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Eric Santos - Revenue plays to preserve MRR, gain efficiency and build a pipeline for future growth during the crisis

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Eric Santos - Revenue plays to preserve MRR, gain efficiency and build a pipeline for future growth during the crisis

  1. 1. Revenue Plays to preserve MRR, gain efficiency and build a pipeline for future growth during the crisis Eric Santos - CEO at RD Station @ericnsantos #SaaStockRemote
  2. 2. A little bit about me/us ● The leading Marketing Automation and CRM platform for SMBs in Emerging Markets ● Over 16,000 customers in 20 countries ● 700 Employees, 1,800 Partners ● ~US$ 80M in funding so far, with investors: TPG, Riverwood, Redpoint eventures, DGF, Astella and Endeavor Catalyst ● Annual conference RD Summit gathers 12K people ● Eric is a second-time tech entrepreneur, a board member of Endeavor Brazil and CERTI Foundation, advisor for a few startups and acceleration programs. Father of a little boy called Max (6yrs), race professional go-karts as a hobby
  3. 3. The SaaS world before, during and after Covid-19
  4. 4. We had been in a long bull run (Growth > Efficiency)
  5. 5. Most companies that IPO'ed in 2019 were below the Rule of 40 line
  6. 6. SaaS Metrics Series C-D At IPO (2010-17) At IPO (2018-19) ARR US$ 25-40M US$ 118M US$ 220M ARR Growth 60%+ 40% 42% Logo Retention 81% 90% 89% Gross MRR Retention 88% 95% 92% Net MRR Retention 103% 112% 119% CAC Payback 16 15 26 ACV/CAC 0.9 0.8 0.7 Software Gross Margin 77% 75% 78% Benchmarks for selected/top-quartile SaaS companies pre-Covid P&L Series C-D At IPO (2010-17) At IPO (2018-19)* Gross Margin 65% 69% 73.5% S&M Expenses 47% 48% 54% R&D Expenses 34% 21% 23% G&A Expenses 23% 16% 15% Rule of 40 20% 32% 25% ARR / $ Raised 0.72 1.13 0.73 KeyBanc’s Private SaaS Co. Survey Goldman Sachs - Retention Research Bessemer’s State of the Cloud report "Rule of 40" resources Tomasz Tunguz's benchmarks Frontline’s Best-in-Class in SaaS The SaaS Napkin Openview’s Expansion SaaS Benchmarks SaaS Radar McKinsey Roadmap to a SaaS IPO
  7. 7. We all saw the Memo....
  8. 8. Most companies projected impact on retention due to the crisis (but it hasn't been as bad)
  9. 9. Through the crisis, ARR has been roughly flat for most SaaS cos.
  10. 10. Cancellations offsetting new MRR gain, but it's getting better
  11. 11. Public SaaS Companies lowering or withdrawing their guidance
  12. 12. The SaaS market seems to have rebounded
  13. 13. The "Rule of 40" should become the North Star for most SaaS cos.
  14. 14. Guidelines for winning after the crisis
  15. 15. ● Hold on to as many existing customers as possible; ● Preserve as much ARR and Cash as possible (in that order, if needed); ● Adjust ICP and Value Proposition if/as needed; ● Gain business model efficiency; ● Gain Market Share; ● Create a pool of future customers and healthy MRR. * Compilation of advice from multiples sources and advisors Curated "rules" for winning after this period How do we do all that?
