What factors have significant impact on your customer churn? Find out so you can reduce your churn rate and drive down your CAC>=.

1. SMB Digital Churn

2. Vendasta’s Data
275k 1250+ 5+
SMBs Markets Years of Data

3. Genesis of Report
Vendasta’s customer data has revealed patterns that may be
triggers or causal factors for churn. This is an opportunity to
understand churn and what may be causing it.

4. Compare Three Sales Profiles
1
2
3
Digital Committers
Digital PurePlay
Digital Extenders

5. Digital Extender1

6. Digital Extender Profile1
Traditional Only Sales Force
Characteristics
● Cherry pick top existing customers
● Usually bundled with traditional products
● Usually DIFM High Gross Dollar products
● Salesforce sells both digital and traditional
Results
● Digital account base shrinks along same
profile as traditional customers
● Loss of verticals and categories
● High churn
“Doom Loop”

7. 2 Digital Committer

8. 2 Digital Committer Profile
Digital & Traditional Sales Force
Characteristics
● Cherry pick top existing customers early on
● Digital-only sales force (often telemarketing)
● Typically a spectrum of DIY - DIFM - DIWM
● Traditional sales force can sell digital
Results
● Rapid growth until saturation of existing
traditional customers
● Growth continues as sales force opens up new
and/or former verticals and categories
Sustainable Growth

9. 3 Digital Pure Play (DIY)

10. 3 Digital Pure Play (DIY) Profile
Digital Only Sales Force
Characteristics
● Outbound marketing ,Telesales , Self-serve
● Very low CAC
● DIY - DIFM - DIWM
● Full service and products upwards creep
Results
● Steady Growth with Low Churn
● Increasing services and products
Sustainable Growth

11. What’s Really Important?
What is the one thing that is more important
than getting new customers?
All SaaS companies know this answer.

12. What’s Really Important?
Retaining the ones you already have!
Churn is a KILLER!

13. Potential Churn Variables
Which of these variables have an effect on churn?
Number of Products
SMB Category
Vertical vs. Horizontal
SMB Service Model
Partner Type
Pricing
Sold as a Offering / Bundle
ie. Restaurants, Real Estate, etc.
Specialization of the Partner
DIY, DIFM, DIWM
ie. Newspaper, YP, Radio, TV etc.
Of the Offering / Bundle ?
?
?
?
?
?

14. About The Data
● Churn data from March 2014 - March
2015.
● Partners that were Vendasta
customers for the entire year.
● Based on Reputation Management;
used as a proxy for entire digital
bundle that our partners are selling.
Excluded DataIncluded Data
● Atypical data / outliers.
ie. Directories which closed
● Customers with 0 churn.
● Customers with more than 90%
churn in any one period.
● Customer with less than 10 accounts.
● Accounts that were created and
deleted in the same month.

15. SMB Category
Vertical vs. Horizontal
SMB Service Model
Partner Type
Pricing
Potential Churn Variables
Which of these variables have an effect on churn?
ie. Restaurants, Real Estate, etc.
Specialization of the Partner
DIY, DIFM, DIWM
ie. Newspaper, YP, Radio, TV etc.
Of the Offering / Bundle ?
?
?
?
?
Number of Products Sold as a Offering / Bundle ?

16. Number of Products & Churn
75%
50%
25%
ChurnRate
Total Digital Products in Bundle/Offering
9 16 23
0%
100%
Average Number of
Digital Products =
11

17. 75%
50%
25%
ChurnRate
Total Digital Products in Bundle/Offering
9 16 23
0%
100%
Average Number of
Digital Products =
11
Summary
A weak relationship
found between the
number of products
that an agency sells
and their churn.
Number of Products & Churn

18. Key Points
● Partners sell, on average, 11 different digital products.
● A weak relationship was found between number of products that
agencies sell and churn.
● Number of products sold does NOT equate greater stickiness.
● Thoughtful product pricing, packaging & fulfillment make the
difference.
Number of Products & Churn

