Top 10 in Tech A WEEKLY NEWSLETTER

Top 10 in Tech - What to know for Week ending July 30, 2021

7/30/2021

SaaS METRIC OF THE WEEK: Customer Renewal Rate measures the percentage of customers who renew their subscriptions at the end of each subscription period. High renewal rates inform companies about lots of things - product-market-fit, market, pricing fit, value, business model viability, etc. The authors of this article from Profitwell describe the formula and also make the point of differentiating between renewal and retention - one is actively renewing, the other is not actively canceling.
USAGE BASED PRICING: v 2.0! Usage-based pricing aligns with customer growth and helps minimize friction during customer onboarding, as customers only pay for what they’re using - it's right-sized. This strategy typically sees best-in-class net-dollar retention results. The cool thing is that the current understanding of ways UBP is being applied in forward-thinking SaaS companies is so fresh that this article is an updated understanding of a UBP Article from November 2020 (but here is that playbook anyway as a downloadable PDF).
CUSTOMER OPERATING SYSTEM: What exactly is the difference between Customer Success and Customer Support? Get started here to understand the nuances, they are both parts of the same customer journey spectrum, and Totango posits, in this recent SaaStr Annual presentation, that we need a fresher look at Success and Support that they coin the “Customer Operating System” (Like the presso? Here are the Google Slides deck).
SDRs: Last week I referenced the varied roles that can sit under an SDR. So this week let's take a look at their Compensation. Once again it's a tricky one to manage and understand - this 'complete' guide (I say that as it's really on 12 pages long) has some great frameworks for you on variable pay structures and the difference between outbound and inbound SDRs - it also included a simple Google Sheets Worksheet to take with you. As part of Betts 2021 Compensation Guide, however - you can interact with the report on actual remuneration stats broken down by US geographic regions.
ROADMAPS: Always seems old-school, clunky, and too rigid to me in today's Agile workplaces. But Agile teams absolutely need them as the teams still need some overarching direction and sense of what’s to come beyond Sprint cycles. Read here on the reasoning why along with 5 roadmap templates to use. I'm personally a fan of how Atlassian has designed its public access roadmap.
SMB vs ENTERPRISE: As a startup - which way to chase? Firstly this obviously depends on the product being built and market size, but in general, the Old Skool guidance was to start chasing the biggest contract values as soon as possible, which is Enterprise. But according to Craft, newer school thinking is to focus on SMB, which has been a sleeper category, as sales velocity is a better strategy than chasing contract size.
SEARCH: Here is a really insightful KB article via Google on causes for various organic search traffic drops and how to categorize them and analyze your own search pattern drops using Google Search analytics. Twitter also liked the article and had some hilarious responses of suggested new category types.
INTERNET: I spent waaaaay too much time cruising around this infographic this week - it's a map of the internet (in high res) and has several thousand of our most visited websites, sorted as distinct "countries" and grouped with others of similar type or category.
TECHNICAL DEBT: This article has made me really think more about my underlying assumption that all technical debt is bad (see page 5 of this report). The authors make the case that all technical debt should not be classified into a single bucket of "bad" and that some technical debt is good to have with real-world examples such as Twitter.
CASE STUDY: Relevant to #6 above. Xero is the SMB master! The accounting software company is approaching $1B in ARR so SaaStr takes a look at how they go there: Nailing a niche and an LTV of 81 months helps! Markgrowth also has a great complimentary article on how Xero acquired 350k SaaS users in 2018.

POD OF THE WEEK: Adding onto #6 and #10 above (and because I didn't listen to much this week, so it's a repeat), Profitwell runs a pricing page teardown on Xero.

