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Run a Business, Not a Backlog
John Mecke Jon Gatrell
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An Episode of Our “Journey to the Perfect Application”
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Journey to the Perfect Application
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https://www.productmanagementtoday.com/frs/15265678/run-a-business--not-a-backlog

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About John Mecke
John Mecke is the Managing Director of DevelopmentCorporate, a consultancy focused on enterprise scale
software firms. He specializes in product management and corporate development. He has over 20 years of
experience in leading product management organizations. He focuses on established firms and the challenges
they face in growing revenues, profits, and enterprise value. He has also significant experience in corporate
development. John has led four major acquisitions with a total value of $175M. He conducted eight divestitures
which generated $24.5M in cash. He played a critical role in producing a $115M dividend for investors, a 2.8x
return on the investment in less than three years. He has evaluated over 500 companies for acquisition and
conducted over 50 due diligence projects. John has served public companies, private companies, and
companies backed by private equity investors.
About Jon Gatrell
Jon Gatrell is a Principal Partner at Market Driven Business and brings more than a decade of experience in
leadership roles at software companies, most recently as COO and CPO of Loren Data. He also worked as
an instructor and course designer for Pragmatic Institute where he trained thousands of product professionals
in the art of outside-in business at global brands such as Adobe, Microsoft, Inuit and many other technology
companies. Before Pragmatic, Jon held roles in product management, marketing, sales, and corporate
development.

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Run a Business, Not a Backlog

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Journey to the Perfect Application

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Journey to the Perfect Application
Dashboard Danger

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Journey to the Perfect Application
Product management delivers results
Goals
Roadmaps
Aligning execution measures to goals

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Context: Size, Shape and Direction of the Business
Market Trends
Customers

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Product managers need financial, numerical, and statistical literacy

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Common Techniques for Analysis
Tiering and Pareto
Flux Analysis for
Understanding Churn

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Use: Prioritizing and Focus
• Tiering
• Segmenting your customers by revenue and/or profit
• Pareto
• The 80/20 rule

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2020 Annual RevenueTier Customer Count 2018 Revenues % Customers
Cumulative%
ofCustomers
% ofRevenue
Cumulative%
ofRevenue
1. >$500K 2 1,611,212
$ 0.06% 0.06% 7.66% 7.66%
2. >$250K <$500K 7 1,541,095
$ 0.23% 0.29% 7.32% 14.98%
3. >$100K <$250K 33 5,052,155
$ 1.07% 1.36% 24.01% 38.99%
4. >$50K <$100K 54 3,713,165
$ 1.74% 3.10% 17.65% 56.64%
5. >$10K <$50K 252 5,710,109
$ 8.14% 11.24% 27.14% 83.77%
6. >$1K <$10K 1,130 3,123,606
$ 36.51% 47.75% 14.84% 98.62%
7. <$1K 1,617 290,998
$ 52.25% 100.00% 1.38% 100.00%
Total 3,095 21,042,340
$ 100.00% 100.00%
Customer Distribution RevenueDistribution
Tiering & Pareto Analysis

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The SOHO Story: Tiering and Pareto

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Tiering & Flux Analysis-Customer Count
2020 vs 2019 Count Change Attrits Declines Flat Growth New Grand Total
1. >$500K 2 2
2. >$250K <$500K 1 1 5 7
3. >$100K <$250K 1 14 5 13 33
4. >$50K <$100K 2 13 4 35 54
5. >$10K <$50K 2 65 22 156 7 252
6. >$1K <$10K 55 400 175 473 64 1,167
7. <$1K 228 268 901 135 48 1,580
Grand Total 289 760 1,108 819 119 3,095
Tiering & Flux Analysis-Year over Year Revenue Changes
2020 vs 2019 $ Change Attrits Declines Flat Growth New Total Change
1. >$500K 155,741
$ 155,741
$
2. >$250K <$500K (220,156)
$ 72,714
$ (147,442)
$
3. >$100K <$250K (153,096)
$ (25,277)
$ -
$ 103,490
$ (74,883)
$
4. >$50K <$100K (137,146)
$ (20,055)
$ -
$ 98,744
$ (58,457)
$
5. >$10K <$50K (45,318)
$ (53,678)
$ -
$ 125,000
$ 158,614
$ 184,617
$
6. >$1K <$10K (152,034)
$ (34,027)
$ -
$ 28,421
$ 176,912
$ 19,273
$
7. <$1K (41,031)
$ (21,156)
$ -
$ 1,340
$ 8,638
$ (52,209)
$
Grand Total (748,782)
$ (154,194)
$ -
$ 585,451
$ 344,165
$ 26,640
$

