Top 10 in Tech A WEEKLY NEWSLETTER

Top 10 in Tech - What to know for Week ending June 26, 2020

6/26/2020

SaaS METRIC OF THE WEEK: Customer Loyalty - it’s actually an amalgam of metrics - Net Promoter Score (shout out to Ask Nicely), CSAT (shoutout to Thematic), Churn Rate, and MRR. Profitwell describes a five-step process to develop a customer loyalty program here.
MARKETING: So how do you measure up as a business? Get started here with the 9 marketing disciplines of great SaaS companies, created by the former CMO of Zendesk and Slack, then complete the Marketing Scorecard Spreadsheet here, scoring each on a 1 to 10 scale. A deeper explainer is on this post.
EXPANSION and RETENTION: Acquiring customers Isn’t enough, expansion and retention are growth practices any good SaaS company needs to get a grip on. They are both deeply related so in this deep dive let's get started with benchmarking. Here is what good expansion looks like and here is what good retention goals should be benchmarked against and how to optimize them.
SECURITY: The ever-increasing adoption of cloud-based software creates more exposure to bad actors looking to exploit vulnerabilities. Tech companies should be continually concerned about the security of the software being built. OWASP can help you out here - it’s a foundation working to improve the security of software and maintains a Top 10 list of the most critical security risks to web applications.
PITCH: If you are looking to raise capital, burn this into memory: You have 2-4 slides tops to grab the attention of an investor. Use those slides wisely and don’t go beyond 12-15 TOTAL. Oh and also do these 4 things as a business to be VC friendly.
PROFESSIONAL SERVICES: It’s a weird open secret that a lot of B2B SaaS businesses generate a significant amount of revenue from implementation and deployment projects, often captured as revenue from Professional Services, due to deployment and configuration complexity. So what are the revenue benchmarks for a SaaS Business to captured revenue through professional services? On average it caps out at 11% of all annual revenue with Enterprise focused businesses but even at the lower end of town it’s still 5% of revenues with SMB focused businesses.
SALES: The Series A funding round is a stamp of approval, product-market-fit is evident and the capital is expected to be spent on growth. PointNine Capital has a great article on how to build a sales engine at Series A.
BUILD or BUY: I’m constantly in a debate (mainly with myself) of whether to build or integrate with an existing app/service to solve a problem in my business or introduce a new feature on behalf of a customer/feature request. So (like me), you should read this article to get a better grip on assessing the pros and cons of either a build or buy strategy.
ED-TECH: Not often referenced in this newsletter - but the sector has become a hotspot and a lifeline in eduction during the COVID-19 pandemic. So how impactful are the technologies to learning pedagogies outside of the traditional brick-and-mortar classroom? McKinsey have an extensive report here TL;DR - it depends on who, how, where and what - there are gaps.
WEBSITE: GrowthInsider have released a great and comprehensive list of the biggest mistakes made on websites and to flip that in a more positive light, here are some ways you can supercharge your website (using research).

POD OF THE WEEK: I love good growth stories and I also love DataDog (I'm a customer). So check out how they got to over a half BILLION in revenue with their product led go-to-market strategy.

