Scaling Customer Success - SaaS Business Asia Podcast Episode #2

Customer Success is a main revenue driver in a growth stage SaaS business, and as it proves its ROI, it can become one of the largest teams. 

This podcast episode features and interview with Saloni Singh, the VP of Customer Success at Ematic, a SaaS business selling email marketing solutions powered by AI. Her Customer Success team currently counts 55 people across 8 markets, mainly in SouthEast Asia but also beyond. 

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We're launching SaaS Business Asia Podcast, with a 1st episode on Setting Goals

Our 2018 resolution is to enable more knowledge sharing in our community. So we're jumping on the bandwagon and launching SaaS Business Asia Podcast

And what better way to kick things off than a 1st episode on Setting Goals?

We're tackling mainly lead goals that get us to lag goals, and we debate on 3 main angles:

  1. Making your customers' goals yours
  2. Using process goals vs. outcome goals
  3. Thinking of OKRs, KPIs, kanban etc. as communication and alignment tools

For this, we have interviewed:

  • Charmaine Chen, Customer Success Manager at DynamicYield, and previously at Hubspot
  • Yi-Wei Ang, Director of Product and previously Head of Growth at TradeGecko
  • Itai Boublil, Director of Marketing at Miller Heiman Group

Happy listening (or reading the transcript below)!

Transcript:

 

Hi there!


This is your SaaS Business Asia podcast host: Adelina Peltea. I am a co-founder of SaaS Business Asia, the place where founders, managers, and investors of SaaS businesses come to learn from each other, and also CEO at GrowthSmiths, a growth agency focused on post-product market fit SaaS businesses.


This episode is about setting goals. 


Now, I know that when it comes to businesses the usual goal is growth. X percent revenue growth - month on month, quarter on quarter, year on year. But that’s a lag measure. Today we will discuss about lead goals, those strategic and tactical goals that will take us to our north star. And in case you have already prepared your goals before the beginning of the year and quarter, fret not - this is about optimising them. 


We’ll go through a few tormenting dilemmas like: making customers’ goals yours (and focus on desired outcomes rather than solved problems), outcome vs process goals, and methods like OKRs and KPIs. And we’ll hear some advice on the topic from Charmaine Chen, Customer Success Manager at DynamicYield and previously at Hubspot, Yi-Wei Ang Director of Product at TradeGecko, and previously their Head of Growth, and Itai Boublil, Marketing Director at Miller Heiman Group. 


Shall we?


Number 1


You probably won’t even be in business if you wouldn’t solve for the customer. Yet, many times we don’t incorporate customers’ goals into our business goals. Successful customers definitely push the needle on growth metrics, especially in SaaS where it is all about retaining customers. 


If you attended our SaaS Business Asia meetup on Product Management, you’ve heard a PM from Hubspot, one of the best growth stack tools out there, mentioning how they were incorporating their customers’ goals - get more leads - into their goals. This kind of goal is basically like going to the very root lead measure. 


And one thing I learnt related to this from my NLP course, is to focus on desired outcomes rather than solved problems. In business we are taught to think about solving problems, but nowadays there are so many alternatives out there for our customers. There are barely unmet needs to cover or problems to solve, but there are ways to get customers to their desired outcomes in easier or cheaper ways. Plus, it is a mindset shift from negativity to positivity. I’ll leave this as food for thought.


So, consider incorporating your customers goals - and clearly define what success is for them - into your business goals. And if not opting for this at business level, we recommend it at least to Customer Success departments. 


Speaking of which, I have Charmaine here with me. She is currently Customer Success Manager at DynamicYield, a personalization engine for e-commerce and content platforms, and previously Customer Success Manager at Hubspot. 


C: Hey, hi there!


A: Hi Charmaine. As I mentioned, I’m looking at teams and especially Customer Success teams that look into what success means for their customers and try to incorporate that into their department or company goal. You had plenty of experience at Hubspot and now at DynamicYield. Can you run us through which kind of metrics you usually have?


C: Absolutely. To take a step back, the main goal of Customer Success is not to be fully accountable for customers’ complete success, but rather about aligning organizational resources within the company. Customer Success is in charge of getting every department in your company interested in your customers’ welfare, and then ultimately giving the customers the resources they need.