  16. 16. Gather Intelligence and Refine Positioning
  17. 17. Identify New Pains & Needs ● What has changed in the life of your customers, partners and prospects? ● Use qualitative interviews, product data and surveys (hint: this can also be used as marketing/PR material) Discover Segments that are suffering or benefiting the most ● Who are you selling to in the middle of the crisis? And who's upgrading? Why? ● What are the segments with most Churn/Negotiation requests? What's happening there? Positioning & Messaging ● What's the new Promise (narrative) for prospects and customers? ● How do we better bring this to Sales/CS pitches and product materials? Gather Intelligence and Refine Positioning
  18. 18. Cases: Surveys and Data
  19. 19. MRR Preservation
  20. 20. Invest heavily in Enablement ● Use the new positioning/messaging to train the team on how to have the right discussions with the customers ● Enable your Partners to do the same. Help them become the protagonists (heroes) of this phase Create Revenue Preservation Squads ● Be proactive, but have empathy ● Use extra headcount as "Rescuers" ● Think carefully about discounts and payment deferrals. Short-term reliefs are usually a better option Change the Narrative ● Most companies are starting to look ahead now. How can you inspire your customers to take action? MRR Preservation Plays
  21. 21. Cases: Covid-specific campaigns/movements
  22. 22. Sales Acceleration
  23. 23. Adapt your go-to-market and SLAs ● Double-down on what's working. Prioritize acquisition for selected segments ● Adapt your Demand Generation with the new messaging (Content & Education work even better now) ● Adjust your Marketing&Sales&CS SLAs in "real-time" Tips for Direct and Channel Sales ● Outbound calls and emails are getting less and less effective. Voice messages and chats are on the rise. ● Service Partners tend to focus solely on keeping their existing customers. Guide them not to "turn off" their acquisition engine. ● Be mindful that some Partners might face cash flow problems. Consider anticipating commissions. ● Integrate the channels: promote specialized partners and segmented case studies to your prospects and customers. Sales Acceleration Plays
  24. 24. Case: Sales acceleration via customer segmentation
  25. 25. Gaining business model efficiency
  26. 26. "Rule of 40" companies have better biz model and P&L efficiencies
  27. 27. Rethink your long-term financial model ● Use the "Rule of 40" as a guardrail ● Optimize G&A for the new normal ● Think of creative ways that you could improve your gross margin. Example: adding a new product. Fine-tune your acquisition funnel ● Less Outbound/Cold Inbound, more Hand-Raising and Product-led Growth; ● Redesign your Sales org accordingly; Consider M&As to accelerate product roadmap and gain inorganic growth ● M&As could lower your needs for R&D investment, thus improving the bottom-line ● Most companies will have modest organic growth in 2020. M&As can be a way to make up for the "miss" due to Covid Gaining business model efficiency
  28. 28. Case: Gaining efficiency and growth through M&A + Significant savings in G&A and S&M due to sinergies and talent arbitrage
  29. 29. Create a pipeline for future MRR
  30. 30. Create and promote a free/cheap entry-level product ● Most companies are accelerating their digital transformation now. Use that to increase your customer/user base quickly ● In practice, revenue cannibalization usually isn't an issue ● Promote the hell out of that offer to audiences in your focused segments that you still don't engage with Start a initiative to go after your higher-priced customers ● Set up a pod armed with tools to find and negotiate deals with those customers ● Use the feedback from that pod to refine your positioning and product roadmap Increase adoption and retention (especially in the Enterprise) ● Provide free/discounted upgrades for customers to try your Premium versions ● In the Enterprise, have initiatives to expand adoption in other departments. (Example: Pipefy) Create a pipeline for future MRR
  31. 31. Cases: Free/cheap Entry-level Products Significant increase in sign-ups and new customers
  32. 32. Bonus: People
  33. 33. Mental health is the challenge ● Over-communication and transparency are key ● Guide/train your leaders on empathy ● Deal with variable compensation and quota issues ● Watch out for people overworking or burning out On layoffs ● Layoffs have been the standard weapon preached by VCs, but they do have a negative long-term effect. ● Avoid them if you have the runway. Let growth and organic turnover do the "rightsizing". ● If you have to do it, do it once and do it right. The Team will always remember how you treated them through this crisis Managing People during the crisis
  34. 34. "Never waste a good crisis" Winston Churchill Eric Santos - CEO at RD Station @ericnsantos #SaaStockRemote