SaaS Interviews with CEOs, Startups, Founders
$800k Bootstrapped SaaS Spun Out of $3m Agency, how'd she do it?
12 Mar 2022
Chapter 1: What is the main topic discussed in this episode?
I think we're actually on track to grow another 20%. We've already had three significant sales in the first month of the year. So we've been growing about 20% a year, year over year for the last two or three years. It's like a big Excel sheet for all of these podcast interviews. Check it out right now at getlatka.com. Hey, folks. My guest today is Valerie Peck.
She focuses on driving customer success, customer experience management, segment-driven marketing, demand generation, and a lot of other things for both B2B and B2C companies, as well as tactical retention, acquisition, and loyalty programs.
She's got a lot of experience in this space, over 20 years actually in this space, and is now building a tool called SuiteCX to help other founders do this at scale. Valerie, are you ready to take us to the top? Absolutely. All right. So there's a lot of sort of big categories you mentioned in your bio. Take me back to the origin story. Is this a CRM? Is it a demand generation tool? What is it?
Well, it's a little bit of both. We often say that we are psychology meets technology. So for years, marketing technology used to be called CRM. That got stolen. Then it was CEM. Then it was CX. These tools all are about getting to understand what customers are thinking, feeling, and doing, and being able to act upon that either with messaging or campaigns or improving the experience they have.
So the tools origin... was actually in doing this with Visio and sticky notes on butcher paper. And what year was that? When did you write the first line of code for the platform? 2013 was when we first said, okay, enough of this. Let's do something different. Got it. So 2013, you get going on this. And did you self-fund at the start or did you raise some capital? We did.
We are totally bootstrapped with no debt. I love that. Even today, bootstrapped. Absolutely no debt. I love this. Okay, very cool. So today, when companies are signing up for your platform, and again, you do a lot of things, what's the average company paying per month to use your technology?
Well, we do an annual subscription because that's preferred by most of the companies because we can make the product a little bespoke. So the annual enterprise view is roughly $26,000. And then there's a $10,000 kickstart to get people going. We have clients who pay us over $100,000 a year to guarantee their time so that we can coach them and help them as well. So it's a range.
So just to be clear, your biggest sort of software contracts are in the $100,000 range per year. Yes. And they can go down as low as a proof of concept of $5,000. Yep. Yep. Okay. And I love this model. So you charge your average customer today. It sounds like it pays $26,000 per year, right? Correct.
And you charge on average almost, well, call it what is almost 35%, 40% of your annual contract in a setup fee, which is good for a variety of reasons. Help me understand how that helps your business. Sure. Well, it gets people more productive quicker. So that gives them retention. That gives them confidence.
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Chapter 2: How did Valerie Peck bootstrap her SaaS business?
So I was the first customer because it saved us incredible amounts of time when we were working with customers. And surprise, our customers said, we want to license this tool. We like it. And so SweetCX was born because we thought, gee, what a great idea. Yes. So our clients to begin with were folks like Lexus and Wells Fargo, no small names.
And most of the clients we have are still with us because they found that it is a very valuable tool for their ongoing success. And again, if we fast forward to today, 30 customers, Valerie, at $26,000 a year on average would put you at about $800,000 in ARR or about $65,000 a month today in revenue.
Chapter 3: What unique features does SuiteCX offer to its customers?
Is that about right? Yeah. And then you add on top about double of that with consulting with pretty much about a 90% margin and the two companies are doing well. So are they the same company? The consulting could be the setup fee.
Well, interestingly enough, we divide professional services, which are setup fees, and consulting, which is bringing our brains to the table, as it were, from a coaching and a diagnostic perspective. You know the software game. When you have consulting associated with professional services and software, it devalues the EBITDA instead of increasing it. So go figure.
It makes more money, but it is separate from an operational and a structural viewpoint. So let's ignore the consulting for a second. If we just look at the setup fees and the SaaS fees from the SaaS business. About 800 grand. Correct. I was going to say about 800K. And what do you think you'll do this year in that business? I think we're actually on track to grow another 20%.
We've already had three significant sales in the first month of the year. So we've been growing about 20% a year, year over year for the last two or three years, even with COVID. Congratulations. Where is most of that growth coming from? Is it expanding current accounts or brand new accounts? Brand new accounts. And where are you finding those folks? What's that motion look like? They find us.
So we have a good reputation. We're in the top quartile of Forrester Wave and several analysts. I do some work with the professional association called CXPA. And so people are interested in companies that know what they're doing and are highly focused. And so in general, we get a lot of referrals from existing customers and the analysts. Okay, got it. So that's a lot of your inbound.
Now, Forrester can also be a pay-to-play model. So what did you do to sort of get that relationship going there? Well, we spent a lot of time and effort nurturing their team whenever they call up and say that they're doing a white paper, a blog or something. And can we get them smart on it?
We take quite a bit of time and effort to make sure that we shine in the knowledge that we share, not always self-serving from a sweet CX perspective. So we've done that over the years. We've been blessed with a pretty stable group of analysts at Forrester and at Aragon. So over the years, we've built up relationships with them and we're very responsive and at times proactive.
