|By Joel York||
|May 13, 2014 09:00 AM EDT||
Becoming a Metrics-driven SaaS Business is no easy task. It takes time, commitment and plenty of customers. However, the financial rewards of moving beyond standard SaaS financial metrics to SaaS customer success metrics and ultimately to sophisticated predictive analytics are significant. Each step toward SaaS metrics greatness builds upon the last. The stages of development can be classified into a natural progression of increasing SaaS business understanding from financial stability to operational measurability to revenue predictability outlined at the very beginning of this series. These stages define a SaaS Metrics Maturity Model that provides a SaaS metrics roadmap along with benchmarks at each stage of development for SaaS companies that aspire to become a Metrics-driven SaaS Business.
The SaaS Metrics Maturity model provides a SaaS metrics roadmap
along with benchmarks at each stage of development
for SaaS companies that aspire to become a Metrics-driven SaaS Business.
This is the fourth and final post in a series inspired by my ongoing collaboration with Bluenose Analytics that explores the new Metrics-driven SaaS Business based on emerging best practices in SaaS customer success metrics. The last two posts discussed the potential uses of SaaS customer success metrics for reducing churn and accelerating customer acquisition. This final post defines The SaaS Metrics Maturity Model, a path for SaaS companies to follow on their way to becoming a Metrics-driven SaaS business.
SaaS Metrics Maturity Model Stage 1:
SaaS Financial Metrics Mastery
The first step along the path to becoming a Metrics-driven SaaS Business occurs when a SaaS business achieves a stable SaaS business model that allows management to monitor the key SaaS financial metrics, including recurring revenue, customer acquisition cost, churn, growth and cost of service. Financial plans and targets are produced using these now standard financial metrics. In addition to the basic financial metrics, more advance metrics such as the customer lifetime value, churn cohorts and the various SaaS magic numbers may also be calculated.
The stage one SaaS business has a solid understanding of SaaS economics grounded in SaaS financial metrics. As the use of SaaS metrics becomes the company standard, they are pushed out into departmental plans. Sales is compensated on recurring revenue and avoids discounts based on total contract value. Marketing makes demand generation plans around revenue, upsell and acquisition cost targets. Customer success focuses on churn reduction. And, executive compensation is based on non-GAAP SaaS financial goals.
SaaS Metrics Maturity Model Stage 2:
Reactive Customer Success with Customer Success Metrics
At stage 2, The Metrics-driven SaaS Business gets serious about customer success and discovers the panacea of information available from product usage data complemented by customer demographics, transaction history, engagement tracking and primary customer research such as surveys and focus groups. It starts to delve into statistical methods and descriptive models to better understand the root causes of churn, upsell, trial conversion, purchase and onboarding. These models produce customer success KPIs and benchmarks than uncover operational opportunities for improving SaaS customer success.
http://bit.ly/1jaBPuB #saas" title="Tweet it!" target="_blank">Tweet it!
Stage 2 is an important transition stage for the Metrics-driven SaaS business. Most companies enter stage 2 out of churn frustration. The SaaS financial metrics mastered in stage 1 give the perils of churn very high visibility, but they offer no guidance for reducing it. This motivates management to explore new operational metrics and approaches to customer success. The need for account-level financial information and product usage data within the SaaS customer success organization becomes obvious, but CRM systems, marketing systems, accounting systems and the product itself often don’t provide easy access. Stage 2 is a struggle.
SaaS Metrics Maturity Model Stage 3:
Proactive SaaS Customer Success with Predictive Analytics
In stage 3, the perseverance required to slug through stage 2 really begins to pay off. The SaaS customer success metrics discovered in Stage 2 become standard KPIs that are used to construct predictive analytics. These predictive models help The Metrics-driven SaaS Business get out in front of churn and acquisition in a systematic way. Health indexes and alerts are incorporated into the daily routines of customer success reps and sales reps to increase revenue and reduce operational costs. Predictive models are plugged directly into the SaaS product to automate communications that facilitate purchase, use and upsell.
The stage 3 Metrics-driven SaaS business is becoming the master of the SaaS metrics domain, moving from art to science. However, predictive analytics in SaaS is a big data problem that only a few companies could conceivably tackle on their own. It is virtually impossible to succeed in stage 3 without significant investment in new customer success systems, as well as the integration of those systems to the product, CRM and accounting system.
SaaS Metrics Maturity Model Stage 4:
The Recurring Revenue Machine
Finally, the stage 4 Metrics-driven SaaS Business has a complete top-to-bottom understanding of the drivers of SaaS financial success. Financial planning goes beyond simple what-if spreadsheets that have no basis in operational reality. Financial goals are linked directly to operational goals using SaaS customer success metrics and predictive analytics. Targeted churn reductions are tied directly to root causes and operational initiatives with predictable results. Growth plans are based on specific improvement programs with well understood impacts on trial conversion, purchase, churn, and the productivity of sales and custom success reps.
