How Product is Changing BASIS - AUGUST 2017 Brought to you by HOW - PowerPoint PPT Presentation

How Product is Changing BASIS - AUGUST 2017 Brought to you by

HOW PRODUCT IS CHANGING We’re building the wrong product, and our direction has dire consequences. Brought to you by

Who in the world are you? Brought to you by

Price ProfitWell Intelligently SaaS pricing software Free financial metrics and tech enabled for subscription services businesses Happy customers big and small Brought to you by your friends at

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

We’re very confident in what we’re building, but most of what we’re building is wrong. Brought to you by

We’re VERY confident in what we’re building.

ROADMAP CONFIDENCE We’re very confident in what we’re building Over 75% of us claim to be confident that we’re building the right features and product to help our companies grow. N 38.912% 0 AVERAGE # OF COMPETITORS TODAY 1282 36.71% 0 0 11.2% 10.88% 2.298% 0 Very Not Confident Not Confident Neutral Confident Very Confident LEVEL OF CONFIDENCE N = 1282 Director, VP, or C-Level Product Leaders Brought to you by SOURCE: 2017 PRODUCT STUDY

Unfortunately we’re building the wrong product.

WE’RE BUILDING THE WRONG PRODUCT Revenue Drivers Calculating the expected impact of product on growth 50% 40% DEVIATION FROM MEDIAN WTP 30% 20% 10% 0% -0.5 -0.4 -0.3 -0.2 -0.1 0 0.1 0.2 0.3 0.4 0.5 -10% -20% -30% -40% -50% RELATIVE PREFERENCE MAGNITUDE 2017 SOFTWARE MARKET Brought to you by SURVEY

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

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

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

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

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

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

WE’RE BUILDING THE WRONG PRODUCT Revenue Drivers What we think we’re building 50% 40% DEVIATION FROM MEDIAN WTP Add-Ons Differentiable Features 30% 20% 18% 68% 10% 0% -0.5 -0.4 -0.3 -0.2 -0.1 0 0.1 0.2 0.3 0.4 0.5 -10% Trash Core Features -20% -30% 2% 12% -40% -50% RELATIVE PREFERENCE MAGNITUDE 2017 SOFTWARE MARKET Brought to you by SURVEY

WE’RE BUILDING THE WRONG PRODUCT Revenue Drivers What we’re actually building 50% 40% DEVIATION FROM MEDIAN WTP Add-Ons Differentiable Features 30% 20% 4% 13% 10% 0% -0.5 -0.4 -0.3 -0.2 -0.1 0 0.1 0.2 0.3 0.4 0.5 -10% Trash Core Features -20% -30% 39% 44% -40% -50% RELATIVE PREFERENCE MAGNITUDE 2017 SOFTWARE MARKET Brought to you by SURVEY

Most of this is our fault. Brought to you by

The market is saturated, and unit economics just aren’t what they used to be…

Competition is now rampant.

UNIT ECONOMICS AREN’T WHAT THEY USED TO BE 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 # OF COMPETITORS IN THEIR 1ST YEAR 9.7 10 4.8 5 2.6 0 5 YEARS OLD 3 YEARS OLD 1 YEAR OLD AGE OF COMPANY N = 1432 software founders and executives 2016 SOFTWARE MARKET Brought to you by SURVEY

UNIT ECONOMICS AREN’T WHAT THEY USED TO BE Number of Competitors Today Older companies increased competition over time, likely due to attracting new entrants, as well as decreased barrier to entry N 15 AVERAGE # OF COMPETITORS TODAY 1432 12.15 11.75 10.25 10 5 0 5 YEARS OLD 3 YEARS OLD 1 YEAR OLD AGE OF COMPANY N = 1432 software founders and executives Brought to you by SOURCE: 2016 MRR CHURN STUDY

The relative value of features is declining.

UNIT ECONOMICS AREN’T WHAT THEY USED TO BE Consumer Willingness to Pay has Declined Over Time Core Features Single Sign On Integrations Software willingness to pay has declined significantly over the past few years due to increased options Analytics and higher demands. WTP AS % OF WTP 4 YEARS AGO 120% N 521k 90% 60% 30% 0% 4 YEARS AGO 3 YEARS AGO 2 YEARS AGO 1 YEAR AGO TODAY WHEN MEASUREMENT WAS TAKEN N = Varies by line, but minimum of 10,000 customer respondents per line SOURCE: 2017 CONSUMER WILLINGNESS TO PAY Brought to you by STUDY

CAC is Steadily Increasing Over Time

UNIT ECONOMICS AREN’T WHAT THEY USED TO BE Customer acquisition cost has increased significantly B2B B2C Customer acquisition cost has increased significantly over the years due to market saturation of BLENDED CAC RELATIVE TO FOUR YEARS AGO marketing vying for consumer attention. N 437 60% 45% 30% 15% 0% -15% 4 YEARS AGO 3 YEARS AGO 2 YEARS AGO 1 YEARS AGO TODAY WHEN MEASUREMENT WAS TAKEN N = 437 companies SOURCE: 2016 CAC Brought to you by STUDY

Most of this is on us.

We focus on the wrong fundamentals.

WE FOCUS ON THE WRONG FUNDAMENTALS Which Pillar is the Most Important in Our Business Founders and software executives overwhelmingly put their support behind acquisition based growth instead of caring about monetization or retention. N 100% 1432 % OF TOTAL RESPONDENTS 71.32% 50% 21.1% 7.58% 0% MORE LOGOS MORE $ PER CUSTOMER KEEP CUSTOMER LONGER PILLAR OF THE BUSINESS N = 1432 software founders and executives 2016 SOFTWARE MARKET Brought to you by SURVEY

We don’t know our buyers.

WHAT ARE QUANTIFIED BUYER PERSONAS? Quantified buyer personas are data driven profiles of the customers you’re targeting or choosing to ignore. TARGET PERSONA IGNORED PERSONA Table Stakes Tony Advanced Arnie VALUED FEATURES LEAST VALUED VALUED FEATURES LEAST VALUED ‣ SFDC Integration ‣ Analytics ‣ Analytics ‣ Chrome Extension ‣ Chrome extension ‣ API access ‣ API Access ‣ Premium Support $160 $75 LIFETIME VALUE LIFETIME VALUE $10/month $25/month WILLINGNESS TO PAY WILLINGNESS TO PAY $22 $58 CUSTOMER ACQUISITION COST CUSTOMER ACQUISITION COST Brought to you by

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. N 100% 1647 % OF TOTAL RESPONDENTS 68.3% 50% 17.7% 10.1% 3.9% 0% 10 or less 11 to 25 26 to 50 51+ # OF CUSTOMER DEVELOPMENT CONVERSATION PER MONTH N = 1647 software founders and executives 2016 SOFTWARE MARKET Brought to you by SURVEY

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. N 100% 1647 % OF TOTAL RESPONDENTS 47.8% 50% 37.81% 12.1% 2.71% 0% 0 1 to 3 4 to 10 11+ # OF EXPERIMENTS OR TESTS PER MONTH N = 1647 software founders and executives 2016 SOFTWARE MARKET Brought to you by SURVEY

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