurring
Revenues
– Monthly
Recurring
Expenses
• ALL
RELATED
IN
MANAGING
THE
SAAS
BUSINESS
MODEL
10/10/12
35. Demonstrate
the
value
of
the
SaaS
model
to
the
stakeholders!
• Clear
Posi4oning
and
Strategy
• Value
Drivers
+
KPI’s
in
a
consistent
and
integrated
Business
Model
– Effec4ve
repor4ng
of
KPI’s
monitoring
and
managing
the
model
• Financing
need
clear
10/10/12
36. THE
PATH
TO
A
MANAGABLE
AND
EFFECTIVE
SAAS
REPORTING
SYSTEM
• PAINT
THE
LANDSCAPE
AND
LOOK
AHEAD
– What
business
am
I
in
and
where
are
we
going
– What
informa4on/
metrics
are
currently
used
to
manage
the
business
– Which
metrics
would
bring
value
in
the
future
and
priori4ze
–
Are
data
available/accessible
to
feed
metrics
• ORGANIZATIONAL
READINESS/URGENCY
– Available
competencies
– Change
management
– Educa4onal
acceptance
•
Evaluate
– Involve
key
personal
across
organiza4on
• Get
feedback
• Create
buy
in
• Take
an
agile
approach
– Define
approach,
Get
started,
Automate,
Prac4ce
what
you
preach,
Adapt
and
op4mize
• Communica)e
with
all
stakeholders
involved
10/10/12