Top 10 in Tech - What to know for Week ending June 19, 2020

6/19/2020

SaaS METRIC OF THE WEEK: Activation Rate: According to Jason Lemkin, Activation Rate is one of the 3-4 most important metrics in SaaS. His observation is pretty pragmatic: 90% or more of your customers need to activate in the shortest practical time. And you need to track this, measure it, and discuss it weekly. Every week. If you don’t, so much of that hard work is down the drain. Read more on his thought here.
CUSTOMER SUCCESS: This is a getting-started deep-dive. We all have a pretty good idea of what Customer Success is and why it’s important (if not read this), but getting started can be a bit tricky and overwhelming. Read this article to better understand how to create a customer success journey
PRICING: Should always be viewed as a continual experiment of never-quite-right. Chargify has a list of 5 pricing scenarios to test as a SaaS company, with real examples to compare.
VENTURE CAPITAL: So, are VC’s still investing? This was a great presentation from Point Nine Capital during last months virtual SaaStr Summit and here is the accompanying article.
COMMISSIONS: How to pay your different sales channels? Commission levels of sales are pretty stable across sale types at about 10-14%. Commissions on renewals is only 3% and up-sell is 9% - however about 50% of the time this is not paid at all. (Bringing up another subject on how much revenue a Customer Service Manager can manage).
RENEWALS (deep dive): To add onto above, I’ll keep banging this drum: Customer Success is CRITICAL to the sustainable growth of a modern tech business. Landing a customer is (obviously) important keep in mind costs - being just acquisition focused is WAAAY expensive (Costing about $1.10+ per $1 of ARR). Compare that to the cost of retaining or up-selling existing customers (about 12c-15c per $1ARR) - that’s 8 times cheaper. Finding a repeatable scalable sales processes is something required to scale. But don’t be a purely acquisition focused business, give some love and attention toward building out the same repeatable-scaleable process for renewals. Also both of these revenue teams need to be aligned.
OUTBOUND SALES: Forget Netflix, do you want some Outbound Sales TV? Yeah! The team at predictable revenue have been running over 50 outbound sales experiments using good ol’ scientific methods to find out what works best (and what doesn’t.). Watch the whole series on YouTube!
DESIGN: Bringing good design into different elements of a business actually has massive benefits. Design led businesses outperform the FTSE 100 by 200%. Marvel have got you covered on how to get started and growth based Design is my new my sub-specialty fav - merging typical HCD/Empathy Design but adding in the pragmatism of designing the jobs that need to be done
ZOOM: Dramatic post title - but also a fascinating read: Why Zoom doesn't have product/market fit. Say whaaaaaaaat now? Full disclosure: I participated in this survey by Hiten Shah. Based on the survey results (but also accepting that the respondents may represent a bias population) Hiten makes that case that Zoom has zoom work to do - esp correlated to it’s new fangled NPS of 21 (not terrible, just not great).
PITCH: So the days of an in-person pitch meeting to a VC are mostly behind us (at least for now). Pitching over Zoom is where we are. Before you focus on getting the perfect lighting though - check these 16 rookie errors founder make pitching to VC’s from Jason Lemkin.

POD OF THE WEEK: Complimenting number 8 above is the First Round Podcast on getting started with Growth Design from head of Growth Design at Dropbox and Pintrest

Top 10 in Tech - What to know for Week ending June 12, 2020

6/12/2020

SaaS METRIC OF THE WEEK: Predictive Churn. Churn is a key metric for every SaaS Business - but it’s a metric of hindsight and not exactly useful for future forecasts apart from presumptions based on past trends. So checkout this tool (another handy Google Sheet) from Newfund as a way to analyze the strength of revenues streams for any B2B startup. A complimentary article outlining the methodology behind the predictive churn tool is here (you should read this first).
REVOPS: aka Revenue Operations is definitely a thing and it needs to be. You may already be practicing this without using the phrase - it’s a way too maximize revenues and in this Age of the Customer it’s also a way to align operational excellence around the customer experience. Here is a good introductory article from Chargebee on RevOps and here are 3 nuggets of wisdom from some significant RevOps leaders.
GROWTH: To compliment above, should a “Growth Team” be party of your revenue strategy? Growth is a fairly generic term, so take a read of this article from Andy Boyd who reviews the benefits of such a team, especially important as there has never been a more important time to focus on efficient growth.
CUSTOMER EXPERIENCE: Customer behaviors have changed dramatically in the past few months and now is the time to start a) Evaluating current customer experience strategies and b) Changing them to gain an advantage during the global impact of Covid-19. McKinsey has an article on the impact and trends in customer behavior during this pandemic era, mapping out ones they feel are here to stay - emphasizing that primarily, recoveries will be digital. This is signaling a great opportunity for tech companies in this post-COVID economy - which McKinsey is also labelling “The Careful Economy".
TRUST: This is an extension from the above reference to the Careful Economy, but worth separating out as, according to Godard Abel (Co-Founder and CEO at G2, who know a few things about trust), SaaS buyers are increasingly more skeptical, suspicious, and unconvinced in this current post/current pandemic world. Making it harder to market and sell software and services than ever before.
MARKETING: To drive marketing-based results via relevant content, a good content strategy is (obviously) key. ContentTools (now part of Growth hackers) has a five step guide to develop a great Content Strategy. Want a shortcut? I got ya, here are 5 B2B examples you can copy.
CAPITAL: We are seeing a growing world of Debt in the Venture and SaaS world…..and according to Nathan Latka, thats a good thing and here is why (from Tomasz Tunguz in 2017).
SALES: I’m sure you have all seen it - a salesforce that likes to cherry pick leads or opportunties based on effort and the source of the lead. It’s a form of confirmation bias that leads to missed opportunities and revenue. So here is an interesting thought exercise - what if you wrapped an SLA around leads? Where all leads need to be followed up on.
ONBOARDING: Good onboarding is a good investment - it impacts product activation and adoption (which improves retention). Here is an onboarding checklist with examples & metrics and, at minimum, good onboarding emails are needed - here are 8 tips to writing great ones.
POC’s: (aka Proof of Concepts) in enterprise sales are a powerful sales tool and critical part of the customer journey. But often times they can be just as big an anchor in sales as they can be an accelerator. Here are some pro tips if your POC’s get stuck.

