In his welcoming address at SaaSFest 2017, Patrick Campbell outlines the current state of the subscription economy and emplores everyone to focus on the fundamentals of developing quantified buyer personas and talking to your customers.

1. Brought to you by
The State of the Subscription Economy
DECEMBER 2017

2. Brought to you by
Today’s all about rethinking our strategy.

3. Brought to you by
We’re in the subscription economy’s adolescence.

4. Brought to you by
We’re ill prepared for the speed of the market.
This has dire consequences for your business.
HOW RECURRING REVENUE IS CHANGING

5. Brought to you by
Who in the world are you?

6. Churn
tribution
Financial
Unit
Price
Survey
Willingness to
In-App Usage
Drastically reduce churnRETAINTM
Actionable, accurate insights to make
you smarter about your business
SUBSCRIPTION METRICS
Proprietary pricing software for
monetization
MONETIZE

7. We’ve seen inside more software
companies than anyone else on the planet.

8. Brought to you by
We’re ill prepared for the speed of the market.
This has dire consequences for your business.
HOW RECURRING REVENUE IS CHANGING

9. Brought to you by
Consumers are getting hammered.

11. Competition is rampant.

12. CONSUMERS ARE GETTING HAMMERED
Number of Competitors in First Year in Business
Companies started more than a year ago had far fewer competitors in their space than companies
started today.
AVERAGE#OFCOMPETITORSINTHEIR1STYEAR
AGE OF COMPANY
2017 SOFTWARE MARKET SURVEY Brought to you by
0
8
16
10 YEARS OLD 5 YEARS OLD 3 YEARS OLD 1 YEAR OLD
14.9
7.4
3.1
2.3
N = 1432 software founders and executives

14. Sales & Marketing channels are leveling off.

15. MARKETING CHANNELS ARE PLENTIFUL
Number of Sales & Marketing Channels Utilized
Sales & Marketing channel utilization has expanded rapidly, giving the rise of more opportunities to
acquire customers from numerous different places.
AVERAGE#OFCHANNELSUTILIZED
YEARS AGO
SOURCE: 2017 MARKETING STUDY Brought to you by
0
5
10
15
15 YEARS OLD 10 YEARS OLD 5 YEARS OLD 3 YEARS OLD 1 YEAR OLD TODAY
13.89
13.22
12.43
8.31
4.72
2.31
N = 1168 software founders and executives
N
1168

16. CAC is Steadily Increasing Over Time

17. UNIT ECONOMICS AREN’T WHAT THEY USED TO BE
Customer acquisition cost has increased significantly
Customer acquisition cost has increased significantly over the years due to market saturation of
marketing vying for consumer attention.
BLENDEDCACRELATIVETOFOURYEARSAGO
SOURCE: 2017 CAC STUDY Brought to you by
-18%
0%
18%
35%
53%
70%
5 YEARS AGO 4 YEARS AGO 3 YEARS AGO 2 YEARS AGO 1 YEARS AGO Today
B2B
B2C
WHEN MEASUREMENT WAS TAKEN
N
743
N = 743 companies

18. Switching costs have decreased dramatically.

19. CONSUMERS ARE GETTING HAMMERED
Time Taken to Fully Onboard Product in an Organization
Over time, implementation time has gone down substantially, providing a leading indicator of how easy
switching between products is becoming.
AVERAGE#OFHOURSTOIMPLEMENTSOFTWARE
YEARS AGO
SOURCE: 2017 SAAS STUDY
Brought to you by
0
10
20
30
40
50
60
10 YEARS AGO 5 YEARS AGO 1 YEAR AGO
6.8
46.4
56.7
N = 894 software companies
N
894