So in terms of aligning customer value with organisational goals there are some really important things that we look at. So, for example, Hubspot as a company might look not only at the number of visitors and contacts a customer gets, but also at the visitor to contact conversion rate - because customers come to Hubspot to drive more effective content and inbound marketing.


A: And you look at that from a general perspective, aggregating data from all the customers, or on an individual basis?


C: This is why Customer Success is important. Customer Success Managers get that one on one relationship with the customers, so they get the first indicator when things are moving in the right direction or when a course-correction is needed. And then, of course, with the aggregated info from all the Customer Success Managers we get inspiration and ideas for product, marketing webinars, additional customer training resources, and even internal hires that we need - maybe we need to open up a new department, build something new that’s going to drive even more value for the customers.


A: You mentioned quite a few times “value for the customers”. How exactly do you define that?


C: Every customer is really different. The Customer Success Manager builds the relationship with the customers and so they can be very transparent about their company goals. But possibly the hardest is understanding the goals of a customer as an individual - does this user want to get a promotion/ did they take this tool for another reason? 


A: And once you know this goal that each and every one has, how do you incorporate that into the goals that you set for yourself? How do you usually operate?


C: For most customers we define something that is called a success management plan. It’s not set in stone, it’s a flexible, living document that we use on weekly calls and on quarterly business updates. It keeps everyone pulling in the same direction. 


A: And from all the years you’ve spent in Customer Success...Actually how many years?


C: Three.


A: What will be your number one learning that you would like to share with other people in Customer Success? Especially with regards to this, with regards to how the goals your customers have impact your goals?


C: Something that is really important is that every Customer Success department has different metrics. You can be compensated on retention, or upsells. But ultimately as a Customer Success Manager your job is to focus on ensuring that your good fit customers grow and that your customers have an experience as positive and constructive as possible. 


So regardless of you are being compensated, your focus on building trust and also being very transparent about your customer’s progress and opportunities will help you succeed as a Customer Success Manager in any company.


A: Cool. Thank you Charmaine.


C: Cool. Thank you Adelina. 


Number 2


If you heard of Gary V, you must have heard him recommend to focus on the process, not the outcomes when it comes to publishing content. He encourages people to publish consistently, work harder, improve their process and quality. Not to obsess over the number of subscribers, or monetization, as that will come if you are disciplined about the process.


This is quite true in many business aspects. You see, you can fully control the process, but the outcomes depends on external factors too. So focus on what you can manage and tweak your goals to be more about the process that you think has the potential to lead you to the desired outcome. In other words, this boils down again to lead vs lag measures.


Try to apply this at least to your growth department or growth projects. Because when it comes to growth, process trumps everything else. 


On this topic, I’ve invited Yi-Wei Ang, fellow alumni at Reforge Growth Program organised by Brian Balfour and Andrew Chen. Yi-Wei is Director of Product and was previously Head of Growth at TradeGecko - which provides a set of SaaS tools to e-commerce and wholesale businesses to manage their inventory and sell.


Y: Hi Adelina. Great to be here today.


A: Hi Yi-Wei. I was telling people about how process trumps any other type of goal, especially outcome goals, and how if you focus on process - which is the thing that you can actually control -, if you constantly improve, you can get to the outcomes that you want. And I am sure that from your experience as Head of Growth at TradeGecko you have plenty to say about this. And maybe you also want to start from: what is Growth in your opinion? Because I know it’s a very misleading term for many people nowadays.


Y: Yeah. At TradeGecko one thing that we realized is: it’s really easy to say you go for the really shiny things and go for the next 10x or 20x. But most of the times the biggest wins we had were from continuous 10% growth over and over again until it eventually gets to our goal. 
One thing that we do believe is like you said, that process trumps everything else. If you do something repetitively and focus more on the learnings, that’s the most important. 


I believe growth is a mentality. It’s a mentality where you are constantly testing, you are constantly putting down your hypotheses, you are developing a process as a team. You make sure that you are constantly challenging yourself, you are constantly finding the best ways to do things, you are constantly being data-driven about what you are going to continue to invest in and why you’ve decided to stop working on something. 


A: How did you start, basically? Because I know Growth can cover many areas. Did you start from actually setting up the process or just doing some small experiments in the beginning? How did you scale it?


