Understanding SaaS Metrics

#StartupBasics | Series by Insights Alley (Hosted by Arun Verma)

S01E07 -Understanding SaaS Metrics

Guest: Nick Franklin, Founder & CEO at ChartMogul

 

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In this episode of #StartupBasics, we discussed:

– The Story of Nick from his early career to Zendesk & now ChartMogul.

– Metrics to track in very early stage of your startup: How many people are signing up? Are they logging in? Are they coming back to the product? How often they login back?

– Metrics vs KPI

– Different type of metrics buckets reflecting different parts of your business:

  • Product Usage Metrics
  • SaaS Business Metrics
  • Financial/Accounting

– The upside of using subscription analytics tools for your SaaS Business metrics

– MRR & ARR:

  • Understanding MRR & ARR in detail
  • Importance of MRR
  • Two ways to think of ARR
  • How to calculate it?

– The number of Customers/Accounts & ARPA/ARPU:

  • How to calculate it?
  • It’s significance
  • How segmentation brings more meaning to your metrics

– CAC:
The best customer acquisition method is by word of mouth

– LTV:

  • Understanding Customer Lifetime Value
  • How to calculate it?

– Customer Lifetime Period & Payback Period

– Churn:

  • Understanding Churn & Churn Rate
  • Types of Churn

– Benchmark for these Metrics
Matrix Partner’s Annual Private SaaS Company Survey

– CAC to LTV Ratio:
David Skok’s Lecture on CAC to LTV Ratio

– Health & Sustainability of your SaaS Business

  • Cash in the Bank, Burn Rate and Runway
  • Churn Rate & SaaS ceiling

– Overlooked Metrics

– The relation between SaaS business metrics & product usage metrics.

 

Resources mentioned:

 

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Pricing Strategy for B2B & B2C SaaS startups

#StartupBasics | Series by Insights Alley (Hosted by Arun Verma)

S01E06 – Pricing Strategy for B2B & B2C SaaS startups

Guest: Patrick Campbell, Co-Founder & CEO at ProfitWell

 

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In this episode of #StartupBasics, we discussed:

– The Story of Patrick from his early days to Price Intelligently & now ProfitWell.

– Importance of Pricing strategy in your business.

– Free Trial vs Freemium
Freemium is not a Revenue Model, it is instead an acquisition method.

– What type of Pricing strategies are there? Problems with them & which is the best strategy?

  • Cost+Markup
  • Competitive Benchmarking
  • Value Metric based pricing

– How to find the Value Metric?

  • We are able to measure value now that we are creating for our users like we were not able to do 10 years ago.
  • Thinking of value metric in very basic fundamental things.
  • How to find your value metric – Step by step process, with an example for a CRM.

– How to find the exact price point in early-days?

  • Understand that human beings think of value on a spectrum.
  • What questions to ask to find out the right initial price point?

– How to update pricing?

  • Pricing complexity & how often?
  • Your price is the exchange rate on the value you are providing to your customers.
  • Probably you are not great at pricing right now.
  • Treat pricing as the growth lever as it deserves to be treated as.

– What to do with old customers with old pricing?
What not to do? and what to do?

– About One-time fee, Add-on and service fee from your customers.

– How to make kick-ass pricing page?

  • Think in terms of user persona that come on your page.
  • Align everything based on the different buckets of different personas
  • Self-serve vs Contact Sales: Understand the unit economics of each plan/persona pairing.

– Pricing Localization: How to do it? with examples

– What to test and optimize in your pricing strategy?

  • Don’t A/B test your pricing, unless you are Amazon.
  • The pricing strategy of Drift vs Intercom

– What to test and optimize in your pricing strategy?

– Reflecting brand in your pricing

– How to start now when you did not any of this stuff from starting?

– Pricing of ProfitWell itself

– Pricing is a Process, not a magic bullet.

 

Resources mentioned:

 

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The Philosophy of Jobs to be Done theory/framework

#StartupBasics | Series by Insights Alley (Hosted by Arun Verma)

S01E03 – The Philosophy of Jobs to be Done theory/framework

Guest: Alan Klement, Author of “When Coffee and Kale Compete

 

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In this episode of #StartupBasics, we discussed:

– Jobs to be Done or JTBD according to Alan.