20. Brought to you by
The Market is dropping out beneath us.

21. The relative value of features is declining.

22. THE MARKET IS DROPPING OUT BENEATH US
Consumer Willingness to Pay has Declined Over Time
Software willingness to pay has declined significantly over the past few years due to increased options
and higher demands.
WTPAS%OFWTP4YEARSAGO
SOURCE: 2017 CONSUMER WILLINGNESS TO PAY STUDY Brought to you by
0%
30%
60%
90%
120%
5 YEARS AGO 4 YEARS AGO 3 YEARS AGO 2 YEARS AGO 1 YEAR AGO TODAY
Core Features
Single Sign On
Integrations
Analytics
WHEN MEASUREMENT WAS TAKEN
N = Varies by line, but minimum of 10,000 customer respondents per line
N
921k

23. Consumers are so ungrateful.

24. THE MARKET IS DROPPING OUT BENEATH US
Despite Amazing Advances, NPS is Actually Down Overall
Average NPS scores are actually falling pretty dramatically over the past five years, indicating either
we’re just getting worse at our jobs or consumers re expecting more
AVERAGENPSSCORE
YEARS AGO
SOURCE: 2017 SAAS STUDY
Brought to you by
0
7
13
20
27
33
40
5 YEARS AGO 3 YEARS AGO 1 YEAR AGO
10.2
19.5
33.8
N = 1,784 software companies
N
1,784

25. We’re building the wrong product.

26. -50%
-40%
-30%
-20%
-10%
0%
10%
20%
30%
40%
50%
-0.5 -0.4 -0.3 -0.2 -0.1 0 0.1 0.2 0.3 0.4 0.5
Revenue Drivers
2017 SOFTWARE MARKET SURVEY Brought to you by
THE MARKET IS DROPPING OUT BENEATH US
Measuring consumer sentiment to what we’re building
DEVIATIONFROMMEDIANWTP
RELATIVE PREFERENCE MAGNITUDE

27. -50%
-40%
-30%
-20%
-10%
0%
10%
20%
30%
40%
50%
-0.5 -0.4 -0.3 -0.2 -0.1 0 0.1 0.2 0.3 0.4 0.5
Revenue Drivers
2017 SOFTWARE MARKET SURVEY Brought to you by
WE’RE BUILDING THE WRONG PRODUCT
Calculating the expected impact of product on growth
DEVIATIONFROMMEDIANWTP
RELATIVE PREFERENCE MAGNITUDE
Differentiable Features
High Value/High WTP

28. -50%
-40%
-30%
-20%
-10%
0%
10%
20%
30%
40%
50%
-0.5 -0.4 -0.3 -0.2 -0.1 0 0.1 0.2 0.3 0.4 0.5
Revenue Drivers
2017 SOFTWARE MARKET SURVEY Brought to you by
WE’RE BUILDING THE WRONG PRODUCT
Calculating the expected impact of product on growth
DEVIATIONFROMMEDIANWTP
RELATIVE PREFERENCE MAGNITUDE
Differentiable Features
High Value/High WTP
Add-Ons
Low Value/High WTP

29. -50%
-40%
-30%
-20%
-10%
0%
10%
20%
30%
40%
50%
-0.5 -0.4 -0.3 -0.2 -0.1 0 0.1 0.2 0.3 0.4 0.5
Revenue Drivers
2017 SOFTWARE MARKET SURVEY Brought to you by
WE’RE BUILDING THE WRONG PRODUCT
Calculating the expected impact of product on growth
DEVIATIONFROMMEDIANWTP
RELATIVE PREFERENCE MAGNITUDE
Differentiable Features
High Value/High WTP
Add-Ons
Low Value/High WTP
Core Features
High Value/Low WTP

30. -50%
-40%
-30%
-20%
-10%
0%
10%
20%
30%
40%
50%
-0.5 -0.4 -0.3 -0.2 -0.1 0 0.1 0.2 0.3 0.4 0.5
Revenue Drivers
2017 SOFTWARE MARKET SURVEY Brought to you by
WE’RE BUILDING THE WRONG PRODUCT
Calculating the expected impact of product on growth
DEVIATIONFROMMEDIANWTP
RELATIVE PREFERENCE MAGNITUDE
Differentiable Features
High Value/High WTP
Add-Ons
Low Value/High WTP
Core Features
High Value/Low WTP
Trash Land
Low Value/Low WTP