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Chapter 4: What is the revenue model for SuiteCX?
We had one company drop out because they decided that they weren't going to focus on CX anymore. But we have a really high conversion rate of probably about 80% and a retention rate of the same as well. Is that gross or net retention? It's gross. It would be a hundred percent because they're so, so we have customers who follow different patterns.
Pattern number one is just a subscription and a license and they renew every year. They're sticky because of the interesting things they're doing on the tool. And then we have customers who add in a coaching consulting training function and And then finally, we have pure consulting customers who just want an output. And we use the tool as a back-end facilitator for them.
So what would net revenue retention be? It's about 80% now, at least. Sorry, you said gross was, right? Well, yeah. So we have virtually no overhead. We work from home. We are garage business. Think of it, it's an awful nice garage. Sorry, Valerie. I'm not talking about gross margin. I'm talking about gross retention.
So if you look at all of your churned revenue over the past 12 months and then add back the expansion, the upgrades you sold. That's math. I went to USC. So again, we're not losing any customers. So that would be- What about downgrades? What about people that are downgrading plans? No. Okay. Got it. So there's no lost revenue over the past 12 months.
Everyone that was paying X amount last year is paying that same X amount today. With the exception of one client who went out of the business. Okay. So that's revenue, right? Yeah. So that's 20,000. Okay. So then the question is, did you upsell other customers to make up the 20,000? Yes. Yes. Okay. So you're above 100% net dollar retention then? Correct. Yeah. Okay. Great.
That makes a lot of sense. Okay. Very cool. What would... I mean, just tell me more about the team. How many folks are full-time with you? We have five virtual full-time people. So we are a gig group where five of us are working full-time, several on contract, several employees. And then we can expand up to 18 people depending on the workload and what's needed.
So we have standby statisticians and videographers and other folks that are part-time, right? They're gigged. and we've had a long relationship with them. So we can gear up and down depending on whatever the workload is. Because how do you know that they're going to have time for you when you need them since they can't rely on you for a full-time paycheck?
So since most of these folks have been working in the same type of capacity since 1999 with me, they make time. Their nights are weekends. The good news is most of our work is not fit between nine to five. So even if they've gone on and are working full-time somewhere, they'll make time to do the work with us. Okay.
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Chapter 5: How does SuiteCX ensure customer retention and success?
It makes good sense. Talk to me about what you want to do with the business. You said you've looked at acquisition offers. Would you ever sell it? Yeah. I think that we're right now, we're at the point where it would be really interesting to find a powerful engine, big sister brother company who can take on some of the sales functions and some of the back office functions and
And let us do more in the thought leadership and development of new product ideas and execution of them. Name the perfect buyer. Well, a perfect buyer might be a business process outsourcing company like Verint or Ipsos from a research perspective or Concentrix from a BPO perspective.
Grant Thornton, some of the midsize consultancies, Walker CX, all of those would be interesting because they're interested in both capabilities and tools. Very good. That makes a lot of sense. Valerie, heck of a story here. Let's wrap up with the famous five. Number one, favorite business book? Managing Customer Experience, Don Peppers and Martha Rogers. Managing Customer Experience.
Number two, is there a CEO you're following or studying? I love, well, I used to love Bill Gates a lot more, but I really like his blog and his information. And Warren Buffett is my idol. I love that. Number three, what's your favorite online tool for building sweet CX besides your own? Actually, we do quite a bit of work with LinkedIn and social media. So that works.
And YouTube, actually, because all of our information is on YouTube. Valerie, number four, how many hours of sleep do you eat every night? Four. That's not healthy. Well, on weekends I catch up. But, you know, when you wake up and you've got clients all over the world, there's always an email for you. Number four or five here. Talk to me a little bit more about your situation.
Married, single, kiddos? I am in a significant relationship of 15 years and happily unmarried.
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Chapter 6: What strategies does Valerie use for customer acquisition?
He has six grandchildren, so that's plenty for me. And we have two four-legged companions who are my fur kids. That's great. And Valerie, do you mind me asking how old you are? I'm 67. Last question. Something you wish you knew when you were 20. That I would be starting businesses up and that my parents were doctors. They had no idea of how to start a business. So I could have benefited.
I had an MBA, but later on. So I could have benefited from understanding how to start a business without going to jail. Guys, she launched an agency in 2002, does anywhere between $3 million and half a million a year in revenue on the agency. But in 2018, said, you know what? There is a big SaaS play here. I'm going to launch it. She did. Sweetcx360.com is the URL.
They're helping folks, large enterprise brands, over 30 of them, manage things like customer onboarding experiences and things of that nature. We'll do about $800,000 in revenue this year. They charge on average $10,000 in setup fees and $30,000 a year for their SaaS contract as they look to scale with their team of five. All bootstrapped, which we love. Valerie Thanks for taking us.
Thanks for your time.