size matters€¦ · themselves better for cost optimization and increased competitiveness “ ed...
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Copyright © 2017 Pax8. All rights reserved.
Get Confident in Your CAC! SIZE MATTERS
Cloud Distribution 2
Cloud Distribution 3
Nick Heddy VP Sales [email protected] 720-500-3835
Ryan Walsh SVP Partner Solutions [email protected] 720-500-3835
Copyright © 2017 Pax8. All rights reserved.
(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
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Cloud Shift
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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
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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
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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
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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
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YOU US
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