Top 10 in Tech - What to know for Week ending July 23, 2021

7/23/2021

SaaS METRIC OF THE WEEK: ZCP: Repeat this metric 5 times as fast as you can: "month zero cash-on-cash payback”- this tongue twister is best referred to as ZCP. It’s a cash-based metric because cash-in-the-bank is THE critical number for a SaaS company to monitor in my experience. ZCP answers the question: if we invest $1 in sales costs (such as salaries and commissions), how long does it take to recoup that dollar spent and welcome it back to our bank account?
SPEND: Figuring out how to optimize marketing spend with growth rate is a key question and this study doesn’t show amazing benchmarks for us all - the percentage of inbound revenue pretty much equals the percentage of growth out, but there is an ever-increasing range of outcomes as spend increases per business. Less mediocre benchmarks are with the Sales vs Marketing spend ratios which stay at about 2:1 regardless of market-facing strategies (although Mixed is a bit of an outlier).
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.
MISTAKES: A somewhat morbid post-mortem article from Failory who analyzed over 80 startups who have failed and identified some of their common mistakes (some fatal). Marketing problems seem the most abundant (and deadly) - but product-market-fit, market size, and value add are all creeping around too.
SDRs: The answer to the question "what does an SDR do?" is pretty unique to whoever is responding. So here is some good empirical survey-based insight on the things an SDR Team does within a revenue organization to add to your job descriptions. It's way more than just prospecting including research, social media, content creation, and.....watch out all you AEs....closing.
CHURN: I love myself a good infographic, so take a good look at this one on Churn prevention complete with steps to take at every stage in the customer lifecycle and the good old involuntary churn prevention - extra tactics on that here (another infographic!)
PREDICTABLE REVENUE: It's the #1 reason investors love SaaS. I may give Salesforce a hard time occasionally - but over 20 years ago, they launched the methodology of Predictable Revenue, which then became a sales guide published way back in 2011 by Aaron Ross - Crib Notes PDF pf that book is downloadable here.
REVENUE MANAGEMENT: Tagging on to #7 above - revenue management is the system of setting prices and adjusting them based on supply and demand (thanks for the infographic Chargify). In SaaS, which is all about predictability, this is really important, with RevOps being a new category of practice within maturing SaaS companies.
A/B TESTS: Everything is a hypothesis in a startup and testing should be embedded into everything you try towards growth and product. When conducting experiments such as A/B tests, get started with this Step-by-Step Guide. Go Practice has some great advice on how to make these experiments run faster.
CASE STUDY: Product hunt has the metric of being everywhere - so how did it get to be the place to discover the new next big thing?

POD OF THE WEEK: Customer churn is the bane of SaaS businesses - data can help understand the causes of churn and take action to reduce it.

Top 10 in Tech - What to know for the week ending July 16, 2021

7/16/2021

SaaS METRIC OF THE WEEK: Light reading this week (jk, jk, lol, no it's not) - I received a bunch of feedback on posts a couple of weeks back for VC Metrics that matter - it's time to go deeper - this is from Andrew Chen of a16z: An 80-page slide deck of the red flags and magic numbers that investors look for in your startup’s metrics. The article is the best part due to Andrew’s notes - but if you just want the PDF, I got ya, just click here.
VENTURE: Another Quarter has passed, so another State of Venture report is out from CB Insights (Q2 21) - and it 190 slides of Spicy! Global funding hit a record high (again), up 157% YoY ($156B), 136 new unicorns in Q2 - 2020 had a mere 128 in total for comparison, and M&A/IPO exits are up 109% YoY (2,893 in the quarter).
CUSTOMER JOURNEY: What the heck is a Customer Journey anyway and why do you need to create one? Now you know you need one, mapping out a Customer Success Journey via a visual map is a great way to know at what areas a Customer Success Team needs to be involved in (and what their responsibilities will be) via a variety of engagement models. You can also access a sweet customer journey mapping template here.
CHANNEL SALES: Figuring out channels (new, emerging, adjacent, uncertain, etc.) requires experimental rigor and good processes. Reforge.com is never lacking for detail when it comes to addressing topics like this, so take a deep read of their article here complete with a framework, case studies, and even a Worksheet (Google Sheets style!).
BOOTSTRAPPERS: This is for all of you choosing the do-it-without-investors route: Check the State of Independent SaaS Report, which is based on hundreds of non-venture track, revenue-generating, SaaS companies. It has fantastic benchmarks for the bootstrapped: growth rates, demographics, validation approaches, and more.
GROWTH: Reforge gets another mention this week - discussing the industry expectations for SaaS companies to choose either Growth or Monetization strategies. Their perspective is that this is a false choice - ask the bootstrappers above: It's about how monetization feeds growth. Adding a tactical layer to this - building a system for growth is an interplay between marketing, product, and good monetization - everything is related.
PRODUCT DEBT: Product Debt is just as bad as Technical Debt - it's all the decisions that have been made, often tactical and acute, without a clear product vision or sufficient consideration about the long-term effects of that moment/decision. The link above also has a great case study of Google's messaging product evolution.
BOARDS: Great fact: Having a diverse board pays off. Check this report examining the link between companies with multidimensional board diversity and the correlation to revenue. You can also see how your board stacks up by calculating your score here.
APP TRACKING: If you hate Apple's new App Tracking Transparency policy (ATT) - my guess is you are in advertising/marketing or you are Facebook. So here are some interesting stats: Mobile ad spend (on iOS 15) has decreased by about 1/3rd since the beginning of June - while the opposite is true on Android. This is also resulting in 15% to 20% revenue drops for iOS developers - likely meaning a big shift of developer energy into Android coming soon. Fun sidebar - ATT request distribution by Geography
CASE STUDY: WISE (the app formerly known as TransferWise) is now a publicly-traded FinTech and anyone that knows me knows that I'm a big fan. I use it for most of my business and personal life and will enthusiastically tell you given the opportunity....never heard of them before? Well, guess what? Their main channel of growth is word of mouth, so you're welcome. GoPractice have a great breakdown of their growth and an accompanying Podcast