31. -50%
-40%
-30%
-20%
-10%
0%
10%
20%
30%
40%
50%
-0.5 -0.4 -0.3 -0.2 -0.1 0 0.1 0.2 0.3 0.4 0.5
Revenue Drivers
2017 SOFTWARE MARKET SURVEY - N = 5K+ INPUTS FROM 1282 DIRECTOR, VP, OR C-LEVEL PRODUCT LEADERS Brought to you by
WE’RE BUILDING THE WRONG PRODUCT
What we think we're building
DEVIATIONFROMMEDIANWTP
RELATIVE PREFERENCE MAGNITUDE

32. -50%
-40%
-30%
-20%
-10%
0%
10%
20%
30%
40%
50%
-0.5 -0.4 -0.3 -0.2 -0.1 0 0.1 0.2 0.3 0.4 0.5
Revenue Drivers
2017 SOFTWARE MARKET SURVEY - N = COMPOSITE DATA FROM 1.2M CUSTOMER INPUTS Brought to you by
WE’RE BUILDING THE WRONG PRODUCT
What we're actually building
DEVIATIONFROMMEDIANWTP
RELATIVE PREFERENCE MAGNITUDE

33. Brought to you by
We make matters so much worse

34. Our playbook is to acquire, acquire, acquire.

35. WE MAKE MATTER SO MUCH WORSE
Which Pillar is the Most Important in Your Business
Founders and software executives overwhelmingly put their support behind acquisition based growth
instead of caring about monetization or retention.
%OFTOTALRESPONDENTS
PILLAR OF THE BUSINESS
2017 SOFTWARE MARKET SURVEY Brought to you by
0%
50%
100%
MORE LOGOS MORE $ PER CUSTOMER KEEP CUSTOMER LONGER
21.1%
7.58%
71.32%
N = 1578 software founders and executives
N
1578

36. Pricing is an afterthought.

37. WE FOCUS ON THE WRONG FUNDAMENTALS
How much time per year do you spend on your pricing
%OFTOTALRESPONDENTS
HOURS PER YEAR
2016 SOFTWARE MARKET SURVEY
0%
50%
100%
10 hours or less 11 - 50 hours 51 - 100 hours 101+ hours
3.28%5.21%
19.2%
72.31%
N = 1432 software founders and executives
N
1432
Founders and software executives overwhelmingly indicated that their organizations are spending very
little time on their pricing each year.
Brought to you by

38. N = 1432 software founders and executives
WE FOCUS ON THE WRONG FUNDAMENTALS
How much time per year do you spend on your pricing
Founders and software executives overwhelmingly indicated that their organizations are spending very
little time on their pricing each year.
%OFTOTALRESPONDENTS
HOURS PER YEAR
2016 SOFTWARE MARKET SURVEY
0%
50%
100%
10 hours or less 11 - 50 hours 51 - 100 hours 101+ hours
6.74%8.32%
49.82%
35.12%
3.28%5.21%
19.2%
72.31%
Pricing Custodian Supplies
N
1432
N = 1432 software founders and executives
Brought to you by

39. Runaway sales is ruining our jobs.

40. MONETIZATION BENCHMARKS
Discounting Impact on Renewal Willingess to Pay
When we discount over 30%, we’re setting ourselves up for failure when it comes time for renewal.
WILLINGNESSTOPAYATRENEWALAS%OFORIGINALCONTRACT
N
941
Q3 = 75TH PERCENTILE
Q3 = 50TH PERCENTILE (MEDIAN)
Q4 = 25TH PERCENTILE
SOURCE: 2017 SAAS UNIT ECONOMIC STUDY
N
50.6k
% DISCOUNT GIVEN ON INITIAL CONTRACT
N = 50.6k Customers of B2B and B2C Products
Brought to you by

