Blue Horizon’s reading list is a curated collection of articles for SaaS founders and management teams. We are entrepreneurs and operators who have lived through the process of founding and scaling software companies. Here are the articles and resources we found useful this week.
Monthly vs. Annual Contracts: Is It Time to Reconsider Your Annual Plan?
by OpenView Partners
If you already offer an annual plan, you’ll most likely find that those customers exhibit better metrics than customers on a monthly plan. This isn’t because annual plans are great at retaining customers, but rather because your more loyal customers are going to opt for those plans, stay on your software for longer, and ultimately exhibit better metrics. Meanwhile, customers that are less confident in the value of your product will choose monthly plans and likely churn faster. This self-selecting bias can quickly lead you down the wrong path of thinking that getting customers on annual plans will improve your metrics.
Why It’s Year 3 When You Lose Your Larger Customers
by Jason Lemkin, saastr.com
Year 1 – the enterprise buys, but often doesn’t even fully deploy until month 6-9, or sometimes even longer. So the buyer really doesn’t even have any success metrics going into the first renewal.
Year 2 – renewal comes up, deployment only finally got going a few months ago. Engagement Metrics are often low but (x) it’s already in the budget, and (y) what do you expect, we finally just deployed? It took us 9 months to get our act together and use the service. OK, just renew at last year’s price.
Year 3 – hmmm. OK, finally, 15-18 months under our belt — and engagement / usage is still low. Should we renew? Meh. Well, if we do, let’s get a big price cut if usage isn’t high. Or put it aside for a year.
How We Got Here: Why Customer Success and Customer Education are Coming Together Now
by ChurnZero
32% of customers stop doing business with a brand they love after only one bad experience?
60% more profitable than companies that don’t focus on customers.
What Makes a Strong Product Culture?
by airfocus
When teams adapt to a product mindset, that’s a natural byproduct of adopting a product culture. In fact, this is essential to creating a strong product culture, because it gives teams the creative freedom to push the product forward in ways that may not have been possible before.
6 Business Value Creation Questions in 10 Words
by David Cummings, davidcummings.org
1) Makable?
2) Desirable?
3) Customer profitable?
4) Customer profitably acquirable?
5) Investment scalable?
6) Platformable?
The 8 Biggest Mistakes First Time Founders Make After $50K MRR Or So
by Jason Lemkin, saastr.com
Not hiring a real VP/Head of Marketing early
Not having 2+ quota-hitting sales reps in place
Not knowing your “Zero Cash Date”
Not driving your NPS up
5 Mistakes to Avoid When Tracking SaaS Metrics
by Baremetrics
1. Tracking too many metrics
2. Neglecting your business model
3. Not considering your investment situation
4. Focusing solely on quantitative metrics
5. Not segmenting your customers
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Blue Horizon acquires and invests in profitable software businesses with stable recurring revenue streams. The Blue Horizon platform combines long-term capital and industry expertise with an operating model that enables businesses and their leaders to focus on growth and profitability.