Patrick Campbell, founder of ProfitWell, explains why freemium models improve customer retention.
Insight
Campbell: Bootstrapping is for lifestyle businesses, while funding targets $1B revenue
“The basic idea is bootstrapping is for lifestyle businesses that want to cash flow. Funding is for companies trying to create a billion dollars in annual revenue.”
What-if
Campbell: ProfitWell likely sacrificed a $1B exit by not raising money sooner
“We sold for over two hundred million dollars, et cetera. But we probably, if we had taken money, we could have had a billion dollar exit or we could have kept going and we should have taken money earlier in our life cycle. This was actually a big mistake becau…”
Insight
Campbell: SaaS retention is highest for daily tools and background automation
“When we look at churn rates across different types of products, those products that are workflow products you use every single day or mostly every single day, or those products you don't have to log into, but you still get the value. That's where the lowest ch…”
Assertion Partly supported
Campbell: Freemium Customer NPS Is Typically Double That of Sales Converts
“And then on top of that, NPS or CSAT, we measured it through NPS, is typically about double.”
Assertion Supported
Campbell: Value metric pricing reduces SaaS churn 20-25% and doubles expansion revenue
“Churn tends to be about 20 to 25% lower because people will downgrade, but they're using, you don't get this, like I'm paying for so much and end up not doing, you know, not using a lot of it. It's like, oh, I'm using eight seats this month. I'm going to downg…”
Insight
Campbell: Companies with NPS over 20 should raise prices annually
“You should be increasing your overall price once per year. If you're building, if you're not building and your support sucks and your NPS is low, then, you know, don't worry about it. But if your NPS is over 20, which is not a very high NPS, you should raise y…”