Success in stage 4 requires an integrated management approach, especially between finance and customer success, two departments that have historically had little to do with each other. The finance-customer success partnership is essential to the Metrics-Driven SaaS Business, because it links continuous operational improvement to financial goals through SaaS customer success metrics. The stage 4 Metrics-driven SaaS Business is a well-oiled recurring revenue generating machine.
Both SaaS vendors and SaaS buyers are going “all-in” to hyperscale IaaS platforms such as AWS, which is disrupting the SaaS value proposition. Why should the enterprise SaaS consumer pay for the SaaS service if their data is resident in adjacent AWS S3 buckets? If both SaaS sellers and buyers are using the same cloud tools, automation and pay-per-transaction model offered by IaaS platforms, then why not host the “shrink-wrapped” software in the customers’ cloud? Further, serverless computing, cl...
Feb. 20, 2017 06:00 AM EST Reads: 1,626
The Software Defined Data Center (SDDC), which enables organizations to seamlessly run in a hybrid cloud model (public + private cloud), is here to stay. IDC estimates that the software-defined networking market will be valued at $3.7 billion by 2016. Security is a key component and benefit of the SDDC, and offers an opportunity to build security 'from the ground up' and weave it into the environment from day one. In his session at 16th Cloud Expo, Reuven Harrison, CTO and Co-Founder of Tufin, ...
Feb. 20, 2017 05:30 AM EST Reads: 4,576
WebRTC is the future of browser-to-browser communications, and continues to make inroads into the traditional, difficult, plug-in web communications world. The 6th WebRTC Summit continues our tradition of delivering the latest and greatest presentations within the world of WebRTC. Topics include voice calling, video chat, P2P file sharing, and use cases that have already leveraged the power and convenience of WebRTC.
Feb. 20, 2017 05:15 AM EST
DevOps is being widely accepted (if not fully adopted) as essential in enterprise IT. But as Enterprise DevOps gains maturity, expands scope, and increases velocity, the need for data-driven decisions across teams becomes more acute. DevOps teams in any modern business must wrangle the ‘digital exhaust’ from the delivery toolchain, "pervasive" and "cognitive" computing, APIs and services, mobile devices and applications, the Internet of Things, and now even blockchain.
Feb. 20, 2017 04:30 AM EST Reads: 152
With the proliferation of both SQL and NoSQL databases, organizations can now target specific fit-for-purpose database tools for their different application needs regarding scalability, ease of use, ACID support, etc. Platform as a Service offerings make this even easier now, enabling developers to roll out their own database infrastructure in minutes with minimal management overhead. However, this same amount of flexibility also comes with the challenges of picking the right tool, on the right ...
Feb. 20, 2017 03:30 AM EST Reads: 6,145
“We're a global managed hosting provider. Our core customer set is a U.S.-based customer that is looking to go global,” explained Adam Rogers, Managing Director at ANEXIA, in this SYS-CON.tv interview at 18th Cloud Expo, held June 7-9, 2016, at the Javits Center in New York City, NY.
Feb. 20, 2017 03:15 AM EST Reads: 1,338
Security, data privacy, reliability and regulatory compliance are critical factors when evaluating whether to move business applications from in-house client hosted environments to a cloud platform. In her session at 18th Cloud Expo, Vandana Viswanathan, Associate Director at Cognizant, In this session, will provide an orientation to the five stages required to implement a cloud hosted solution validation strategy.
Feb. 20, 2017 02:00 AM EST Reads: 4,156
"We host and fully manage cloud data services, whether we store, the data, move the data, or run analytics on the data," stated Kamal Shannak, Senior Development Manager, Cloud Data Services, IBM, in this SYS-CON.tv interview at 18th Cloud Expo, held June 7-9, 2016, at the Javits Center in New York City, NY.
Feb. 20, 2017 01:00 AM EST Reads: 5,215
China Unicom exhibit at the 19th International Cloud Expo, which took place at the Santa Clara Convention Center in Santa Clara, CA, in November 2016. China United Network Communications Group Co. Ltd ("China Unicom") was officially established in 2009 on the basis of the merger of former China Netcom and former China Unicom. China Unicom mainly operates a full range of telecommunications services including mobile broadband (GSM, WCDMA, LTE FDD, TD-LTE), fixed-line broadband, ICT, data communica...
Feb. 20, 2017 01:00 AM EST Reads: 832
Zerto exhibited at SYS-CON's 18th International Cloud Expo®, which took place at the Javits Center in New York City, NY, in June 2016. Zerto is committed to keeping enterprise and cloud IT running 24/7 by providing innovative, simple, reliable and scalable business continuity software solutions. Through the Zerto Cloud Continuity Platform™, organizations can seamlessly move and protect virtualized workloads between public, private and hybrid clouds. The company’s flagship product, Zerto Virtual...
