ICTO14 - Karel van der Poel, Producteigenaar BI & Analytics ServiceNow

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Growth Hacking: Metrics & Business Models

Serial Enterprise Software Entrepreneur, former VC

Today: ServiceNow

.

Karel van der Poel

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Karel van der Poel born 1972…

1993 1996 1997 1999 2004 2007 2010 2014

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2,200+Enterprise Customers

2,100+Employees

Major SitesSan Diego, Silicon Valley, Seattle, Amsterdam,

London, Sydney

ServiceNow – The Enterprise IT Cloud Company

*Expected 2014 Revenues

$13M$28M

$64M

$128M

$244M

FY12FY11FY10FY09FY08

$424M

FY13

*$652M to $657M

FY14

$139M

Strong Revenue & Growth

Platform Designed to Manage Service Relationships in the Enterprise

Highly Secure and Available Enterprise Cloud

SaaS Business Model

Enterprise IT CloudNYSE: NOW

$478MTrailing 12-Month Revenue

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ServiceNow - The Enterprise IT Cloud Company

To IT For IT Thru IT

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The new world: Measure everything!

• Tweets, likes, referrals• Ad Impressions, Clicks, Visitors• Landing pages, Conversion• Trials – leads – customers• Usage of trials• Usage Statistics of customers• Upsell – Cross sell• Recurring revenue, ACV, Margin• Renewals - NPS

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Fast Growth Saas companies: Measuring what matters

Special thanks to David Skok of Matrix partners: http://www.forentrepreneurs.com

• CAC = Customer Acquisition Cost• LTV = Life Time Customer Value• MRR = Monthly Recurring Revenue• ARR = Annual Recurring Revenue• ACV = Annual Contract Value• ARPU = Average Revenue per user/customer (AVG ACV/ARR/MRR)• Churn = the % of customers or dollars that are not renewed• Retention = the % of customers or dollars that are renewed. (100%-Churn)• % Renewal rate = % of customers that are up for renewal that actually renew• % ARR expansion = Expansion revenue from existing customers as % of total revenue• Conversion = the % of prospects / trials that are converted into PAYING customers

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SaaS success factors

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Deep dive on Profitability

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Two powerful metrics every CEO should know.

LTV = Life Time customer valueCAC = Customer Acquisition Costs

The Goal

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SaaS is capital expensive

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Impact of growth and the impact of “time to recover CAC” on Cash Flow

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Impact of success

• Finally cash flow positive?• Time to accelerate!• Negative cash flow again…• Pattern keep repeating when you are

able to keep accelerating

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New Logo’s – Expand – Retain

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Your churn determines your revenue potential.

One oft-overlooked aspect of churn is that the churn rate, combined with the rate of new ARR adds, not only defines how fast you can grow the business, it also defines the maximum size the business can reach

Zero Growth: New ARR = Churned ARR

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• “97% of all our customers are retained each month!”

– Does that include free customers?

– What % of revenue is retained?

– What percentage of customers was actually up for renewal?

– 3% churn per month? You mean 31%! of your customer base churns in 12 months!

– What does your cohort analysis look like?

Why are customer churn and revenue churn so different?

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Churn Cohort Analysis

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Improving your churn over time.

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Where you want to be: Negative Churn!

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Impact of Churn and Negative Churn

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Your Funnel Metrics

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Mirror42 & KPI Library – low touch sales model.

Online Advertising

CustomersLoyal

CustomersInvite

10000Members a

month

Retain&

GrowConvert

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The SaaS Company Dashboard

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Thank you

Questions? Karel.vanderpoel@servicenow.com