POD OF THE WEEK: This one doesn't actually exist yet but is an expansion from #2 above - it's a future webinar (July 20th at 2pm EDT) reviewing the CB Insights State of Venture Q2 21 report

Top 10 in Tech - What to know for Week ending July 9, 2021

7/9/2021

SaaS METRIC OF THE WEEK: Beyond Customer Satisfaction Surveys or Net Promoter Scores is this idea of a Customer Engagement Score. This is a useful tool for managing a companies customer base and making segment decisions easy, therefore enabling different priorities and engagement strategies - and being able to measure the impact of those strategies over time. Get started reading this article.
SECURITY: As of the writing of this week's newsletter over 1,500 businesses have been affected by a ransomware attack on IT firm Kaseya. This is even bigger than last year's SolarWinds breach if you didn't notice. So time to revisit this (again)- Security should be an integral part of your dev cycle: Know your weak spots and how to recover well - if it is not obvious yet - firewalls and perimeter protection are Old School. Founder Institute discusses 6 points of vulnerability in your tech stack that I bet are a bit leaky and here are 5 steps to get started.
CX: According to this Zendesk report, 65% of enterprise companies are investing more in Customer Experience technology this year. Investing in customers is a pretty obvious payoff, but what to prioritize is the trick.
USP: If done right a unique selling proposition (USP) can be leveraged to build your brand, differentiate your business, and attract your ideal customers - so check this article on how to create a compelling unique selling proposition.
CAP TABLE: Last week I referenced alternatives to Venture Capital and dilution - this week let's focus on dilution from a cap table perspective. Take a read of this article from Heavybit that discusses Cap Table management in relation to growth and also how to manage that Option Pool.
GROWTH MARKETING: If you're responsible for growth/marketing we've hit the motherlode! Dan Siepen has put together a comprehensive list of resources and the lists are updated often, so make sure you bookmark this page.
PROSPECTING: This is part 1 of a Workshop via HeavyBit - focused on helping early-stage startups build predictable prospecting pipelines and repeatable closing processes and Part 1 comes complete with a full worksheet for you to make a copy of.
DUNNING - er: Now that I've discovered this weird-ass name for involuntary churn (aka bad payments), I'm a little obsessed. According to Baremetrics, SaaS and subscription businesses lose around 9% of their MRR due to failed payments on average. So take a read of my new discovery this week - a report documenting the art of mastering Credit Card failures - this is an easily addressable problem that's kinda big - according to Profitwell's study - 20-40% of churn is credit card failures.
SDR SALES: Chorus.ai has built a great report of what high-performing outbound sales teams are doing to close deals (this is an analysis of over five million sales calls!). You can add in the kind of business you are (SMB, Mid, Enterprise) on this page to see how you measure up. Key nuggets: An SDR dials, on average, 106 people to schedule just one meeting and the typical win rate of a sales qualified lead (SQL) is 19%.
CASE STUDY: Contrary to traditional startup lore, not every founder is a domain or industry expert. Here are 6 lessons from founders who (successfully) founded a startup in a space they are not an expert in.