Y: From our angle, we recognized that Growth wasn’t purely Marketing, or purely Product. We think about the customer lifecycle holistically - from the point where you read our content for the first time to when you sign up for a trial to when you derive some value from it to the point when you start purchasing us. We believe it’s a process. 


So when we’ve put together the growth team, we thought about everything holistically, from the moment you found us on a partner site all the way to you being a customer. The first thing that we did was to align where we thought were the biggest problems. For example, activation was one of the key issues we needed to solve - how do we make sure that when someone lands on the product for the first time they understand the value we bring to the table and they can be successful in the first hour? 


A: And how did process building come into this?


Y: 90% of what we invested in were mistakes. It’s really easy to get discouraged. We do 2 weeks sprints where as a team we would sit down and say what we believe are the highest impact experiments that we can run. 


The first couple sprints are always the most difficult because you are a bit in the dark, you haven’t run things before, you don’t know what’s working and what’s not. And it’s easy to get discouraged because the data comes in - “oh, we didn’t move the needle”. Try another experiment - “we didn’t move the needle”. But you need to have to trust that with process, with focusing on “ok, what did work about each experiment?”, with extracting key learnings and applying them to the next experiment, you’ll get to a point when it really works. 


That really mattered to us. For example, for activation, we were really going almost minute by minute to figure out. We don’t need everyone to achieve everything in the first go, let’s make sure that people spend more time on the product in the first 1 hour. So that was the first metric that we really focused on and did repeated experiments to get there. 


A: If you are to advise a company that’s just starting to form a Growth team, what would you advise them to start with? When it comes to process, what are the very basic, foundational steps that they should put in place?


Y: I believe that the first thing you need is to get everyone on the same mindset. Marketing, for example, hasn’t traditionally worked in a very agile way, 2 weeks repetitive sprints. Product teams are maybe a little bit more familiar with it, but the fast pace experiments and learning methodology might not be there. So the most important thing that you need to get everyone on the same level playing field is this concept of fast-paced experimentation. 


And once you establish that, really get everyone in the room to learn about what methods you use. I would say keep it simple. At TradeGecko we started really simple early on. For example, we used Trello as a way to plan our sprints. Every experiment idea had a card, we moved things along as we pulled them into sprints, we tried to keep it as lightweight as possible, we kept the results of our experiments and then we scaled out of there. But always, in the beginning, start as small as you can.


A: Awesome. Good stuff. Thank you Yi-Wei.


Y: Thank you.


Number 3


OKRs, KPIs, 4DX, Kanban, sprints - you name it. They matter a lot. Because it is all about the execution, and less about the idea. And you’ve probably tried them all. And none is perfect when it comes to implementation. 


What I learnt from my experience at TradeGecko, ViSenze, and Argomi, is that ultimately all these are communications tools, not so much planning tools. For planning, especially in agile environments as startups, it is much better to have a clear vision and operating principles and then let the teams align by using any of these methods. 


And communication, therefore alignment, is tremendously important. I remember an article by the CTO of Hubspot, who got his inspiration from Elon Musk. It was about vectors: “Every person in the company is one vector. Your progress is determined by the sum of all vectors.”  It was about the fact that in order to move fast, you need to consider both the magnitude and the direction of each vector. Keep one thing in mind: “You can make more progress with the amazing people you already have simply by better aligning vectors.”


In order to get some practical advice on goal setting methods and tools, let’s hear some tips from Itai Boublil, Director of Marketing at Miller Heiman Group - a corporate providing sales training that is currently undergoing a business model transformation into SaaS.


I: Thank you for that intro, Adelina. And hello!


A: Hi. We’ve been working together and I noticed you are very particular about the planning methods that you use and how you communicate inside your department and outside your department. So to start with, maybe you want to tell us, for your Marketing department, what method do you like to use when it comes to setting goals?


I: First of all, I like my team to actually understand the funnel and their roles in it - so, for example, if you are producing content, if you are in charge of the blog, what are the metrics you are going to be accountable for and what are pretty much your goals? So it starts with the team really understanding these metrics across the funnel and later what we try to do is have a monthly metrics meeting when we come in one room, we keep everything transparent. We use Trello to track progress, we use scrum, agile marketing.


