2013 Pacific Crest SaaS Survey

For Entrepreneurs

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. Business Model SaaS CAC churn

2014 Pacific Crest Saas Survey- Part 2

For Entrepreneurs

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 […]. Business Model SaaS Startup Help 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.

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This Is Why You Should Start A Subscription Box Business

YoungUpstarts

Subscription business models have been around for a pretty long time, but thanks to modern technology, this model has evolved from milk or newspapers delivery to a versatile eCommerce experience. One characteristic remains: the products subscription businesses can provide, ranging from magazine subscriptions to literally anything, can appear on a customer’s doorstep every day, week, month or year. Subscription business brings recurring revenue.

Shark Tank Season 4 week 10 breakdown

Lightspeed Venture Partners

Season 4 of week 10 of Shark Tank was interesting because two of the pitches were for internet businesses that I could imagine seeing in my day job as a Silicon Valley Venture Capitalis t. They are seeing an 85% monthly renewal rate. All e-commerce businesses should be examined through the lens of customer acquisition cost and lifetime value. I speculate that a tie lasts two years under this model before you have to replace it, and there are perhaps 4 exchanges per month.

When Customers Make You Smarter

Steve Blank

Here’s what happened when an extraordinary Digital Health team gained several critical insights about their business model. In Week 1 the Tidepool team diagramed its customer segment relationships like this: Using the business model canvas they started with their value proposition hypotheses, articulating the products and services they offered for each of the five customer segments.

Startup Benchmarks

VC Cafe

All Good to Great companies began the process of finding a path to greatness by confronting the brutal facts about the reality of their business. One question that keeps coming up when speaking with early stage entrepreneurs when it comes to funding, is what metrics the company needs to hit to raise seed/series A/B etc: What’s a good conversion rate? Is my churn rate below the category average? Benchmarks are typically specific to stage/business model/geo.

B2C 100

Visualizing the Interactions Between CAC, Churn and LTV

A Smart Bear: Startups and Marketing for Geeks

If you like this, go see his Shockwave Innovations blog ) Anyone that has taken an accounting class or learned basic business financials knows the interaction between key elements of a P&L (revenue, cost, expense) and a balance sheet (assets, liabilities, equity). But it’s surprising to me how many companies with recurring/subscription revenue don’t understand the interactions between the elements that make up customer acquisition cost (CAC), churn and lifetime value (LTV).

9 Things That Take a Pitch From Good to Great

Up and Running

It must be because they think they need to address every aspect of their business plan in one fell swoop, but doing so makes them seem anxious, tense, and nervous. Outline your business model. Your business model tells an investor how your idea will (or does) convert into being economically viable. The best way to show you how to communicate your business model is to show you an example of a good one. Think about when Henry Ford built the Model T.

14 Entrepreneurs Describe The BHAGs (Big Hairy Audacious Goals) For Their Business?

Hearpreneur

Often entrepreneurs and business owners create their daily, weekly, quartely or yearly goals around their business. I launched the business just a couple of months ago (July 15th) with great success. We don’t follow the invented here model. 4- Reduce churn rate by half. My big hairy audacious goal for my business by the end of this year is to reduce our churn rate by half. We can protect businesses and consumers from harm.

9 Things That Take a Pitch From Good To Great

Up and Running

I’ve seen hundreds of business pitches, and most of them—at best—are just okay. It must be because they think they need to address every aspect of their business plan in one fell swoop, but doing so makes them seem anxious, tense, and nervous. Outline your business model. Your business model tells an investor how your idea will (or does) convert into being economically viable. Your business model should answer the questions: What do you sell?

SaaS CRO: What You’re Not Testing (But Should)

ConversionXL

Exhibit A: This is the table of contents from the article that currently ranks first for the keyword “conversion rate optimization tips.” Exhibit B: This is the best-selling course in the “Conversion Rate Optimization” category on Udemy. They advocate for your company and/or product, actively referring new business to you. They’re at-risk or churned, and need to be re-engaged. Customer loyalty is very, very lucrative for businesses. Renewal rate.