POD OF THE WEEK: I love good growth stories. Here are the 7 Marketing Steps Lemlist took to get to $1m ARR

Top 10 in Tech - What to know for Week ending June 5, 2020

6/4/2020

SaaS METRIC OF THE WEEK: Gross Margin. It’s my (unpopular to some) opinion that Margin is the do-or-die metric for recurring revenue based businesses. It’s why VC’s love SaaS Businesses so much. According to David Skok and Co, the Median is 78%! (This is after respondents were asked to back out stock-based compensation BUT includes customer support expenses. The SaaSCFO has you covered for best ways to calculate this though.
MARKETING: When it comes to growth marketing - a lot is email dependent. Andrus Purde at Outfunnel takes a look at some of the best in the game in this post - there is a bunch we can all learn from this tear down - great stuff!
THE SEED ROUND: Last week I referenced a path to Series A story. This week, let's look at the Seed round, and more specifically, what an investor expects within a seed round contracts (and why), it’s a great framework for founders to understand why certain terms are required at Seed stage.
ESOP: Employee Share Option Plans are a wonderful idea to incentivize and retain great staff, so here is a bit of a deep dive here - but all from the same source, Alexander Jarvis’s Blog (who’s run courses on Udemy in the past): Starting with a cheat Sheet to terms, how to size an ESOP plan, understanding how dilution will work with an ESOP plan (complete with a calculator), and the full ESOP deep dive complete with videos, slide show, and am Excel based planning tool.
GROWTH: Five ways to build a $100M business - just follow this simple video, find your target market animal spirit, and you are good to go. This is a fantastic way to think about customers, segments, pricing, and cohorts.
STRATEGY: As an expansion on above, because there are many different ways to build a SaaS business, it depends on the “animals sprit" of the target market as to which strategy is best.
VC: US-based startups raised fewer total rounds in Q1'20 compared to recent quarters, but mega-rounds (deals work over $100m) rose sharply (up nearly 50% compared to the prior quarter.). At the lower check size end of town, it also looks like the VC Hustle (to wind deals) is over and pragmatic and controlled approaches to investing have returned.
PRICING: Current climates have really put a bit of a brake in most mid-enterprise SaaS sales cycles, I’m certainly seeing it. Everyone is just moving cautiously toward their digital initiatives. Here are three of the key changes to enterprise software buying habits, and how your team can adapt. CoBloom have a complimentary article on how to develop a cross-functional pricing squad.
JUST DO IT: It's easy to get caught up in the details and troubles that 2020 is slapping us in the face with. As a leader, keeping the beat and progressing the business forward during this time takes some help. So read this from Henry Ward from Carta on how to create a continued Bias for Action.
FRICTION: Taking the friction out of their sales processes is one fo the best things to improve the efficiency and cadence of a business. Jason lemkin from SaaStr recently asked for some top troops on smoothing out points of friction - check it out, it's a great list.

POD OF THE WEEK: To add onto #8 above - here is the video expanding on pricing and packaging for mid-enterprise sales during COVID times.

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Top 10 in Tech - What to know for Week ending June 26, 2020

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Top 10 in Tech - What to know for Week ending June 26, 2020

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