1. Analysis
Selected Slides from the Survey
Confidential © 2013 Amity
Download the Survey
Pacific Crest, along with David Skok of Matrix
Partners, has been conducting annual surveys of
private SaaS companies since 2010. Pacific Crest
is an investment banking firm with a strong focus on
SaaS. David Skok is a highly respected authority in
the SaaS industry.
Paul Philp, CEO and Founder, Amity
paul@getamity.com
647.927.8574

2. Pacific Crest Survey Analysis
Industry Growth
Acquisition Channels
ACV: New customers vs. renewals vs. upsells
Trial-based ACV
Commissions
Average Deal Size
Contract sizes and billing cycles
Pricing Metrics
Churn
Confidential © 2013 Amity

3. The SaaS Industry’s Growth is Accelerating
Driven by broad adoption of the cloud, and mobile.
Confidential © 2013 Amity

4. Use of Low Cost Acquisition Channel is Accelerating
‘Land and expand’ and organic growth gaining momentum.
Confidential © 2013 Amity

5. Low Cost Channels are Expanding
The SaaS model is bifurcating into high cost and low cost strategies.
67%
13%
65%
29%
6%
38%
54%
8%
25%
75%
100%
2011 2013 2011 2013 2011 2013 2011 2013 2011 2013
Confidential © 2013 Amity

6. New Customer Revenue is Expensive
Upselling or renewing takes a fraction of the cost.
Confidential © 2013 Amity

7. Renewing Revenue is Highly Profitable
Leveraging existing customer base the key to profitability.
Remember:
$1.00 upsell ACV costs
$0.17.
$1.00 new customer ACV
costs $0.92.
If a company is getting
25% of new ACV thru
upsells, then for $1MM
new ACV:
$250,000 costs $42,500;
$750,000 costs$690,000.
ROI:
588% vs 109%.
Confidential © 2013 Amity
Average excluding
smallest companies:
20%

8. Fast Growth SaaS Leverages the Customer Base
Faster growth at a lower cost.
Confidential © 2013 Amity

9. Trials Generate One Third of All New ACV
1/4 to 2/3 of respondents use trials of some sort.
In 2011, trials
accounted for
~19% of new
ACV.
Confidential © 2013 Amity

10. Renewal Commissions now Standard Practice
Recognizing the profitability of renewals and upsells.
2012:
50%
Confidential © 2013 Amity

11. Average Deal Size is Getting Smaller
Consistent with the shift to lower-cost CAC.
2011 Median: $37.5K
2012 Median: $24K
Confidential © 2013 Amity

12. Customer cash flow is at increased risk.
Average billing period has dropped significantly since 2012.
2012: Average
Billing Period
was one year.
Confidential © 2013 Amity

13. 2/3 of Revenue is Consumption-based
At risk.
Confidential © 2013 Amity

14. Revenue Churn Has Almost Doubled
Consistent with lower-cost acquisition, smaller deal size and consumption-based pricing.
2011 Median: 5%
2012 Median: 5%
Confidential © 2013 Amity
It is interesting
that only 66 out
of 94 possible
respondents
answered this
question.
Could it be the
rest don’t know
their churn rate?

15. Lower Cost Channels have Higher Churn
The industry is moving to lower-cost channels, so churn is rising across the industry.
Confidential © 2013 Amity
We suspect that
‘Internet Sales’ is
even higher –
there were only 5
responses.

16. What the Data Tells Us
The SaaS model continues to evolve.
Confidential © 2013 Amity
SaaS growth is accelerating
Driven by adoption of the cloud, and mobile.
90% growth rate by internet distributors.
Use of low cost acquisition is
accelerating
Model is splitting into high- and low-cost
strategies.
Trials generate one third of new ACV 1/4 to 2/3 of respondents use trials.
Average Deal Size is getting smaller SMB and VSB fastest growing segments.
Leveraging customer base is key to
profitability and growth
Renewing revenue is highly profitable.
On average, companies are realizing
20% of new ACV from upsells.
The fastest-growing companies are
significantly higher: up to 35%.
Renewal commissions now standard 50% paid in 2012, increased to 76% in 2013.
Revenue churn has almost doubled Lower cost channels have higher churn.
Customer cash flow is at increased risk
Billing period has dropped from one year in
2012 to 3 months in 2013.
2/3 of revenue is consumption-based.

17. Conclusions
SaaS 1.0: Enterprise
Complex, top-down, cost-
focused.
SaaS 2.0: Personal
Accessible, engaged,
organic.
Economic
drivers
Empowered customers Empowered users
Business
strategy
Management platforms
Land, expand and organic
growth
Value
proposition
Reduce costs Collaborate and engage
Customer
acquisition
Complex contracts Easy to try, easy to buy
Customer
relationship
Break/fix: high complexity,
low engagement
Low complexity, high
engagement
Customer
development
Contract-based, negotiated Continuous and organic
Business
application
stack
Siloed
Product and business
alignment
We are witnessing an industry transformation:
Confidential © 2013 Amity

18. 1. Generate Product Qualified Leads:
Lower barriers to evaluation and adoption.
2. Use Inbound Marketing and Inside Sales:
Focus on lower cost customer acquisition methods.
3. Align Product and Business:
Horizontal layers over Departmental silos.
4. Focus on Personal Customer Success:
High-engagement, personal service builds trust.
5. Scale Customer Engagement:
Enable employee-to-people engagement throughout the customer journey.
Easy to try, easy to buy, easy to engage.
Confidential © 2013 Amity
Competing in the Next SaaS Wave

19. helps SaaS companies keep
and grow their customers by:
Removing time-wasting complexity from
the customer success process, and
Enabling customer-facing teams to
spend more time engaging customers.
provides the only scalable
customer engagement platform
purpose-built for SaaS.
Customer Success. Simplified.
Confidential © 2013 Amity

20. For more information contact:
Paul Philp, Founder & CEO
paul@getamity.com
647.927.8574
Thank You!