A Complete Guide to Forecasting Sales for Your Monthly Subscription Business

Up and Running

Some subscription models, like gym memberships and magazines, have been around for a long time, while other subscription businesses are brand new and innovative. And, it’s no wonder that businesses are trying to come up with new and innovative subscription business models that they can offer to their customers. Finally Churn, which is the ultimate number that any company with a subscription business model must pay very close attention to.

Practical Advice For Growing Your Software Business w/ Lars Lofgren of KISSmetrics

ConversionXL

When a business increases it’s webinar attendance by 1000% & net $40,000 in the first 3 sessions, you should probably listen to what they’re doing right. What Are The Mechanics Of A Business Growth Engine? Calculate Your Churn. ” The easiest metric for subscription software products to check is churn rate. . “On SaaS, target churn rate should be around 2% monthly churn.

Why Metrics Get Worse With Scale

Seeing Both Sides

Conventional wisdom suggests that the most important metrics for a startup - such as unit economics, cost of acquisition, lifetime value, churn rates - typically get better with time. I hear this asserted frequently by entrepreneurs who confidently project their businesses with increasingly improving metrics as they scale into the future. Take growth rate as a simple one. Thus, more mature companies naturally have slower growth rates than younger ones.

The Lean Analytics Cycle: Metrics > Hypothesis > Experiment > Act

Occam's Razor

To win in business you need to follow this process: Metrics > Hypothesis > Experiment > Act. The book introduces a wonderful process called the Lean Analytics Cycle, which aims to help you create a sustainable way to pick metrics that matter by tying them to fundamental business problems, creating hypotheses you can test and driving change in the business from the learnings you identify. One thing the cycle can't do is help you understand your own business.

3 Ways to do Cohort Analysis on SaaS Churn

Guy Nirpaz

This week, Jason Cohen wrote a very comprehensive blog on software-as-a-service churn: Deep Dive – Cancellation Rate in SaaS Business Models. Jason looks at many different definitions for the SaaS Cancellation Rate metric. Eventually, Jason recommends performing cohort analysis when looking at cancellation rates. However, I argue that this is not the only, and maybe not always the best, way to do cohort analysis on SaaS churn.

SaaS CRO: What You’re Not Testing (But Should)

ConversionXL

Exhibit A: This is the table of contents from the article that currently ranks first for the keyword “conversion rate optimization tips.” Exhibit B: This is the best-selling course in the “Conversion Rate Optimization” category on Udemy. They advocate for your company and/or product, actively referring new business to you. They’re at-risk or churned, and need to be re-engaged. Customer loyalty is very, very lucrative for businesses. Renewal rate.

Recurring Revenue is Magic

Seeing Both Sides

But many years later, I began to appreciate that one of our core flaws was our business model. But the downside to our business model was that we did not have hardly any recurring revenue. . When I discuss business models with entrepreneurs and investors, there is a varying appreciation for why recurring revenue is so special. Recurring revenue business models are not a little bit better than non-recurring models.

How to Write a Business Plan for a Subscription Box Service

Up and Running

The subscription box industry is growing rapidly thanks to a steady revenue model and tapping into people’s love for surprises. But with so many people trying to get their share of the growth, many subscription box businesses fold within a year or two.

Lean Analytics

Startup Lessons Learned

Normal depends on what kind of business you're in, and what stage of that business you're at. Start with metrics in mind To help with this, the book looks at dozens of metrics—such as churn, customer lifetime value, viral coefficient, acquisition cost, uptime, and engagement—and suggests where that metric should be before you can move on to the next stage of your business. In the early days of a SaaS business, churn really doesn’t matter that much.

How To Calculate & Increase Customer Lifetime Value

ConversionXL

I bring this up because time & time again, I see business owners reallocating budgets based on soundbite statistics and ending up with disastrous results. If you want to see your business grow, I can not underscore the importance of analyzing your own data to establish viable benchmarks and goals enough. It appears that LTV should be about 3 x CAC for a viable SaaS or other form of recurring revenue model. Calculating Your Customer Retention Rate.