A: So that’s what you use on a daily basis?


I: Yes, that’s what we use on a daily basis. So everyone can actually see how the team progresses. And at the end of the month we meet. And we report on the previous month, and we set goals for the next month. During this month we have weekly tactical meetings when we sit down and go through the tasks the team has, the numbers attached to them, we have a triage and a part where we raise obstacles and tensions. It’s always transparent, there is no siloed work within the team.


A: And how about with other teams? How do you make transparent what you guys are doing? 


I: It’s a great question because sometimes Marketing departments try to keep their data to themselves. We have a weekly huddle when we try to bring this information from Marketing, we try to show it to sales, show it to other departments that are interested in our work. For us it’s good, it boosts our ego a little bit, but it’s good to show the company what we are actually doing. Sometimes people have an idea that can help us progress with our work.


A: How do you overcome how people understand you? I assume that inside your department you use a lot of marketing jargon. So if they would look at your Trello it will sound….


I: Yeah. The way to go about it is to keep talking about it. So if you meet with someone, try not to be patronizing. If you meet someone from finance and you say “yeah, we hit our SQL” and they look at you in a weird way, you say “it means sales qualified lead, they come from MQL, we have a lead scoring etc.” So you kind of give them a little bit of a lecture, and before you know it this person will come to you and say “how are your MQLs today?”


A: So it’s a lot of constant education inside the company. 


I: Yeah. And keeping things transparent and communicating on everything. Don’t keep it to yourself. That’s pretty much it. 


A: What’s your number 1 advice for someone that also uses kanban methods, Trello and so on? What is the main thing you learned from practicing it day in and day out?


I: I know as a Director you always have this big vision, this big idea. And normally Trello would be led by the Director of the department. You want to keep your team aligned. You want to keep your decisions and thoughts very transparent to your team. When they are aligned with what you want to do, you are going to move forward. If they are not aligned, if they have a problem with it but you have a closed door policy, you are not going to go anywhere, you are going to fail. You are going to get frustrated and eventually maybe get fired because you are not reaching your goal. So that would be my number 1.


A: Cool. Awesome stuff. Thank you, Itai.


I: You’re welcome. 


That’s all for today. Hope you enjoyed our first SaaS Business Asia podcast episode. Expect to hear from us once in every 2 weeks. 


This was Adelina Peltea, Co-Founder at SaaS Business Asia and CEO at GrowthSmiths. If you have questions or business stories to share, please reach out to me via LinkedIn.


Cheers till next time. 
 

Top global SaaS companies have 3,000+ staff in Southeast Asia

In our analysis of SaaS activities in Southeast Asia, we turned our attention to the largest cloud companies and their workforce. We looked at the top 44 listed Cloud companies, as monitored by the BVP Cloud Index, and compared their workforce (using LinkedIn) in the different countries of the region.

As one would expect, the region is still a small part of their team, overall representing only 3% of their total workforce. However, dismissing it based on this data point only would be ignoring that several of them are building significant teams in the region.

What did we find?

  • Overall, it’s 3,000+ people working with the top SaaS companies in Southeast Asia. That's good news for the ecosystem has it means lots of people experienced working with the best companies. (for those on head hunting mode, if we consider average time in a job to be 2 years, it's more than 100 people changing companies every months, which can join another SaaS company :)

 

  • 10 companies have 20 staff or more

 

  • Netsuite has the largest workforce in the region, with close to 1,000, including 800+ in the Philippines
  • 5 have more than 5% of their global workforce in the region

 

  • 9 of the 44 companies have no staff in the region. That’s 20% of the group :(
  • No one has a team in Laos, Brunei or Timor :(

 

We will be sharing more of this research about top global SaaS companies in the coming weeks. What would you like to know about them and their presence in Southeast Asia?

 

Meetup #2: B2B Product Management Edition is happening on May 12th

Following the success of our first meetup, we are delighted to announce the 2nd meetup for May 12th.

Jeremy Seow - Product Manager for Zendesk’s Chat Product (Zopim), Graham Kennedy - Head of Product at TradeGeckoRuixin Xu - Product Manager at ViSenze and Danielle Greco - Product Manager for Hubspot’s Sales CRM will share their experience building kick-ass products. The meetup will be hosted in Sequoia Capital's Singapore office.

