This week’s SaaS roundup features tips for calculating revenue run rate, perfecting customer health scores, improving SaaS user engagement and much more! Let’s get started…
Every six months, Redpoint‘s Tomasz Tunguz takes a fresh look at how the public markets are valuing next-generation software companies. His findings are always quite fascinating, but the latest report is especially revealing. Tunguz’s June 2019 chart shows that the variance of the forward multiple has increased from about 3x to about 7.6x in the last six months. This is another way of saying that multiples have expanded at the upper end of the spectrum quite significantly, reaching shockingly high numbers. This comes as great news for public companies because this means they can raise capital at lower and lower costs, and smaller and smaller dilution. No matter how you slice the numbers, the future of SaaS is looking bright!
As of mid-June, the public markets value software companies at all-time highs.– Tomasz Tunguz
ProfitWell‘s Patrick Campbell takes a magnifying glass to one of the lesser-known SaaS metrics. What is revenue run rate? Sometimes called annual run rate, revenue run rate lets you estimate how much revenue you might expect from your SaaS company throughout the next year. For those who may be unfamiliar with this metric, Campbell’s guide takes you through every step of understanding the benefits and risks of it, and teaches readers how to properly calculate it. It’s a one-stop-shop for those interested in tracking this metric.
Your run rate is a valuable metric for tracking the performance of your subscription company, particularly if you’ve only been in business for a short time. It’s a quick and easy way to get a benchmark on your revenue—but it’s also an easy metric to abuse and an easy metric to miscalculate, sometimes with harmful consequences.– Patrick Campbell
CustomerSuccessBox Head of Marketing Nilesh Surana warns readers that a single customer health score is not ideal for a B2B SaaS business, and breaks down the best practices for proper health score configuration. Surana also discusses why health scores are important in the first place, when and why they fail, what the five dimensions of a health score are and how to keep things just simple enough to get the job done right. Surana’s advice? “Keep it simple, stupid.”
Lagging indicators only alert you when a fire has to be put out and not when the fire is about to start.– Nilesh Surana
How to Build SaaS Product? Tips and Tricks. Why Do You Need It? How Is It Developed? How To Monetize?
Ukraine & Swiss-based development company Incode Group have put together a fantastic SaaS crash-course for both experienced and inexperienced SaaS-centric Medium readers. Thorough without appearing overly indulgent, this 12-minute read does a brilliant job of filling in the blanks left in many glossary-style pieces while also forging into territory all it’s own. Presented as half article, half Q&A – Incode Group CEO Oleh Meleshko really pulled something special together with this piece, and we’re happy to go along for the ride!
I do think SaaS is vital because it’s simultaneously customer-oriented and yet relatively easy to monetize. This makes it viable for a company and a good fit in terms of service quality. SaaS, as a format, weeds out the weaker projects all on its own, leaving little room for janky software.– Oleh Meleshko
Mia Jacobs of Totango is quickly becoming a household name in the SaaS community, earning her spot amongst the top internet contributors one fantastically-enlightening piece at a time. Dusting off her brilliant writing skills for her 5th piece this month, Jacobs dives into the issue of low user adoption, and what to do about it. After explaining the most common causes of low user adoption, Jacobs shares 7 tips for improving adoption today, and closes the article out with a call for a change of perspective. Meet your low user adoption head-on!
Low user adoption isn’t a lost cause. Rather, it is an opportunity to reinvest in your customer and your mutual growth.– Mia Jacobs
We always look forward to the articles published on Inside Intercom, so you can imagine our joy when the blog’s recent content-drought broke this past week with a wide assortment of great articles – including Cindy Chang’s latest piece. Discussing the challenges related to keeping new SaaS users engaged with your welcome page, Chang breaks down what separates the good welcome pages from the bad ones. With a wide variety of fantastic examples included, Chang takes 8-minutes to thoroughly detail the power of a strong welcome page, why they work, and why they don’t. If you’re looking to increase your SaaS user engagement, this article is for you.
When a user sees your welcome page, it should be personalized for them. At minimum, this means including their name, but ideally, this page should be tailored to their role, how they’re going to use your product, or what kind of plan they’ve chosen.– Cindy Chang
Thanks so much for joining us for another SaaS roundup. We hope to see you here again next Monday!