This week’s SaaS roundup features helpful tips on lead nurturing, SaaS customer discovery plans, how to present quarterly sales forecasts to your board and more! Let’s get started…
What is lead nurturing? Lead nurturing refers to the automated process of taking a person from one step to the next in the buying cycle, automatically. In his latest post, Intercom‘s Geoffrey Keating shares 7 brilliant nurture messages, and explains when to send them. Not enough? Keating also offers 6 tremendously helpful strategies for tailoring your lead nurturing campaign to each customer’s needs.
Between 40% and 60% of people who sign up for a free trial of your software will never convert. What are you doing with the leads that don’t convert right away? If your answer is “nothing,” you’re leaving money on the table.– Geoffrey Keating
The always-insightful Clement Vouillon unveiled a fresh approach to building simple and effective SaaS customer discovery plans. But how do you know if you need a better customer discovery plan? Vouillon asks 3 questions to help you analyze your current plan, and shares 5 tips for building a better one today.
For each persona, you should be able to describe exactly what a typical day for them looks like, what frustrates them, what excites them, how they work etc. It’s not only about what your product can do for them, but about understanding your customers deeply. You have to become an expert at your “persona”, and not just at your product.– Clement Vouillon
Is there ever a reason to celebrate churn? According to ProfitWell‘s Wilson Davis, the answer is “kind of”. In this article, Davis speaks to outcome-driven SaaS businesses, and deals with the customers who churn after the product “did its job”. These are customers who cancel a subscription strictly because they no longer have a need for it, and leave satisfied with their experience. Wilson urges SaaS businesses to deeply analyze what this type of churn means, to celebrate the success within, and to grow from what they learn from it.
It’s no secret that churn, whether it’s good or bad, hurts a subscription company’s bottom line. If new customer acquisition and net revenue retention do not offset your ability to retain customers, you’re dealing with a leaky bucket of a business that’s bound to become totally parched. And you cannot rely on the positive morale of your happily churned customers alone to save your business.– Wilson Davis
So what steps can your subscription company take if you’re successfullychurning customers? In other words, how can you survive with a high “good churn” rate?
Though SaaS metrics should be tailored to suit the capital structure and funding goals of a startup, certain metrics are almost guaranteed to be more valuable than others. Last week, Fundica published an article spotlighting the best metrics for gaining attention from investors, while linking to several other fantastic metric-centered articles in the process.
Fábio Mazzeu of SaaSholic, who once stated that the five metrics all subscription businesses should track were monthly recurring revenue (MRR), customer lifetime value (LTV), customer acquisition cost (CAC), average revenue per account (ARPA), and churn, later amended this claim, adding that where you are in the funding process will naturally dictate which metrics are most important. Above all else, he argues, your key metrics should be focused, actionable, and subject to change as your company grows, moving from qualitative feedback towards more quantitative figures.– Fundica
For those who may not be familiar, the Rule of 40 is an industry rule of thumb that says a high-growth SaaS company can burn as much cash as it wants to grow — as long as its growth rate is 40 percentage points higher than its free cashflow margin. In Enterprise Irregulars‘ latest posting, Dave Kellogg discusses a relatively new update to the SaaS rule of 40, and shares quite a few insightful and “nerdy” observations on what it all means.
My instinct at this point is that many companies target R40 compliance too early, sacrifice growth in the process, and hurt their valuations because they fail to deliver high growth and don’t get the assumed customer acquisition cost efficiencies built in the financial models, which end up, as one friend called them, spreadsheet-induced hallucinations.– Dave Kellogg
This article comes to us from our new friends at OPEXEngine, who reached out to us last week asking to be considered for this week’s roundup. And we’re so glad they did! Their blog is brimming with fantastic SaaS-related content, and has become a new favorite of ours. Last week’s offering instructs readers on how to properly present a quarterly sales forecast to you SaaS company board, and leaves no question unanswered in the process.
Communication with your board members will be more effective if you have standard definitions for “forecast” or “best case.” I like to define “forecast” (at the VP of sales level) to be 90% confidence in beating and “best case” to mean 20% confidence in beating. This means you get to miss your forecast once every 2.5 years and you should beat your best case once every 5 quarters.– OPEXEngine
Thanks so much for joining us for this week’s SaaS roundup! We hope to see you back here next Monday!