I really liked Christoph Janz’s blog post on what he looks for in Saas startups (see here) since he pretty much describes what I do as well.

Two additional things I look for is “Customer Lifetime Costs” and “Customer Lock-in”.

Whereas costs of service delivery are close to 0 with regards to IT spendings, their seem to be certain product types and customer groups that result in high costs mostly resulting from support efforts. The barrier to fire off a support request via Email or some other tool integrated in the service are really low since the user is using the browser anyways - and customers sure know how to use them.

I truely believe that any company should invest in responding to those requests and satisfy their customers. Happy and satisfied customers are (next to the quality of the product) the key elements to customer retention and thus have a huge impact on the “Customer Lifetime Value”.

The “Customer Lock-in” factor is more of a soft-factor where I try to understand the hurdles / pain a customer will have to quit the service - either to use none at all or in order to transfer to a competitor. A low lock-in adds additional pressure on the business and potentially leads to higher “Customer Lifetime Costs” (remember these are the costs to keep your clients happy).

The problem: Both are just as hard to guesstimate as CLV and CAC… but that is the fun part of our job :)