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SaaS Is Growing Up: 4 Business Model Changes To Adopt with Notion Capital

SaaStr

Some of the changes we’ve seen in the last year or two include: CAC reduction Headcount optimization Price complexity Quality of revenue A different environment means a different strategy, and Notion Capital lays out four business model changes that could be helpful based on what peers are doing. You don’t want to be there.

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Customer Success benchmarks: headcount and budgets

ChurnZero

Customer Success benchmark: headcount How many people should be on a Customer Success team? of revenue or less…and overall 64% of respondents reported non-headcount budgets of $200,000 or less: a severe under-investment in this critical business function.” When asked about non-headcount budgets; 8.3%

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Customer Success benchmarks: headcount and budgets

ChurnZero

Customer Success benchmark: headcount How many people should be on a Customer Success team? of revenue or less…and overall 64% of respondents reported non-headcount budgets of $200,000 or less: a severe under-investment in this critical business function.” When asked about non-headcount budgets; 8.3%

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Clouded Judgement 5.24.24 - Software Environment Remains Strained

Clouded Judgement

Unfortunately, that didn’t happen… The Workday earnings call summarized it well: “But within the quarter, we experienced increased deal scrutiny as compared to prior quarters, and we are seeing customers committing to lower headcount levels on renewals compared to what we had expected. Securities and Exchange Commission.

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Clouded Judgement 12.8.23 - Q3 Earnings Preview

Clouded Judgement

Companies have reduced headcount, but new bookings aren’t getting any easier Quarterly net new ARR growth : Some green-shoots! Most public companies don’t report net new ARR, so I’m taking an implied ARR metric (quarterly subscription revenue x 4). Altimeter is an investment adviser registered with the U.S.

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Clouded Judgement 4.7.23

Clouded Judgement

That’s a big difference, especially when you layer in the growth in headcount from 2021 to 2022. Essentially companies grew headcount significantly to add less ARR. We’re obviously seeing the rightsizing of this now with headcount reductions. The second chart comes from the latest MS CIO survey (below).

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Clouded Judgement 3.22.24 - ERR vs ARR and the Conundrum of AI Revenue Streams Today

Clouded Judgement

Headcount planning, budgeting, fundraising, etc can often be largely based on a top line plan. Most public companies don’t report net new ARR, so I’m taking an implied ARR metric (quarterly subscription revenue x 4). Companies that do not disclose subscription rev have been left out of the analysis and are listed as NA.

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