POD OF THE WEEK: This is complementary to #7 above - Predictable Pipelines for building your sales stack, processes, and prospecting.

Top 10 in Tech - What to know for Week ending July 2, 2021

7/2/2021

SaaS METRIC OF THE WEEK: Cohort Analysis (free Cohort Analysis template!). GoPractice has a Product focused article on how to forecast key product metrics through cohort analysis and The Startup takes a look at this metric from a VC Due Diligence perspective.
MARKETING: This is one to save to your bookmarks or add to your ideas/inspiration board. At first glance, it looks like a lightweight article. But just wait. One day you will be looking for ideas on how to elevate your product or business, when you do open up this bookmark for some true inspiration on 52 Low-Cost Ways to Promote Your Business
GAMING: So what's been going in gaming in the past pandemic year (HINT: A lot) Check this new report from AppAnnie on their take on what is going on. Mobile is smashing it (compared to PCs or Consoles) with a BILLION games downloaded weekly (on average) - which is up 30% on last year (and spending 40% more). In-game Ads are still weird though - most people remain not fans.
OKR’s: Pioneered by Google a few years back, OKR’s have emerged as a part of the suite of modern product and company best practices (that include Lean, Agile, and Jobs-To-Be-Done frameworks). Heavybit has a great article on steps to get started for the first time within your organization.
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 are only 3% and upsell 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 to the 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 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.
BLOG: Content is kind, so how is your blog content page? After reviewing this article I now know mine needs work: The 13 Best Practices of the Top 100+ Marketing Blogs. But my email sign-up works at least, I got two of these three. Mastering great content writing is also a skill - and I've snagged a great guide for us all here on that topic and along with great info on how to plan a data-backed B2B content marketing strategy. But don't worry - there is no correlation between social shares and people reading anything anyway.
RETENTION: In Q1 of this year, SaaS Capital conducted a survey of B2B SaaS company metrics (they do this every year) - here is the report (downloadable PDF) - no real Covid impact was observed. Bootstrapped businesses have great gross revenue retention compared to their equity-backed counterparts (94% vs 90%). Fun fact though - and why NDR is important: Growth above 40% is associated with 100+% net revenue retention - now what? How about a great article on how to optimize retention.
CAPITAL: In the current tech world, it doesn’t have to always be about Venture Capital or equity (and dilution) when looking to finance. Revenue-based financing is quickly becoming a popular way for startups to raise funds without sacrificing equity, with the rise of significant services such as Lighter Capital and The 20-Minute Term Sheet in the past couple of years. Here is how it works and what these financiers care about. HINT: It’s ARR and growth. From the SaaS CFO here is the Founder’s Guide to Venture Debt with advantages vs disadvantages of Debt vs Equity.
CASE STUDY: Expanding on #7 above is a neat experiment an SEO company took on increasing their monthly organic traffic by 3012%! It was bu focusing on content, improving structure, and link building.

POD OF THE WEEK: Scale-up Marketing - How marketing delivers growth with the Chief Growth Officer of FreshWorks.

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Top 10 in Tech - What to know for Week ending July 30, 2021

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Top 10 in Tech - What to know for Week ending July 30, 2021

Top 10 in Tech - What to know for Week ending July 23, 2021

Top 10 in Tech - What to know for the week ending July 16, 2021

Top 10 in Tech - What to know for Week ending July 9, 2021

Top 10 in Tech - What to know for Week ending July 2, 2021

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TOP 10 IN TECH
a weekly tech newsletter