19. SMB Category
Vertical vs. Horizontal
SMB Service Model
Partner Type
Pricing
Potential Churn Variables
Which of these variables have an effect on churn?
ie. Restaurants, Real Estate, etc.
Specialization of the Partner
DIY, DIFM, DIWM
ie. Newspaper, YP, Radio, TV etc.
Of the Offering / Bundle ?
?
?
?
?
Number of Products Sold as a Offering / Bundle ✕NO

20. Pricing & Churn
60%
40%
20%
ChurnRate
Monthly Price
$100 $200 $300
0%
80%

21. 60%
40%
20%
ChurnRate
Monthly Price
$100 $200 $300
0%
80% Every hundred dollars that a
package increased, it
resulted in 8% higher churn.
Pricing & Churn
Summary
Companies with lower
prices (below $100) had
avg. annual churn of
28%
Companies with higher
prices (above $100) had
avg. annual churn of
50%

22. Key Points
● SMBs are more time-taxed & budget-starved than ever.
● They require clear ROI, especially with so many digital options .
● The higher the price point, the higher the demand for discernible
return.
○ Especially in a DIFM relationship where they're essentially hiring a
company as their outsourced marketing arm.
Pricing & Churn

23. SMB Category
Vertical vs. Horizontal
SMB Service Model
Partner Type
Pricing
Potential Churn Variables
Which of these variables have an effect on churn?
ie. Restaurants, Real Estate, etc.
Specialization of the Partner
DIY, DIFM, DIWM
ie. Newspaper, YP, Radio, TV etc.
Of the Offering / Bundle
?
?
?
?
Number of Products Sold as a Offering / Bundle ✕NO
YES ✔

24. Vertical vs. Horizontal & Churn
45%
40%
35%
30%
25%
15%
10%
5%
0%
20%
Vertical Partners Horizontal Partners
31%
42%

25. Vertical vs. Horizontal & Churn
45%
40%
35%
30%
25%
15%
10%
5%
0%
20%
Vertical Partners Horizontal Partners
31%
42%
Summary
Clearly horizontal media &
agencies continuously
evaluate.
Horizontals often tune their
packages to verticals.
Verticals are able to
provide a higher specialized
ROI.

26. SMB Category
Vertical vs. Horizontal
SMB Service Model
Partner Type
Pricing
Potential Churn Variables
Which of these variables have an effect on churn?
ie. Restaurants, Real Estate, etc.
Specialization of the Partner
DIY, DIFM, DIWM
ie. Newspaper, YP, Radio, TV etc.
Of the Offering / Bundle
?
?
?
Number of Products Sold as a Offering / Bundle ✕NO
YES ✔
YES ✔

27. SMB Category & Churn
Annual Churn Rate
0% 20% 40% 60% 80%
Mining & Agriculture
Transportation
Shopping
Financial Services
Industrial Goods
Arts
Restaurants
Auto
Professional
Home Services
Education
Hotels & Travel
Beauty Services
Food
Health
Active
Other
Event Services
Real Estate
Local Services

28. Annual Churn Rate
0% 20% 40% 60% 80%
Mining & Agriculture
Transportation
Shopping
Financial Services
Industrial Goods
Arts
Restaurants
Auto
Professional
Home Services
Education
Hotels & Travel
Beauty Services
Food
Health
Active
Other
Event Services
Real Estate
Local Services
SMB Category & Churn
Summary
Generally speaking, the higher the
value of a lead (for the SMB) the
lower the churn & greater the
retention (ie. Local Services, Real
Estate, and Health).
Financial and Auto are exceptions.
Highly competitive and often churn
as large cohorts (ie.
Brands/Franchises).
Under siege by vertical players.

29. SMB Category
Vertical vs. Horizontal
SMB Service Model
Partner Type
Pricing
Potential Churn Variables
Which of these variables have an effect on churn?
ie. Restaurants, Real Estate, etc.
Specialization of the Partner
DIY, DIFM, DIWM
ie. Newspaper, Radio, TV etc.
Of the Offering / Bundle
?
?
Number of Products Sold as a Offering / Bundle ✕NO
YES ✔
YES ✔
YES ✔

30. Partner Type & Churn
Annual Churn Rate
TV
Agency
IYP
SEO / SEM
PurePlay
Newspaper
Vertical
Radio
0% 25% 50% 75% 100%

31. Partner Type & Churn
Annual Churn Rate
TV
Agency
IYP
SEO / SEM
PurePlay
Newspaper
Vertical
Radio
0% 25% 50% 75% 100%
Summary
Churn Relates To:
● Bundling and trajectory of
traditional sales.
● Experience and length of time
selling digital.
● Pricing of digital by partner type.
● Types of SMB categories partner
types sell to traditionally.

