size matters€¦ · themselves better for cost optimization and increased competitiveness “ ed...

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Get Confident in Your CAC! SIZE MATTERS

Cloud Distribution 2

Cloud Distribution 3

Nick Heddy VP Sales nheddy@pax8.com 720-500-3835

Ryan Walsh SVP Partner Solutions rwalsh@pax8.com 720-500-3835

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(FUBAR) Seriously…

Unexplainable Provisioning Delays…

Separate Vendor Bills…

Limited or No Support Assistance…

DISTRIBUTION IS BROKEN.

John Street, CEO

Previously founded: • MX Logic (2002) • USA.Net (1997)

John Street CEO and Founder

7

Cloud Shift

8

000,000,000,000

Where will the cloud shift come

from? 9

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Where the Cloud Shift will come from?

“ Organizations embracing dynamic, cloud-based

operating models position themselves better for cost optimization and increased

competitiveness “ Ed Anderson, Research VP Gartner

SMB Market is a Vital Growth Opportunity

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Cloud computing is viewed by 80% of US SMBs as a solution that contributes to business growth.

Firms: 10,900 Employees: 55 Million

Firms: 9,700 Employees: 6.5 Million

Firms: 5 Million Employees: 58 Million

Source: US Census Bureau

Enterprise 1,000+

Employees

Mid-Market 500-999 Employees

SMB 1-499 Employees

US Market Size Only

SMB Market is a Vital Growth Opportunity

The SMB cloud market is estimated to grow 19% annually over five years, from $42B in 2015 to $100B by 2020

Huge Opportunity in SMB Cloud Market

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$B

$10B

$20B

$30B

$40B

$50B

$60B

$70B

$80B

$90B

$100B

2015 2016 2017 2018 2019 2020

Projected SMB Cloud Spending

Sources: Compass Intelligence, Technavio

How Do You Reduce Customer Acquisition Cost?

How Does MRR Impact Your Valuation?

What is Customer Acquisition

Cost?

Resell =

MSP Valuations based on Type of Revenue

14

Breakfix = Pro Svcs = Source: Paul Dippell – Service Leadership

$.10

$.45 $.63

Resell = $.10 Breakfix = $.45 Pro Svcs = $.63

MSP Valuations based on Type of Revenue

15

Managed Recurring Services?

MSP Valuations based on Type of Revenue

$1.27

•  2 MSPs at $5 Revenue •  MSP 1 = Avg Margin 7% •  MSP 2 = Avg Margin 15%

•  Difference = $4.25 million

Efficiency of Recurring Revenue

16 Source: Paul Dippell – Service Leadership, Channel e2e

Concepts for the Cloud Age

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•  Rule of 78s •  Cost of Customer Acquisition

Concepts for the Cloud Age

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Rule of 78s

CAC Defined &

Rule of 78s

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Customer Acquisition Costs

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•  Customer Acquisition Cost (CAC) Ratio helps determine the profitability of sales and marketing investments for Cloud Subscription MRR

Economics in Cloud

•  The CAC Ratio helps determine how much of you S&M investment is paid back within a year * TARGET = less than 24 months

*: Bessemer’s Top 10 Laws of Cloud Computing and SaaS

•  Sales Team Salaries •  Marketing Costs – Website, Collateral, etc. •  Advertising •  Entertainment budget (Rockies games !) •  Etc.

Sales and Marketing Costs

21

How to Reduce CAC

•  Own a niche •  Capture your secret sauce •  Target your marketing •  Track and trace •  Be Easy to Find (social media) •  Iterate until your nail the recipe •  Upsell / Cross-sell •  Get a Wingman

Ways to Reduce CAC

23

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YOU US

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BOOTH #417/419

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THANK YOU