More details and registration on https://www.eventnook.com/event/sbameetup-2-b2bproductmanagementedition/home 

For pictures of the previous meetup, head to the Facebook page:

Zoho makes fun of other SaaS companies

This article was first published in the SaaS Business Asia's bi-monthly newsletter. Be the first to read future curated news and analysis about the SaaS ecosystem in Southeast Asia: Subscribe for curated news


On a dedicated website, postIPOnonprofits.com, Zoho highlights how no SaaS company is profitable yet (although Salesforce.com has just become profitable) and states that all SaaS companies claim to be gaining market share and yet don’t expect to be profitable for the foreseeable future. Zoho also compares data (which SaaS companies manage) with money in a reference to the importance of financially strong banks.

While Zoho is of course praising its own business model and obscuring the fact that several of these companies operate with positive cash flows, the financial stability of SaaS must be kept in mind to ensure the long-term success of the industry. And, a reminder for early stage SaaS companies: providing a free product does not prove sustainability, so show pricing plans as soon as possible.

SaaStr’s Jason Lemkin gave his thoughts on the lack of profits in the SaaS industry: poor sales efficiency, and pricing is often too cheap (read his Quora post on the topic).

Go recurring... and double your valuation!

This article was first published in the SaaS Business Asia's bi-monthly newsletter. Be the first to read future curated news and analysis about the SaaS ecosystem in Southeast Asia: Subscribe for curated news

 

In its Q1 2015 report, Software Equity Group (SEG) finds that listed software companies are valued at 3 times their revenue while SaaS companies are valued at 5.7 times their revenue. Investors love recurring revenue!

Salesforce, already leading CRM, continues to increase its lead

This article was first published in the SaaS Business Asia's bi-monthly newsletter. Be the first to read future curated news and analysis about the SaaS ecosystem in Southeast Asia: Subscribe for curated news

The CRM market is undergoing radical change: Gartner finds that the global CRM market was worth US$23bn in 2014, up 13% from 2013. Salesforce.com leads the way with an 18% market share (in its Q1 results Salesforce announced a US$6bn annual run rate) and revenue growth of 28%, significantly higher than the 7% growth of SAP and Oracle’s 3%.

Gartner report's finding write up by Forbes' contributor Louis Columbus here.

As software giants try to adapt, we can expect more changes: Founder of SaaStr Jason Lemkin has published his analysis of the situation which states why he believes there will be 10-20 CRM companies achieving US$100m+ annual recurring revenue in the coming years.

(Customer Support / Indonesia) ex-Yammer engineer takes on customer service with Bornevia’s Team Inbox

This article was first published in the SaaS Business Asia's bi-monthly newsletter. Be the first to read future curated news and analysis about the SaaS ecosystem in Southeast Asia: Subscribe for curated news

Started in 2014 by Benny Tjia, Bornevia focuses on customer support. Initially a CRM, the company just released its new product, Team Inbox.

What’s a “team inbox” you ask? Why not simply share an email among colleagues? Very well thought and designed, Team Inbox allows to collaborate within a team, maintaining proper user rights and tracking of conversations. Team Inbox also merges conversations from Facebook messages, Twitter and emails all in one place, under the familiar appearance of an email inbox.

When asked why he cares about this, Founder and CEO Benny told us that “our vision is to change the way businesses handle customer support. We think support has to be all hands on deck, especially in smaller business”. The simplicity of the product makes it perfect for companies needing a customer support system without the complexity of ZenDesk or a similar product.

If you wonder who’s behind this beautifully, carefully crafted product, Benny Tija is the one you’re looking at: a Stanford graduate and early engineer at Yammer, he lived 2 years in California before coming back in Indonesia. His experience will surely benefit not only Bornevia, but also other regional entrepreneurs who can get inspired by Benny’s product management and pitching skills.

Talking SaaS at Tech in Asia conference

Tech In Asia invited us to talk about the trends in SaaS in Southeast Asia during their annual conference, gathering 3,000 tech entrepreneurs and investors. We took it as an opportunity to show data points such as the amount of funding which went in SaaS so far and the number of employees.

