Few days ago, at the Pipeline Summit Conference, I had a chance to meet with one of the keynote speakers, Corey Haines from Baremetrics. His company gives the metrics, dunning, and engagement tools you need to grow and make profitable decisions for your SaaS business. It also allows to connect your payment processor or subscription management platform with our one-click integrations to unlock powerful insights and start improving retention.
Since measuring efficiency of business online is one of the key reasons why I’ve even decided to spend my life running internet businesses, I just had to pull Corey aside and ask him a few questions. Enjoy the read!
SaunaGrow (SG): Corey, why you’ve chosen to be focused on SaaS?
Corey Haines (CH): Baremetrics was originally built as a custom software solution for another SaaS company and then was spun out into its own entity when the founder, Josh Pigford, realized there was some real demand for it. From the start, Baremetrics was built to cater to SaaS businesses, and although now we have a wider range of customers today, the majority is still SaaS.
Personally, I consider my position as Head of Growth at Baremetrics my “dream job” because I love working with SaaS founders. I’ve been obsessed with SaaS products and the business models ever since I was first introduced to it. The recurring nature, emphasis on relationships, and scalability are unmatched in any other type of business. And SaaS founders tend to be some of the smartest people in the world — they’re fun to work with.
SG: What are the 3 first things you’re looking at when evaluating health of a SaaS business?
CH: Besides MRR (obviously), the first three metrics I look at are ARPU, User Churn, and the Quick Ratio.
ARPU is a huge indicator of the market. It also dictates churn to a certain degree, as a lower ARPU (e.g. low double digits or single digit price points) are far more prone to a higher churn rate than businesses with a higher ARPU (e.g. high double digits and above). And the movements in ARPU are good indicators of if a company is providing more value over time and creating a path to expansion.
SaaS is completely dependant on retention. While it’s still possible for a business to grow with a churn rate above 10%, it’s extremely difficult, and in the long-run, unsustainable. Your churn rate is also a strong indicator of product-market fit and how indispensable your product is to your customers.
The Quick Ratio is my favorite and least known metric. It takes all positive MRR inputs (new customers, upgrades, and reactivated customers) and divides it by all negative MRR inputs (downgrades and cancellations) to give you a value usually between 0.5 and 5.0. Anything above 1.0 means that the business is growing, and anything below 1.0 means the business is contracting. It’s a really easy way to get a comprehensive glimpse into the business at a glance.
SG: And if you were to choose 3 key elements of a successful SaaS project, that you cannot measure at Baremetrics, what would these be?
CH: The three most overlooked elements of successful SaaS businesses are the market they target, pricing and activation model, and messaging and positioning.
Unfortunately, too many SaaS founders don’t have a good grasp of who their customers are or who their future customers will be. They think they know, but usually it’s nothing more than a guess or an assumption. Investing in comprehensive market and customer research will unveil insights that you can’t find anywhere else and provide clarity across many different aspects of the business.
Pricing and activation is usually done on a whim. Pricing models are chosen based on what the founders want, instead of what works for the customer. Activation models (e.g. freemium, free trial, demo, etc) are given even less thought. But these are the intersection of every part of the business: market, product, messaging & positioning, and acquisition channels.
SG: What do you believe is the one single thing that startups do wrong in selling their services?
CH: They sell from their own perspective instead of the perspective of the customer. When marketing, selling, writing, building, strategizing, etc… founders unconsciously think, “Does this make sense [to me]?” when they should be asking “Does this make sense to them?”
SG: What would you advise to an entrepreneur thinking of launching a SaaS project?
CH: Take the time to invest in relationships — relationships with potential customers, relationships with potential technical and co-marketing partners, relationships with advisors and investors, and relationships with peers and others who have done what you want to go do.
SG: How close are you with your competitors, do you believe a fairly close relation between competitors is good or bad?
CH: I don’t have a personal relationship with any of our competitors. And no, probably not a good idea.
I don’t subscribe to the “don’t pay attention to your competitors” dogma, but I also think it’s naive to think you can be completely friendly or indifferent to them.
SG: What are your thoughts on automation? When startup should automate their processes?
CH: My personal motto is “Do things that can’t be automated.” Most everything can be scaled, but not everything should be automated.
Automate the things that you can’t add any extra value by doing manually. Or introduce automation to help you scale what you do manually. But don’t go overboard on automations.
SG: You’re often mentioning ‘minimal path to value’ What is it and why is it important?
CH: The “minimum path to value” is a framework to help think about your onboarding experience, whether through a freemium, free trial, paid trial, money-back guarantee, or consultation model.
There’s a few facts founders have to get comfortable with:
- Your software is probably less intuitive than you think
- No one cares about your features, they only care about the end result of what those features enable
- You may only get one shot to show the value of your product
So my advice is to find the “minimum path to value,” in other words, what’s the single experience you can deliver on that requires the least amount of effort from users that allows them to see enough value in the product to make a decision on whether or not it’s for them.
Remove any sequence, communication, highlight, tooltip, or other tool for guidance that isn’t absolutely necessary. And then optimize an onboarding flow that gets someone straight to the core value of the product.
SG: What is the perfect competence mix for a Team of SaaS co-founders? Who’s a must on that Team from day one?
CH: There are a few core competencies that can be called many different names, but could be boiled down to: marketing, operations, and product development.
Founders likely won’t have competencies for all three, so you have to figure out what you will own and what you’ll find someone else to fill that role.
SG: Where do you personally seek self development, do you seek peers outside your own company?
CH: I do a lot of reading books, listening to podcasts, and learning directly from peers and advisors. I spent most of my personal development time on my Kindle, Overcast app, and on Zoom catching up and learning from others.
SG: Why have you joined Baremetrics?
CH: As I mentioned before, I love working with SaaS founders, so Baremetrics provides the perfect avenue to do that. Not only that, but as a one-man growth team, I get a lot of autonomy to make decisions and work on what I think will move the needle for the business.
SG: You’ve joined Baremetrics just under a year ago, but I’m sure since then you have some thoughts already on what should be done in another way. Can you share it?
CH: One thing I can definitely improve on is communication. Specifically, communicating with team members about growth experiments as well as what I need from others. There have been a few projects that didn’t get prioritized correctly or were in the backlog for too long before realizing that it was no one’s fault but my own.
SG: As a your customer, can I pick up your brain from time to time or is what you do a pure SaaS, without human element in it?
CH: Absolutely! I meet with 10-20 founders a week to talk metrics, strategy, pricing, landing pages, onboarding… you name it.
SG: Last but not least, what do you think of SaunaGrow concept – what pros and cons can you see in it? Do you like & use sauna yourself?
CH: I’ve never actually been in a sauna so it’s hard to tell if it would be a good fit for me. If you’re really into saunas, sounds really fun! Otherwise, you may have to do some educating about the benefits of saunas and why it’s better than a regular meeting in an office or coffee shop.
SG: Thank you Corey, I am sure that San Diego may be simply to hot for regular sauna use, so whenever you’re next time around in Europe – let me show you it’s benefits! Thanks for you time and conversation!
Want to discuss it in a sauna with one of our mentors? That’s also possible.