VCs eating our own dog food: Using technology and analytics to make better investments

David Teten

But in business, you want a lot of partners. This is a great example of why data businesses have substantial moats. She is a model for us all! I use FullContact to import business cards and sync other data sets with my CRM.

Twitter Link Roundup #199 – Small Business, Startups, Innovation, Social Media, Design, Marketing and More

crowdSPRING Blog

These posts and videos are about logo design , web design , startups, entrepreneurship, small business, leadership, social media, marketing, and more! Empower Your Small Business: 4 keys to success, 2014 trends, content marketing – crowdspring.co/19PV71E. Study Finds Small Businesses Waste 25 Percent Of Their PPC Budgets - crowdspring.co/GNk8Aa. Small Business and Startups: The Trends for 2014 (Pt I) | by Mike Samson - crowdspring.co/164zLP9.

Focus on awareness and metrics are keys to success

Up and Running

” As he told BBC News , “There’s only one strategy for growth we can have now and that is rolling up our sleeves and doing everything possible to make it easier for businesses to grow, to invest, to take people on.” A more fundamental problem that entrepreneurs can control, however, is related to their understanding of the key revenue drivers of their businesses. Who needs a business plan when there is work to be done?” Business Planning

How to Conduct a SaaS Funnel Audit

ConversionXL

After fighting tooth-and-nail to launch your SaaS business, the last thing you want is a leaky sales funnel to undermine all your hard work. Because even a small leak can snowball into a gushing cascade of leads, leaving your business bone-dry. A flowing sales funnel is crucial in any business, but even more so with SaaS businesses… Unlike other business models, revenue is generated over an extended period of time. Churn. Customer Churn.

8 Effective Ways Your Small Business Can Wow and Win Back Lost Customers

crowdSPRING Blog

Your customers are your business’s most valuable resource. In fact, businesses expect to lose customers. There’s even a term for measuring that loss – churn rate. And, for obvious reasons, your business should aim to minimize the number of customers who disengage. But, it does mean that you should evaluate how much time your business spends trying to get new customers vs. building stronger relationships with the ones it already has.

How to create a profitable Freemium startup (spreadsheet model included!)

andrewchenblog.com

Check out my list of featured essays How to create a profitable Freemium startup (spreadsheet model included!) As part of the talk, we worked on a spreadsheet model for freemium businesses that we didn’t get enough time to work on – so I’m going to cover it in this post!

How to Write a Business Plan

Up and Running

You’ve reviewed what a business plan is , and why you need one to start and grow your business. It’s time to dig into the process of actually writing a business plan. In this step-by-step guide, I’ll take you through every stage of writing a business plan that will actually help you achieve your goals. First, a few must-follow rules for writing a business plan. > Business plans should be short and concise. One sentence business overview.

Webinar Recap: 14 Tips on How to Pitch and Get Funded

Up and Running

” Our featured speaker was Caroline Cummings, the VP of Business Development at Palo Alto Software. She is regularly invited to participate as a judge for business plan competitions, as well as speak on topics including entrepreneurship, angel investing, social media, and authentic self promotion. Needless to say, the webinar was absolutely packed with great tips on what it takes to pitch your business so that investors take notice. Then there’s businesses.

Cracking The Code: The Bessemer 10 laws of SaaS - Fall 2008.

Cracking the Code

Here is theFall 2008 version: Your key monthly business metrics are: CMRR (Committed Monthly Recurring Revenue), Churn, and Cash flow - “Bookings” is for suckers Customer Acquisition Cost (CAC) and Customer LifeTime Value (CLTV) are the best indicators of long term value creation Tune before you scale: the Sales Learning Curve is even more critical for SaaS and it takes at least $300k MRR to climb it. You validated our business model and added huge value to our efforts.

Crazy! 189 Answers To The Top Startup Questions On Your Mind

maplebutter.com

What is the best advice you can give for finding a business partner? Don’t quickly choose any business partner. If you’re looking for business talent – go to the business meetups. I don’t have any formal business training and I actually think it’s served me well. My goal is to some day get an honorary degree for kicking ass in business. I have the vision, model and the core elements of the ideas established. No investor cares about a business plan.