Sonatpe coffee talk 2016 - final
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Sonatype Coffee Talk
Follow me @matthewjhoward
Keeping Score & Measuring Success for Marketing at Sonatype
May, 2016
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I know that half my marketing works, I just don’t know which half.
John WanamakerHenry Ford
I know that none of my marketing is working, and it’s your job to fix it, and prove it with data, and if you don’t, you’re fired!Wayne speaking to new hire named Matt
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1. Context Setting (Elephant in the Room)
2. Story Time (Because we’re marketers)
3. Data, Data, Data (How do you stack up?)
3 Things
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Software eats the world.Data dominates all.Transparency rules.Nothing is immune.
Especially not Marketing!
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Software + data leads to automation, transparency, and disruption in all things including…
The other elephant in the room!
B2B marketing.
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DIFFERENT NAMES…
#SMARKETING#GROWTHHACKING
#REVOPS
SAME GAME.
FEED ME!
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• Funnel Foods
Tofu
Mofu
Bofu
• Funnel Utensils• Funnel Results ?
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“For the fourth year in a row, we surveyed 305 companies to gather benchmark data with regard to growing a successful SaaS business.”
-- David Skok, Matrix Partners
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Demographics of 305 Companies• Median revenue = $4M (82% < $25M)
• Median employees = 47 (range of 2 to 1,200)
• Median customer count = 300 (72% < 1,000)
• Median ACV = $21k (21% < $5K and 17% > $100K)
• Sales Model = 41% primarily direct, 21% primarily inside
• Headquarters = 70% in U.S.
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CAC ACV LTV DRR ETC
Data, Data, DataRatios, Acronyms, and Lingo…
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short story.To simplify SaaS unit economicsI created a
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Three reasons why every day is valentine’s for the Sonatype marketing team… Spend $ to acquire new friends Spend $ to keep the friends they have Seek hugs ($ ACV) in return
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Hugs (ACV) from friendsis the universal metric for measuring SaaS marketing.
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Of course, not all friends are equal.
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Therefore…We must carefully measure spend to acquire new friends.
CAC = Cost of Acquiring Customers
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And measure hugs per friend, per year.
ACV = Annual Contract Value
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And hugs received over lifetime.
LTV = Life Time Value
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And measure efficiency…
CAC/ACV (lower is better)$1 CAC generates $2 ACV = 0.5 / 6 month payback
ACV/CAC (higher is better)Generate $1,000,000 ACV from $500,000 CAC investment = 2.0 sales efficiency
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$@!t happens.So we also need to measure breakups...
Churn
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…and total annual hugs minus breakups.
DRR = Dollar Retention Rate
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Ultimately, Sonatype has 3 types of friends:
• Friends with Benefits• Friends with Costs• Friends with Biggest
Benefits
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Friends with benefits stick around and give many hugs over time.LTV > 3X CAC
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Friends with costs give few hugs and leave early.
LTV < 3X CAC
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Friends with biggest benefits not only stick around...but they give more hugs the longer they stay.
LTV > 10 X CAC
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So, it's all about the hugs!And that's why every day is Valentines for Sonatype marketing.
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Being a good valentine is expensive.Top performers grow >35% and spend >40% of revenue on dates.
Note: top performers have solid payback and abundant access to capital. Others spend less.
Note: Public players with >$100m spend 44% on revenue on dating.
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Top performers are fanatical about farming and have a higher % of new ACV from upsells.
Love the Ones You’re With…
Players with >$40m in revenue generate 37% of new ACV from upsells.
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Spend $0.28 Acquire $1.00 of up-sell Median CAC/ACV = 3
months Sales Efficiency = 3.5
Up-Sales Cost 24% of New Sales
Renewals Cost 11% of New Sales Spend $0.13 Acquire $1.00 of renewals Median CAC/ACV = 1
month Sales Efficiency = 7.6
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Thank you!