Unit economics deciphering the state of SaaS
- Part 1 Unit economics deciphering the state of SaaS
- Part 2Making your SaaS biz a “must have”
Show Notes
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01:37An overview of the Maxio platformMaxio is a billing and financial operations platform that helps companies collect billing and invoicing data to shape business strategies. As a user in his previous CEO role, Maxio changed the way Randy thought about managing business operations and being a CEO.
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02:43Maxios Growth Report and researchMaxio uses its unique access to billing and invoicing data to monitor growth rates in SMB and midmarket companies. Maxios quarterly reports provide timely insights for CEOs and CFOs to triangulate on their performance compared to a cohort, manage the board, and set targets.
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05:04Insights from Maxio's Growth ReportThe report helps people understand growth rates in their segments, providing benchmarks for comparison. It shows that while growth rates were high in 2020 and 2021, they've now stabilized around 15-20%, indicating a shift in what's considered strong growth for companies.
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06:59The shift from growth at all costs to efficient growthCompanies are shifting from prioritizing growth at any expense to focusing on efficient growth. They're using metrics like the rule of 40, which combines growth rate with EBITDA margin, to make strategic investments rather than pursuing growth without regard for profitability.
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08:20Use cases of growth dataGrowth data helps companies decide between high growth or efficient growth and helps investors determine the investment potential of companies. It's also crucial for setting expectations with investors and securing funding and valuations for future growth.
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10:54What investors look for in companiesInvestors typically prioritize growth over EBITDA margin for valuations. They favor companies with a replicable GTM engine to acquire new customers using the new CAC ratio, low customer churn, and an expansion strategy for sustainable growth.
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12:32CAC ratio dynamics in a recessionIn competitive markets, it's common for companies to invest more than $1 to acquire $1 of ARR. The goal is to retain and expand that ARR over time, balancing the initial investment with long-term profitability, and ensuring that the CAC payback period aligns with customer retention.
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14:57Investing strategically in B2B SaaS marketingMarketers should focus on allocating their budget wisely across people, technology, and programs. They should balance investments between demand creation and demand capture, ensuring they adapt their strategy based on their brand's stage and market presence.
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18:49Balancing art and science in marketingMarketing is a blend of art and science, requiring both creativity and analytical skills. Effective marketing involves brand awareness, demand creation, and data-driven investments across channels to fill out the funnel and reach more potential customers efficiently.
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22:29Content led growth and thought leadershipBuilding thought leadership pillars requires patience, time, and unique data for compelling storytelling. Content-led growth, though challenging, is a key differentiator in a crowded market.
Quotes
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"There was a 31% year-over-year growth in Q2 of 2022 across our broad set of customers. at the end of q4 of 2023, that growth rate had dropped to about 17%. The new normal is somewhere between 15% and 20% growth." - Randy Wootton
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"Implementing metrics like the rule of 40 to signal efficient growth, rather than pursuing growth at any expense, marks a significant shift in strategy observed over the past two years." - Randy Wootton
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"New investors are coming in to fund future growth. You must be able to show you're either a high growth company or an efficient growth company." - Randy Wootton
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"Future investors want to see that your GTM engine is replicable, that you've addressed churn, and that you have an expansion motion." - Randy Wootton
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"B2B tech has under-invested in demand creation. It's a 50/50 between demand creation and demand capture. I would bet if most B2B marketers look at their budget, its probably 80/20 demand capture vs. demand creation." - Randy Wootton
- Part 1 Unit economics deciphering the state of SaaS
- Part 2Making your SaaS biz a “must have”
Up Next:
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Part 1Unit economics deciphering the state of SaaS
Randy Wootton, CEO of Maxio, delves into what drives SaaS success. In the last two years, there's been a shift in the landscape of SaaS. It seems the days of growth at all costs are over, and instead, there's a growing emphasis on efficient growth, leading to a change in the metrics for marketers and SaaS business valuations. Today, Randy discusses how we can decipher the state of SaaS.
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Part 2Making your SaaS biz a “must have”
Randy Wootton, CEO of Maxio, delves into what drives SaaS success. In the last two years, there's been a shift in the landscape of SaaS. Achieving "must-have" status for your SaaS business hinges on nurturing a comprehensive strategy that addresses each stage of the customer journey, from initial awareness to conversion and beyond. This approach requires a strong foundation built upon understanding your customers' problems and showcasing your product as the solution. Today, Randy discusses how to make your SaaS business a must-have.
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