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The Money Wheel

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78%
7%
6%
3%
6%
2020 Money Wheel
My Product Add-On A Add-On B Training Services
The Money Wheel

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The Money Wheel: Detailed View
Moneywheel Spoke
Customer
Count
ACV % Customers % ofRevenue
1. Net New 120 9,582,888
$ 48.4% 77.8%
1. New VP 36 2,975,257
$ 14.5% 24.1%
2. Merger/Divestiture 24 1,964,189
$ 9.7% 15.9%
3. Bad Quarter 42 3,166,443
$ 16.9% 25.7%
4. Competition 18 1,476,999
$ 7.3% 12.0%
2. Add on 60 1,061,683
$ 24.2% 8.6%
1. Mobile 27 236,683
$ 10.9% 1.9%
2. Org Chart Data 33 825,000
$ 13.3% 6.7%
3. Expand 32 495,674
$ 12.9% 4.0%
1. MoreSeats 32 495,674
$ 12.9% 4.0%
4. Migration 9 13,500
$ 3.6% 0.1%
1. On-Prem to SaaS 9 13,500
$ 3.6% 0.1%
5. Financial 27 1,167,169
$ 10.9% 9.5%
1. Audit 7 317,162
$ 2.8% 2.6%
2. Disaster Recovery 6 150,000
$ 2.4% 1.2%
3. Universal License 14 700,007
$ 5.6% 5.7%
Grand Total 248 12,320,914
$ 100.0% 100.0%

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Awareness
Qualified
Lead
Business Need
ID Evaluation Negotiation Close
5% 35% 50% 75% 75%
50% 90% 75% 75% 75%
50% 90% 75% 75% 75%
50% 90% 75% 75% 75%
25% 90% 75% 75% 75%
Funnel Metrics
Funnel Conversion Rates: Marketing Approach
1. Net New
2. Add on
3. Expand
4. Migration
5. Financial
Moneywheel Spoke
FY21 Target
Customer
Count
FY20 Target
ACV Awareness
Qualified
Lead
Business Need
ID Evaluation Negotiation Close
1. Net New
1. New VP 60 5,200,000 12,190 610 213 107 80 60
2. Merger/Divestiture 40 3,500,000 8,127 406 142 71 53 40
3. Bad Quarter 75 5,500,000 15,238 762 267 133 100 75
4. Competition 30 2,600,000 6,095 305 107 53 40 30
Subtotal 205 16,800,000 41,651 2,083 729 364 273 205
2. Add on
1. Mobile 50 500,000 1,016 508 178 89 67 50
2. Org Chart Data 70 1,650,000 1,422 711 249 124 93 70
Subtotal 120 2,150,000 2,438 1,219 427 213 160 120
3. Expand
1. MoreSeats 100 1,500,000 527 263 237 178 133 100
4. Migration
1. On-Prem to SaaS 20 50,000 105 53 47 36 27 20
5. Financial
1. Audit 20 650,000 211 53 47 36 27 20
2. Disaster Recovery 5 650,000 53 13 12 9 7 5
3. Universal License 15 300,000 158 40 36 27 20 15
Subtotal 40 1,600,000 421 105 95 71 53 40
Funnel Metrics
Targeting Buyersand Buying Drivers

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Product Migration: Tiering, Flux and Money Wheel

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Helping Sales: How a product manager saved their company $1,000,000 . . .

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• Understand the market, your customers and trends
• Size, Shape and Direction
• Leverage financial data to prioritize activities
• Focus profitable customers segments
• Tiering
• Prioritize backlogs
• Pareto
• Flux
• Renewal and retention focus
• Align products analytics to achieve business results
• Help sales with known customer insights – usage, product and their
financial performance
• Love your data and it’s just math

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Q&A
Jon Gatrell
With: With:
Managing Director, DevelopmentCorporate
Linkedin page: /in/jcmecke
Twitter:@devcorporate
Website: developmentcorporate.com
John Mecke
Principal Partner, Market Driven Business
Linkedin page: /in/jongatrell
Twitter: @spatially
https://www.productmanagementtoday.com/frs/15265678/run-a-business--not-a-backlog