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Apr 3, 2024

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STEP 1: Current Output Here, with our current base case (1000 customers, 25 acquires per month, monthly churn 10%. CSAT 70%), I forecast the current revenue output to get a gauge on the revenue’s direction. Month 1: Start with 1000 customers. Add 25 new customers: 1000+25=1025 10% churn: 1025×10%=103 Subtract churned customers: 1025−103=922 If we plugin in 24 for n and 23 for k we get 287 customers by the 24 months, losing around 713 customers and total revenue $1,221,158 – $1,221 Avg Revenue per User Generalized equation for total customers and revenue ( Here r/R is churn and A is acquisitions) : C n = 1000 × ¿ ¿ Cumulative Revenue = ∑ k = 1 n ❑ 100 × ¿ ¿ STEP 2: Quantifying Each Jobs Revenue Output (24 months) New Business Acquisition: $100 x 24 months x 5 people = $12,000 Support: Total revenue with 1000 people and 10% churn = $920,234 – with support 8.5% churn rate total revenue = $1,036,934  $116,701 Account manager: 100 * 1.20 n , n <= 6, where 1.20 is the percentage increase and n are the months. Totaling $6,566 per person * 25 - (2400 * 25) which is normal plan. The formula would be:  Cn represents the number of customers at the end of month n  1000 x 0.9 represents models exponential decay in the initial customer base  n is the current month  k represents the months that have passed since each batch of new customers was added, thus k = n - 1.

= $104,150  Month 1: $120  Month 2: $144  Month 3: $172.80  Month 4: $207.36  Month 5: $248.83  Month 6: $298.60 STEP 3: Generalizing Main Equations Before we optimize the equation, we should consider the Customer Lifetime Value Cycle: At the first few stages we want our customer base to increase as we just acquired this company, thus increasing our reach through marketing and branding will increase our customer acquisition. This should be the target for the first 8 months . After significant growth of user base than we can focus on conversion. Thus, New Business Acquisition will be very important at the start but after 8 months, we can pivot to conversion through Account Managers and reduce the rate of growth. The support team affects retention but, in this case, if we increase our customer base to much a high churn rate can cause us to lose a lot of customers through the cracks. Hence, large investments in customer

acquisition with low investments in Support(retention) and Account Manager(monetization). After a large customer base, for the next 8 we focus on conversions by increasing Account Managers and reduce acquisition, here we are profiting from our large customer base. For the next 8, we want to keep our high revenue therefore increasing Support, to sustain our large revenues. STEP 4: First 8 Month Strategy For our existing long-term customers, we want to capitalize on them, thus we will have 4 out 20 people working as an Account Manager, 20% of the work force. To decide between how we allocate the 16 we can measure the revenue difference in two extreme cases over 24 months: Let’s take a scenario where we have 12 support team members and 4 acquisition: 12 Support Members  82 CSAT score  10% × 15% 12 is the Churn Rate 4 Acquisition Members  25 + 4(5) = 45 New Customers If we plug these values in our first Cumulative Revenue equation without Account Managers, we get = $3,750,000. Let’s do the same thing but with 4 support and 12 acquisition: Churn = 0.10 x 0.15 12 , CSAT = 74 Acquisition = 85 New customers Total Revenue = $4,947,492. This shows we have high acquisition and a lower churn rate we can help exponentially increase revenue; having more acquisition staff in comparison to support makes sense because the churn moves closer and closer to zero and makes less of an impact. Let’s combine our Account Manager Revenue and get the total revenue for the first 8 months. Account Manager Revenue = $178,879 Without Revenue = $1,105,782 Total = $1,284,661 Revenue, 1,679 Customer Base.

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STEP 5: Next 8 Month Strategy Account Managers = 10 Acquisition = 6 Support = 4 Account Manager Revenue = $448,197 Without = $1,540,871 Total = $1,988,068 Revenue Cumulative $3,272,729 Revenue, 2,119 Customers. STEP 6: Last 8 Month Strategy Account Managers = 7 Acquisition = 6 Support = 7 Account Manager Revenue = $313,038 Without = $1,893,199 Total = $2,206,237 Cumulative $5,500,000 Revenue, 2,600 Customers Summary and Analysis Over a 24 month period at SaaSafras, strategic resource allocation was phased to align with the evolving needs of the business. Initially, investments were heavily focused on new customer acquisition to accelerate market penetration for the newly acquired company. Resources were then shifted towards account management to maximize revenue from the expanded client base. Relationship building and cross-selling efforts aimed to deepen engagement and increase spend per user. In the final phase, support and account management were balanced to retain clients long-term while maintaining a high average revenue per user (ARPU). This phased strategy not only optimized short-term revenue but significantly enhanced client lifetime

value (CLV), doubling it from an initial ARPU of $1,200 to $2,115 and a CLV around $4,230 over two years. Looking ahead, enhancing the customer satisfaction (CSAT) score is seen as pivotal for year three objectives. Higher CSAT correlates to reduced churn and stronger client loyalty, critical to sustainable long-term growth and profitability. To achieve this, focus will be placed on augmenting support team training, upgrading CRM tools for more efficient service, and establishing feedback mechanisms. Continuous adaptation based on client input will further refine the experience. Prioritizing the customer experience is expected to solidify SaaSafras' market standing by driving down attrition and building a loyal, recurring client base. This approach supports the overarching goal of sustained performance expansion through increased client retention and spend over time and more importantly maximizing profit. Risks and Tradeoffs While the phased strategy for SaaSafras is designed to maximize customer acquisition, revenue, and retention, it involves inherent risks and trade-offs. Initially focusing heavily on customer acquisition could strain resources and potentially overlook the immediate needs of existing customers, risking customer satisfaction. The middle phase's shift towards account management, while beneficial for revenue growth, might lead to a slowdown in new customer acquisition, which could impact market expansion. Lastly, the final phase's emphasis on support and retention, though crucial for long-term sustainability, might divert resources from aggressive market capture strategies, potentially ceding ground to competitors. Furthermore, while the strategy is underpinned by complex mathematical calculations, these are imperfect approximations. Developing an exact equation that account for all variables in a dynamic business environment is hard and would need tools such as using linear programming models, could offer a better understanding of resource allocation.

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