41. Acquisition is now table stakes.

42. WE FOCUS ON THE WRONG FUNDAMENTALS
Impact of Improving Each Pillar of Your Business
Monetization and retention based growth far outpaces acquisition based growth. This impact is getting
greater over time.
%IMPACTONREVENUE
SOURCE: 2016 STUDY ON COMPANY UNIT ECONOMICS Brought to you by
0%
5%
10%
15%
20%
ACQUISITION MONETIZATION RETENTION
3.32%
2008 - 2012 2013 - 2016
N
734
N = Data from 734 software companies
PILLAR OF THE BUSINESS

43. WE FOCUS ON THE WRONG FUNDAMENTALS
Impact of Improving Each Pillar of Your Business
Monetization and retention based growth far outpaces acquisition based growth. This impact is getting
greater over time.
%IMPACTONREVENUE
SOURCE: 2016 STUDY ON COMPANY UNIT ECONOMICS Brought to you by
0%
5%
10%
15%
20%
ACQUISITION MONETIZATION RETENTION
2.35%
3.32%
2008 - 2012 2013 - 2016
N
734
N = Data from 734 software companies
PILLAR OF THE BUSINESS

44. WE FOCUS ON THE WRONG FUNDAMENTALS
Impact of Improving Each Pillar of Your Business
Monetization and retention based growth far outpaces acquisition based growth. This impact is getting
greater over time.
%IMPACTONREVENUE
SOURCE: 2016 STUDY ON COMPANY UNIT ECONOMICS Brought to you by
0%
5%
10%
15%
20%
ACQUISITION MONETIZATION RETENTION
2.35%
6.71%
12.7%
3.32%
2008 - 2012 2013 - 2016
N
734
N = Data from 734 software companies
PILLAR OF THE BUSINESS

45. WE FOCUS ON THE WRONG FUNDAMENTALS
Impact of Improving Each Pillar of Your Business
Monetization and retention based growth far outpaces acquisition based growth. This impact is getting
greater over time.
%IMPACTONREVENUE
SOURCE: 2016 STUDY ON COMPANY UNIT ECONOMICS Brought to you by
0%
5%
10%
15%
20%
ACQUISITION MONETIZATION RETENTION
9.32%
15.89%
2.35%
6.71%
12.7%
3.32%
2008 - 2012 2013 - 2016
N
734
N = Data from 734 software companies
PILLAR OF THE BUSINESS

46. Brought to you by
There are clear winners and losers
in this environment.

47. CLEAR WINNERS AND LOSERS
Comparing Growth Strategies of Companies
Acquisition based growth companies grow at a smaller rate than those with a balanced growth
approach (growth from all three pillars of growth).
YOYGROWTHRATE
SOURCE: 2016 STUDY ON GROWTH Brought to you by
0%
25%
50%
75%
100%
2012 2013 2014 2015
50.81%49.81%47.91%48.91%
25.71%27.1%
31.09%
34.67%
Primarily Acquisition Growth
Balanced Growth
N
512
N = Minimum of 512 companies per segment pulled from the middle 2/3 of companies in terms of
growth rate. This, along with a dampening model was used to control for outlier spikes in growth rate.

48. We’re lazy with customer research

49. WE FOCUS ON THE WRONG FUNDAMENTALS
Customer Development Conversations Per Month
SaaS founders and executives indicated that their companies are primarily only talking to less than 10
customers in a cust dev capacity per month.
%OFTOTALRESPONDENTS
# OF CUSTOMER DEVELOPMENT CONVERSATION PER MONTH
2016 SOFTWARE MARKET SURVEY Brought to you by
0%
50%
100%
10 or less 11 to 25 26 to 50 51+
3.9%
10.1%
17.7%
68.3%
N = 1647 software founders and executives
N
1647

50. WE FOCUS ON THE WRONG FUNDAMENTALS
Experiments and Tests Per Month
SaaS founders and executives indicated that their companies are overwhelmingly running less than 10
experiments per month.
%OFTOTALRESPONDENTS
# OF EXPERIMENTS OR TESTS PER MONTH
2016 SOFTWARE MARKET SURVEY Brought to you by
0%
50%
100%
0 1 to 3 4 to 10 11+
2.71%
12.1%
37.81%
47.8%
N = 1647 software founders and executives
N
1647

