🏴☠️ ⚡️ Momentum After a Record Quarter (Portfolio Performance & Strategy)
This newsletter is dedicated to Acquiring and Operating Micro SaaS firms. Join us every Saturday morning for acquisition case studies, operational tactics, growth frameworks, and more!
We are back with a portfolio performance and strategy wrap for Q423. Proud of our results and clear on the path ahead. I’ll leave it at that, let’s dive in…
TABLE OF CONTENTS:
REFLECTION & DIAGNOSIS
MAIN ACHIEVEMENTS
BY THE NUMBERS
MRR, ACTIVE USERS & REVENUE
CORE PERFORMANCE METRICS
OKR EXECUTION
STRATEGIC PLANNING
Y1 PACING
DRAFT Q124 OBJECTIVES
🏆 PORTFOLIO PERFORMANCE & STRATEGY
📺 WATCH:
📻 LISTEN:
// REFLECTION & DIAGNOSIS
🎖️ MAIN ACHIEVEMENTS
Record growth in MRR from $19,014 to $20,819 (9.49%) and ARPU from $36 to $41 (13.89%) following the release of new pricing and monetization
Generated ~$20k in free cashflow via annual plan option
Stable retention (>98.5%), in spite of pricing changes and big product releases
80% approval from user base for our 1st substantive product release, with the roadmap locked and loaded through Q224
Notable shift in momentum with ~MoM MRR Growth ($ and %) trending increasingly positive, compared to negative TTM growth in 2022
🔢 BY THE NUMBERS
MRR, ACTIVE CUSTOMERS & REVENUE
Disclaimer: as noted previously, we acquired the business just after a migration to stripe as the underlying billing infrastructure. In addition, the prior owner sold ad-hoc months of prepaid subscriptions, which resulted in ~150 subscribers who had yet to bill via stripe. Thus, the navy chart below is incomplete so we’ve included manually generated charts, which adjust MRR for both billing method (stripe and legacy) and subscription term. In addition, we’ve included a manual chart showing revenues. Lastly, the manual charts have been colored green to highlight when we took control of the business.
CORE PERFORMANCE METRICS
Comments & Observations:
New Visitor Sessions: our always on channels (blog and social media) are steady and buzzing. We haven’t seen a structural incline in new visitor sessions, though the quality of visitors has improved notably, as measured via trial signups and conversion to paid users.
Trail Signups: are indeed showing structural improvement, where we averaged ~48 in Q423 as a function of better quality traffic coming from google / search, blog / social media and ambassadors
Trial to Paid Conversion Rate: we ~2x’d our YTD average, which is HUGE for us, though there’s a ton of room for improvement to the onboarding experience, which is contemplated in our OKRs for this quarter…
Churn: continues to improve to absolutely elite levels, thanks be to the SaaS gods 🙏
🛠️ OKR EXECUTION
OBJECTIVE #1: New pricing model boosts MRR >15%
KEY RESULTS:
Finalize new pricing design (via analysis / exploration)
Determine user impact (% of users moved to new plan and $ change), break even point (spectrum of MRR and Churn sensitivity) and revenue (net effect)
Execute competitive audit to inform view on negative impact to new trial users and paid user conversions
Identify top 3 risks of transitioning users to new pricing plans, create mitigation plan
Pricing plan transition operations (stripe, product back-end, in-app experience)
Execute multi-touch / channel communication strategy (3x email, 3x facebook group) to ensure awareness
Update pricing page across digital surface area (Website, in-app)
Provide FAQ document / templates to support to navigate related convos in best practice manner
Set up alert to monitor negative sentiment (Social / review monitoring) and template responses
EXECUTION SCORE: ⭐️⭐️⭐️☆
REFLECTION / DIAGNOSIS: We landed at +~$2k MRR (10%) and fell short of our goal, though we standardized pricing across the user base and generated ~$20k in free cash flow with no increase in churn. As such, we see this as a huge win for the business. That said, we did not allocate enough time toward user interviews to validate the messaging and usage associated with key value metrics, resulting in a few hiccups. In the most macro sense, we determined it is critical to establish a general point of view on pricing and monetization during diligence, or immediately upon taking ownership of the business.