– Famous example explaining JTBD theory: McDonald’s Milkshake’s Job to be Done by Clayton Christensen

– Jobs remain the same, the products we hire to do those jobs change. It’s true but much more complicated than that – Alan’s viewpoint and maybe we need to rethink that.

– JTBD in making software products. Jobs Data vs Usability/User Experience Data.

– While making software products, how to find jobs that people would hire your product to do?: Feedback Loops, Catalysts, Constraints.

– Why User Persona is flawed, not with their intent, but as a model. Behaviour & Motivations are demographic agnostics.

– Replacing User Story with the Job Story: When ____, I want to ____, So I can ____
Another way Alan is using Job Story is making them for products that don’t exist.

– How to do Switch Interviews or Jobs To Be Done Interviews. Difference between Switch Interview & Customer Development Interview.

– How to prioritize for multiple Job stories people are hiring your product for?

– Jobs to be Done is not a series of steps to be done, but a theory to understand how the market operates, what causes consumers to buy & use products.

– What is JTBD and what it is not?

Resources mentioned:

  • Book: “Sprint: How to Solve Big Problems and Test New Ideas in Just Five Days” by Jake Knapp, John Zeratsky & Brad Kowitz
  • Book: “When Coffee and Kale Compete: Become great at making products people will buy” by Alan Klement
  • Book: “Competing Against Luck: The Story of Innovation and Customer Choice” by Clayton Christensen, David Duncan, Karen Dillon, & Taddy Hall
  • Blog: Jobs to be Done Medium Blog
  • People: Steve Blank (for Customer Development)
  • People: Clayton Christensen (for Jobs to be Done)

 

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Make a Growth system and culture in your startup

#StartupBasics | Series by Insights Alley (Hosted by Arun Verma)

S01E02 – How to make a Growth system and culture in your startup after product market fit?

Guest: Dani Hart, Former Head of Growth at GrowthHackers

 

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In this episode of #StartupBasics, we discussed:

– Why not build a Growth System or Team before Product Market Fit? and How to define Product market fit?

– The method by Sean Ellis to identify if you have got PMF: Link to the Survey

– Understanding the NorthStar Metric & Growth objectives.

– The Growth Process:

  • Ideas –> Prioritize –> Test –> Analyze
  • Rapid testing drives Growth.
  • The growth process is a feedback loop.
  • Growth meetings.

– Prioritization of growth ideas and speed of testing, resource management and rate of ideation.

– 2 Big Challenges: Just getting started with the process and then maintaining consistency.

– “Hypothesis” in a growth experiment/idea.

– Determining Success or Failure criteria of your experiments & statistical significance. Link to Statistical Significance Calculator.

– Which part of the funnel to focus on? Acquisition, Activation, Usage, Retention?

– Feeding the growth system with ideas: Empower your entire team to contribute to your growth idea generation process.

– Organized & Documented Learning:

  • Learn from each experiment (failed or successful).
  • Keep a good track of what has been tested in the past for your own learning & future team members.
  • Revisiting failed ideas.
  • Don’t give up on the growth system. Failed experiments are a part of the process.

– Component of a growth team & contribution of founders. Common mistakes & example of a successful experiment.

Resources mentioned:

  • Book: “Hacking Growth: How Today’s Fastest-Growing Companies Drive Breakout Success” by Sean Ellis & Morgan Brown
  • People: Brain Balfour
  • People: Sean Ellis
  • People: Morgan Brown

 

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Grow Leads / Sales like a Hedge Fund

#StartupBasics | Series by Insights Alley (Hosted by Arun Verma)

S01E01Why & How to grow Leads/Sales from existing & new channels like a Hedge Fund?

Guest: Gaurav Agarwal, VP Growth at Molekule

 

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In this episode of #StartupBasics, we discussed:

– Growth: Outcome of different processes that have been coordinated to work well with each other. Systemic growth needs to be: Sustainable, Robust, Scalable & Expansive.

– The difference in growth systems for B2B vs B2C.

– Effects of being dependent on only one channel to drive your growth. Risk & return period for each channel of your lead acquisition.

– Thinking of lead channels in terms of Portfolio theory. Risk, reward and the expected value of each channel. Real example with numbers. Upside and hedge. Exploring existing and new channels, use a mix of predictable & moonshot channels.

Gaurav’s Google Sheet

-Predicting outcomes of new channels beforehand. Optimizing current channels.

-Doing customer development with one or more channels.

Resources mentioned:

 

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