Feb. 20, 2017 12:15 AM EST Reads: 971
As businesses adopt functionalities in cloud computing, it’s imperative that IT operations consistently ensure cloud systems work correctly – all of the time, and to their best capabilities. In his session at @BigDataExpo, Bernd Harzog, CEO and founder of OpsDataStore, will present an industry answer to the common question, “Are you running IT operations as efficiently and as cost effectively as you need to?” He will expound on the industry issues he frequently came up against as an analyst, and...
Feb. 20, 2017 12:00 AM EST Reads: 1,415
WebRTC is about the data channel as much as about video and audio conferencing. However, basically all commercial WebRTC applications have been built with a focus on audio and video. The handling of “data” has been limited to text chat and file download – all other data sharing seems to end with screensharing. What is holding back a more intensive use of peer-to-peer data? In her session at @ThingsExpo, Dr Silvia Pfeiffer, WebRTC Applications Team Lead at National ICT Australia, looked at differ...
Feb. 19, 2017 10:30 PM EST Reads: 6,156
With major technology companies and startups seriously embracing IoT strategies, now is the perfect time to attend @ThingsExpo 2016 in New York. Learn what is going on, contribute to the discussions, and ensure that your enterprise is as "IoT-Ready" as it can be! Internet of @ThingsExpo, taking place June 6-8, 2017, at the Javits Center in New York City, New York, is co-located with 20th Cloud Expo and will feature technical sessions from a rock star conference faculty and the leading industry p...
Feb. 19, 2017 09:30 PM EST Reads: 843
IoT offers a value of almost $4 trillion to the manufacturing industry through platforms that can improve margins, optimize operations & drive high performance work teams. By using IoT technologies as a foundation, manufacturing customers are integrating worker safety with manufacturing systems, driving deep collaboration and utilizing analytics to exponentially increased per-unit margins. However, as Benoit Lheureux, the VP for Research at Gartner points out, “IoT project implementers often un...
Feb. 19, 2017 08:00 PM EST Reads: 2,838
SYS-CON Events announced today that Technologic Systems Inc., an embedded systems solutions company, will exhibit at SYS-CON's @ThingsExpo, which will take place on June 6-8, 2017, at the Javits Center in New York City, NY. Technologic Systems is an embedded systems company with headquarters in Fountain Hills, Arizona. They have been in business for 32 years, helping more than 8,000 OEM customers and building over a hundred COTS products that have never been discontinued. Technologic Systems’ pr...
Feb. 19, 2017 06:45 PM EST Reads: 3,168
SYS-CON Events announced today that IoT Now has been named “Media Sponsor” of SYS-CON's 20th International Cloud Expo, which will take place on June 6–8, 2017, at the Javits Center in New York City, NY. IoT Now explores the evolving opportunities and challenges facing CSPs, and it passes on some lessons learned from those who have taken the first steps in next-gen IoT services.
Feb. 19, 2017 06:15 PM EST Reads: 1,098
SYS-CON Events announced today that WineSOFT will exhibit at SYS-CON's 20th International Cloud Expo®, which will take place on June 6-8, 2017, at the Javits Center in New York City, NY. Based in Seoul and Irvine, WineSOFT is an innovative software house focusing on internet infrastructure solutions. The venture started as a bootstrap start-up in 2010 by focusing on making the internet faster and more powerful. WineSOFT’s knowledge is based on the expertise of TCP/IP, VPN, SSL, peer-to-peer, mob...
Feb. 19, 2017 06:00 PM EST Reads: 1,411
Containers have changed the mind of IT in DevOps. They enable developers to work with dev, test, stage and production environments identically. Containers provide the right abstraction for microservices and many cloud platforms have integrated them into deployment pipelines. DevOps and containers together help companies achieve their business goals faster and more effectively. In his session at DevOps Summit, Ruslan Synytsky, CEO and Co-founder of Jelastic, reviewed the current landscape of Dev...
Feb. 19, 2017 05:45 PM EST Reads: 5,386
SYS-CON Events announced today that delaPlex will exhibit at SYS-CON's @CloudExpo, which will take place on June 6-8, 2017, at the Javits Center in New York City, NY. delaPlex pioneered Software Development as a Service (SDaaS), which provides scalable resources to build, test, and deploy software. It’s a fast and more reliable way to develop a new product or expand your in-house team.
Feb. 19, 2017 05:45 PM EST Reads: 967
The security needs of IoT environments require a strong, proven approach to maintain security, trust and privacy in their ecosystem. Assurance and protection of device identity, secure data encryption and authentication are the key security challenges organizations are trying to address when integrating IoT devices. This holds true for IoT applications in a wide range of industries, for example, healthcare, consumer devices, and manufacturing. In his session at @ThingsExpo, Lancen LaChance, vic...
Feb. 19, 2017 05:00 PM EST Reads: 8,171