OBJECTIVE #2: New global components earns 80%+ user approval
KEY RESULTS:
User Communication & Expectation Management - Execute multi-channel communication plan (email, social, in-app) to educate and orient users to the improvements
Testing and QA - Establish dedicated QA period prior to release and execute all relevant activities in staging environment to uncover and resolve issues
Rollback Plan - Establish a comprehensive rollback plan for each release allowing for immediate action in case of unforeseen issues
Monitoring & Issue Resolution - Establish a method for flagging support issues re new releases, and assigning high priority
Training and Support - Provide training materials and resources (canned email responses, support articles / how-to guides) the customer support team, ensuring they can address 90% of user queries without escalation
User Experience and Feedback Collection - Execute user survey (’How satisfied are you with XYZ product release? 1-5 Stars)
Process - Translate this OKR into repeatable product release checklist
EXECUTION SCORE: ⭐️⭐️⭐️⭐️
REFLECTION / DIAGNOSIS: We stuck this OKR, though some unforeseen issues during QA left us a bit frantic. Moving forward, we will plan our release schedule with more slack between QA and the formal release date we socialize with users to prevent anxiety for the team.
OBJECTIVE #3: Execute UGC Tactical Experiment to Inform Longer-term UGC Strategy
KEY RESULTS:
Establish RICE score for panel webinars
Execute 2nd webinar and measure campaign results
Apply the RICE Framework to Select next UGC Tactic from prioritized Options
Develop a clear hypothesis statement for the chosen UGC tactic (outlining the expected impact on engagement, conversion, and user satisfaction)
Execute the UGC tactic before Dec 15th
Measure campaign results 30 days post-campaign launch
Compare results and provide structured leadership recommendations, including thoughts around what you would/could have differently
EXECUTION SCORE: ⭐️⭐️⭐️☆
REFLECTION / DIAGNOSIS: We are proud of the rigor applied here, as it relates to framework-led thinking. We were also pleased with the work to identify the landscape of modern tactics available to us, though we could have gone deeper studying elite performers and competitor failures in each of the tactics.
// STRATEGIC PLANNING
🏁 Y1 PACING
Comments:
Revenue ($) — we’re sitting at $173k in Revenues after three quarters, which gives us a $49.5k revenue delta to close in Q124 and complete Y1. We’ve put up ~$15k revenue / mth, which should generate ~$45k in Q1, which leaves us $3.2k behind goal, though we are very much in striking distance here.
YoY MRR Growth (% and $) — We grew MRR ~$800 via pricing optimization, though this lever is now exhausted. We need to now generate $1.5k+ organically via user acquisition . This translates to a target of ~45 net new paying users for the quarter (after forecasted churn), which is 6x above our best quarterly performance to-date. We need to GIDDY UP on a) improving the onboarding experience to drive trial to paid conversions and b) a targeted acquisition tactic that is more predictable than SEO and ambassadors (ie cold outbound or paid ads)
~MoM MRR Growth — We’re averaging ~.28% after three quarters behind the wheel. To hit goal, we need to 4x our performance and average 1% in Q124, which is a steep hill to climb.
📝 DRAFT Q124 OBJECTIVES
OBJECTIVE #1: Implement segment-based / modern onboarding to set the foundation for improved trial to paid conversions (currently ~5%)
OBJECTIVE #2: Test cold outbound to generate predictable increase in trial signups
OBJECTIVE #3: Maintain product release momentum to keep product relevant and maintain retention <1.5%
OBJECTIVE #4: 50% increase in content / social volume to uncover impact to new site visitors (how correlated is content / social volume to trial signups)