More from Tech in Asia themselves: https://www.techinasia.com/time-start-saas-business-southeast-asia/

The slides are available on SlideShare:

Lifestyle entrepreneur Jon Yongfook launches Intellihelper, a video game-inspired onboarding product

This article was first published in the SaaS Business Asia's bi-monthly newsletter. Be the first to read future curated news and analysis about the SaaS ecosystem in Southeast Asia: Subscribe for curated news

 

Remember Zelda and Final Fantasy where a character would guide you through the story using a text box at the bottom of the screen? Jon Yongfook’s new startup Intellihelper is the equivalent for websites: a product manager can now write onboarding instructions (as well as other automated customer service messages) as a story shown in-line on the page.The magic happens thanks to an animated red bubble that highlights the relevant area. Intellihelper’s demo was built using Intellihelper itself. Jon tells us “I used Intellihelper to create the Intellihelper onboarding and it was super easy and fast to do.

Will Founder and CEO Jon Yongfook - the most famous lifestyle entrepreneur in Southeast Asia (did you miss his selfie with a fish? Check out his ‘1 Year as a Digital Nomad’ slideshare) - give up on the beach to grow Intellihelper into a million dollar business?

Very possibly! Jon told us, “If Intellihelper leans towards enterprise sales, I'll need to spend a lot more time servicing clients, which is not something I can do from the beach!”

However, that will depend on the sort of customer profile the product attracts. Will it be the “self-serve SaaS market for $50 to $200 per month subscriptions or custom integrations and enterprise for higher fees with fewer customers?” One thing’s for sure, his previous startup Beatrix is a “glue” product, “it connects two services in a useful way” but “glue is not very defensible, it's usually quite competitive, and you're also usually at the mercy of various third party ecosystems.”

Definitely I think my ambitions have grown. I've been especially cognisant about building a proper ‘solution’ as my next challenge. A stronger product and IP that I can sell to various sizes of company.

Is he sad about a possible lifestyle change? Not really. Jon is the eternal optimist: “I think the important thing with lifestyle design is to keep some variety. I had a good two years of beachy fun, maybe the next phase of life will see me running round the city pitching Intellihelper to big corporations! After which, I'm sure I'll find a way to return to the beach.

Let’s see if his next Instagram pic is of a coconut under a Thai sunset or a cheque from a leading VC… actually, I bet we might see both over the coming months.

TradeGecko and its focus on people pre and post US$6.5m Series A

This article was first published in the SaaS Business Asia's bi-monthly newsletter. Be the first to read future curated news and analysis about the SaaS ecosystem in Southeast Asia: Subscribe for curated news

 

TradeGecko has raised Series A funding of US$6.5 million led by NSI Ventures and Jungle Ventures. That’s one of the top 10 biggest fundraising so far in 2015 in Singapore and makes TradeGecko the fourth best-funded SaaS company in Southeast Asia. For those who are not currently using TradeGecko, particularly if you’re running a Shopify, ecommerce, retail or wholesale business, give it a try now like thousands of other businesses. It’s a beautiful product that is API-focused, built with Ruby on Rails and Ember.js and was produced under the guidance of Co-founder and CTO Bradley Priest.

What happens after such a fundraising effort? In a chat with Founder and CEO Cameron Priest, Cameron highlighted that “around the Series A stage is when any startup should transition to building a truly scalable company.” How will he do that? Through a “focus on hiring great people.

TradeGecko was founded three year ago during the first JFDI.asia bootcamp (of which yours truly, your devoted writer, is also an alumnus as a Co-founder of Flocations). Over the past three years the team has grown from its three founders to include sixty employees in two offices (Manila and Singapore) who belong to an impressive nineteen different nationalities (Singapore and Southeast Asia excel at embracing diversity). Indeed, Cameron told us that one of the achievements he is most proud of so far is “building a truly multinational team.

Slack's latest round was made at a 100x ARR ratio!

This article was first published in the SaaS Business Asia's bi-monthly newsletter. Be the first to read future curated news and analysis about the SaaS ecosystem in Southeast Asia: Subscribe for curated news

 

Strong of 750,000 daily active users including 200,000 paying ones, Slack has raised an additional US$160m in April, this time at a $2.5bn+ (pre-money) valuation.
Founder Stewart Butterfield, says it's the best time to raise money "since the time of the ancient Egyptians" even though he has no use for the money. One of the upsides of fundraising is the impression it gives to customers: "it reinforces the perception for our larger customers that we’ll be around for the long haul." 
Read Stewart's insights in his interview with The New York Times interview.