51. Brought to you by
There are clear winners and losers
in this environment, too.

52. CLEAR WINNERS AND LOSERS
Comparing Cust Dev Strategies of Companies
Acquisition based growth companies grow at a smaller rate than those with a balanced growth
approach (growth from all three pillars of growth).
YOYGROWTHRATE
SOURCE: 2017 STUDY ON CUST DEV Brought to you by
0%
25%
50%
75%
100%
2012 2017
44.821%
31.72%
Minimal Customer Development
Aggressive Customer Development
N
687
N = Minimum of 687 companies per segment pulled from the middle 2/3 of companies in terms of
growth rate. This, along with a dampening model was used to control for outlier spikes in growth rate.

53. CLEAR WINNERS AND LOSERS
Comparing Cust Dev Strategies of Companies
Acquisition based growth companies grow at a smaller rate than those with a balanced growth
approach (growth from all three pillars of growth).
YOYGROWTHRATE
SOURCE: 2017 STUDY ON CUST DEV Brought to you by
0%
25%
50%
75%
100%
2012 2017
59.08%
44.821%
17.43%
31.72%
Minimal Customer Development
Aggressive Customer Development
N
687
N = Minimum of 687 companies per segment pulled from the middle 2/3 of companies in terms of
growth rate. This, along with a dampening model was used to control for outlier spikes in growth rate.

54. This should be scary.

55. Brought to you by
Buyers are the central tenet of your business
POINT OF CONVERSION
DRIVE CUSTOMERS
OFFER PRODUCT A
JUSTIFY PRICE A
OFFER PRODUCT B
JUSTIFY PRICE B
OFFER PRODUCT C
JUSTIFY PRICE C
$ $$

56. Brought to you by
We’re not focusing on the fundamentals.

57. Brought to you by
That doesn’t work anymore.

58. Brought to you by
How do we fix this?

59. That’s what today’s all about. :)

60. That’s what today’s all about. :)
#SAASFEST17 Brought to you by your friends at@PriceIntel
8:00 AM
9:00 AM
9:30 AM
10:00 AM
10:30 AM
11:00 AM
11:30 AM
12:00 PM
REGISTRATION AND BREAKFAST
WELCOME AND STATE OF SAAS
PATRICK CAMPBELL
MOWING YOUR PRODUCT LAWN: LETS
CHAT OUTCOMES AND HOW TO DESIGN
A PRODUCT TO MEET THEM
NATE WALKINGSHAW
ACQUISITION THE AGILE WAY - SCALING
MARKETING FROM $5M TO $25M
KATE MOORE
KEY CONSIDERATIONS WHEN
OPERATIONALIZING YOUR PRICING
STRATEGY
MONIKA SAHA
BREAK
INTENT DRIVEN AUTOMATION: WITH
GREAT PERSONALIZATION COMES
GREAT CONVERSATION
GUILLAUME CABANE
THE HOW AND WHY OF SUPPORT
DRIVEN GROWTH
SUNEET BHATT
12:30PM
1:15 PM
2:30 PM
3:00 PM
3:30 PM
4:00 PM
4:30 PM
5:00 PM
5:30 PM
7:00 PM
LESSONS LEARNED FROM BUILDING 5
PRODUCTS IN A YEAR
MARIE PROKOPETS & HITEN SHAH
LUNCH
DESIGNING A SAAS SALES MACHINE
STELI EFTI
COMMON SENSE SCALING
ED BYRNE
HOW TO KEEP CUSTOMERS FOR LIFE
JONATHAN KIM
BREAK
SEGMENTING FOR SUCCESS
KATIE ROGERS
STOP IGNORING PAID MARKETING, STUPID
DAVID HAUSER
THE CASE FOR FREEMIUM
PATRICK CAMPBELL
THE WHISKEY PRIEST
150 PIER FOUR BLVD,
BOSTON, MA 02210
SCHEDULE

61. Brought to you by
Two big rules…

62. Brought to you by
Pitching

63. Brought to you by
Follow the golden rule