32. SMB Category
Vertical vs. Horizontal
SMB Service Model
Partner Type
Pricing
Potential Churn Variables
Which of these variables have an effect on churn?
ie. Restaurants, Real Estate, etc.
Specialization of the Partner
DIY, DIFM, DIWM
ie. Newspaper, YP, Radio, TV etc.
Of the Offering / Bundle
?
Number of Products Sold as a Offering / Bundle ✕NO
YES ✔
YES ✔
YES ✔
YES ✔

33. SMB Service Model & Churn
60%
Annual Churn Rate
45%30%15%0%
DIFM
DIWM
DIY

34. SMB Service Model & Churn
60%
Annual Churn Rate
45%30%15%0%
DIFM
DIWM
DIY
Summary
DIY
● DIY still has the lowest churn…by far!
● Self selected / Engaged users.
● Reinforces the need for media &
agency to have low-cost DIY solutions.
DIFM
● Highest churn and by definition
highest priced.
● SMB demand an “ROI”
DIWM
● DIWM "middle ground" as a safe &
sought-after spot.
● SMBs outsource “work” but still
engaged.

35. SMB Category
Vertical vs. Horizontal
SMB Service Model
Partner Type
Pricing
Potential Churn Variables
Which of these variables have an effect on churn?
ie. Restaurants, Real Estate, etc.
Specialization of the Partner
DIY, DIFM, DIWM
ie. Newspaper, YP, Radio, TV etc.
Of the Offering / Bundle
Number of Products Sold as a Offering / Bundle ✕NO
YES ✔
YES ✔
YES ✔
YES ✔
YES ✔

36. Okay, So What?
What is really important?
What model do you need?
What is the prescription?

37. Given the SMB Realities
1-4 5-9
Yearly Spend
$2,506.00
10-99Employees EmployeesEmployees (Core/VSBs)
Yearly Spend
$20,694.00
Yearly Spend
$53,440.00
Total % of SMBs
63.3%
Total % of SMBs
17.5%
Total % of SMBs
19.2%
Preferred Model
DIWM / DIFM
Preferred Model
DIWM / DIFM
Preferred Model
DIY
In-Premise Sales Rep Value
Indifferent
In-Premise Sales Rep Value
Minimal
In-Premise Sales Rep Value
High
SMBs 10 to 99 employees - Advertising & Marketing Trends
SMBs with 2 to 9 employees - Advertising & Marketing Trends
LCM Wave 18 Advertising Trends of Core SMBs

38. Given the Market Realities
DIY
Low Cost Digital Solutions
DIFM / DIWM
High Spend
That the traditional business model is under attack!

39. Given Traditional Media Co Realities
● In-Premise sales force
● High cost of customer acquisition
● Shrinking verticals / customer base
● Few (if any) DIY / DIWM products
● Multiple products & reporting options
● Scaling issues

40. To Succeed You Need
A platform solution that allows you to sell to SMBs in the method,
pricing, and model that they want to be sold in.
Must Include:
● Marketing automation to lower cost of customer acquisition
● Sales force management and measurement
● Scalable solution to provide DIY/DIWM/DIFM
● Low cost DIY/Freemium Solutions with a clear path to upgrade
● Digital sales force / Tele sales
● Single Solution for partner and SMB
● Extensive Customer Reporting and deep integration of products
● Easy and cost effective onboarding and support
● White label branding
● Integration with back end systems

41. Competitive Landscape

42. Mobile: 306-717-3808
Twitter: @BrendanKing
bking@vendasta.com
Brendan King
Co-Founder and CEO
Vendasta Technologies Inc.