While Slack's revenue has not been disclosed, as the basic plan costs US$8 per month, we can estimate the company's Annual Recurring Revenue to be at around $20m... which means that fundraising was done at a 100+ times ARR ratio!

6 things SaaS entrepreneurs should know about Shopify

This analysis based on Shopify's IPO filing was first publishing in the SaaS Business Asia's bi-monthly newsletter. Be the first to read future curated news and analysis about the SaaS ecosystem in Southeast Asia:

  • Shopify captures 3% of its customers’ revenue!

The well-known e-commerce startup Shopify is moving to the next rung of the ladder and has filed for a proposed IPO. The company is looking to raise $100 million to continue its mission to bring 46 million target retailers online.

We've looked at the IPO filing document and we found out that Shopify is able to collect as much as 3% of the revenue its customers generates through its platform! That figure should inspire any SaaS entrepreneur.

  • Its customers sell US$35k+ of annual merchandise annually through Shopify

With a gross merchandise volume, i.e. total sales of stores run on Shopify, of $1.3bn in Q1 2015 across 160,000 merchants at the end of the quarter, we can estimate the average of $35k+ annual sales by Shopify's customers.

  • Average revenue per customer is $80 per month, with $45 coming from subscriptions.

Shopify generated $22m in subscription revenue in Q1 2015 and $37m in total revenue, with 160,000 merchants at the end of the period. $80 per month is ~$1,000 per year, and around 3% of the stores' average sales.

  • 8 years to reach $100m in Annual Recurring Revenue (ARR)

Shopify was launched in 2006 and reached $24m in quarterly revenue in Q2 2014 (with merchant services accounting for 33%). Annual revenue for 2014 stood at $105m, up 100% from 2013.

  • $230k of revenue per year per staff member

As of March 2015, Shopify has 632 employees.

  • 6% average compounded monthly growth, driven by merchant services more than subscriptions.

Quarterly revenue grew from $18.8m to $37.3m between Q1 2014 to Q1 2015
Growth from subscriptions is at 5%, while growth from merchant services (currently 40% of revenue) is at 8%.

  • Shopify achieves negative churn

Shopify boasts a monthly billing retention rate of 101%.

Dive into the Southeast Asian ecosystem

More than 30 SaaS companies of all sizes responded to our first survey for Q4 2014, giving it insights into the state of the ecosystem, the tools they use, the acquisition channels in place and metrics benchmarks.

While the detailed report is reserved to the participants themselves and on demand, we are publishing some overview of the ecosystem.

- Age of SaaS companies
- Business models (SaaS vs. consulting/services)
- Funding of SaaS startups
- BI & Analytics softwares they use (Google Analytics...)
- Hosting platforms (Amazon AWS...)
- Marketing softwares (Mailchimp...)
- Customer support softwares (ZenDesk)
- Other softwares (Slack, Zopim, Salesforce...)
- Conversion rate benchmark from visitors to leads
- ARPA benchmarks
- MRR growth rate
- Customer acquisition channels

Get the PDF report on Slideshare:

Chat, CRM and ... fragmented payment landscape...

These are part of the results for the Q4 2014 survey among SaaS businesses around Southeast Asia. See more.

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Singapore-based Zopim's success shows in the market penetration it got... being used by 45% of SaaS companies.

Slack has the leadership of business communication, in use at 40% of companies (Will that change after official launch of Singapore-based Pie?), and industry's leader Salesforce is in use at 20% of regional SaaS startups.

Often discussed in the community the fragmentation of the payment gateway market is visible, with no leader.

 

The top 3 customer service softwares are...

These are results for the Q4 2014 survey among SaaS businesses around Southeast Asia. See more.

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While for analytics, tech and marketing we found clear leading platform used by more than 2/3 SaaS companies in the region, it's not the case for customer support. For a big part, there is not even a dedicated software in use, companies managing it through simple emails.

Among the 60% of companies having in place a dedicated solution, ZenDesk is the leading one, followed by UserVoice and FreshDesk.