Recently, we sat down with Neel Desai, ProfitWell’s Director of Product Management, to discuss how the company approaches its integration strategy and measures its impact on its business.
The podcast link is here if you want to listen to the entire conversation. If you’re pressed for time and prefer to read a summary containing all the key takeaways, read on.
- ProfitWell is a revenue automation platform that Paddle recently acquired.
- During ProfitWell’s internal study of 500,000 subscription companies, they observed that integrations boost retention by 10-15%.
- ProfitWell discovered that integrations uncover new and unexpected use cases for their suite of products.
- To figure out which integrations to prioritize, ProfitWell analyzes the size of the market opportunity, the ideal customer profile (ICP), and the complexity of each integration.
- Given that ProfitWell is known for the accuracy of its data, it’s essential to the company that its payments integrations have perfect uptime.
- Maintenance is the biggest challenge around every integration - much more so than the initial effort it took to build the integration.
- To measure the return on investment (ROI) of its integrations, ProfitWell’s product team looks at revenue data and support tickets and spends time with sales.
- It’s important to build a strong relationship with sales/customer success and provide transparency on roadmap decisions, as their qualitative insight is extremely valuable for decision-making.
What is ProfitWell?
ProfitWell, headquartered in Boston, is a comprehensive subscription revenue automation platform. Used by companies as large as Netflix, Masterclass, and Calendly, ProfitWell now drives subscription growth across five different verticals:
- B2B SaaS
- Consumer SaaS
- Subscription ecommerce
- Subscription media
- Non-profits with recurrent donations
Since its inception, ProfitWell has adopted a multi-product, product-led growth strategy—one free Metrics product to bring in new users and three paid ones. Its products provide value primarily by reducing cancellations, providing accurate revenue reports, minimizing churn, and optimizing pricing.
In addition, by automating many of the joint pain points around subscription metrics, ProfitWell frees up its customers’ time so they can focus on their products and users.
ProfitWell and Paddle: A natural synergy
In May 2022, billing company Paddle acquired ProfitWell in a deal worth more than $200 million in cash and equity. Both businesses reduce the operational and financial obstacles in subscription revenue—so there is a natural synergy.
Paddle built an ecosystem of products through acquisitions, giving its customers access to a broader range of services. From ProfitWell’s perspective, the deal also gives them access to capital to continue expanding their market share more aggressively.
Why are integrations important to ProfitWell?
ProfitWell has access to vast revenue data from other subscription companies—putting the team in an excellent position to derive insights about retention, activation, and other key SaaS metrics. For example, during the podcast conversation with Paragon, Neel referenced insights from ProfitWell’s Integration Benchmarks study.
According to the study, data from 500,000 software consumers found:
- Products with at least one integration have 10–15% higher retention, and 18-22% higher for products with four or more integrations
- Willingness to pay is 20% higher for products with 5-10 integrations, and 30%+ for products with 11+ integrations
The impact of integrations on retention
Bootstrapped from founding to the acquisition, ProfitWell is very careful to keep customer acquisition costs to a minimum. However, since its data shows the impact of integrations on retention—and since it costs five times more to acquire new customers than it does to retain current ones—investing in integrations is a no-brainer for ProfitWell.
Quantitative data aside, Neel recognized the actual value of integrations early on in Profitwell's journey from a conversation he had with a customer. He learned about a user who never logged into his account but obsessively read ProfitWell’s growth newsletter and was getting immense value from their product. This made him re-think what it means for someone to be an 'active user' and is what ultimately led him to realize the critical role integrations play in their product strategy.
Insights into revenue data
Neel realized that the job to be done for ProfitWell is to give users insights into revenue data, even if it wasn’t within their app. In an ideal world, ProfitWell would like users to receive these insights from their dashboard, but ultimately, how users want to consume the data is up to them. While the original intent was for users to receive data via their dashboard, they’ve since learned that users get even more value by getting their data around upgrades/delinquencies pushed to:
- CRMs like HubSpot
- Marketing automation tools like Intercom
- 3rd party BI tools
- Slack notifications
ProfitWell’s team learned not only did this provide consistency in knowledge, but these integrations also created additional value and use cases. For example, several of their integrations stemmed from learning about their customers' workarounds to copy and paste data from one app to another.
This observation sparked the insight that ProfitWell could use integrations to automate these tasks for their customers. This not only would save their customers time, but it would make ProfitWell much stickier.
Determine the TAM size
The first step ProfitWell takes is to assess the size of the total available market (TAM) for the integration. They do this using builtwith.com to determine how many companies currently use the third-party software they want to integrate with. Once they know the size of the market, ProfitWell estimates how much additional revenue-building the integration could unlock.
However, it's not just about how many companies use the 3rd party app. In the case of their revenue automation integrations, companies in the same space sold to different segments of the market:
- Zuora targets enterprises with $10–$15MM (annual recurring revenue) ARR
- Recharge focuses on subscription ecommerce
- And Chargebee’s audience is mid-size, B2B SaaS businesses
This meant that each of those integrations, while seemingly similar, would unlock an entirely new customer base for them.
Discover the complexity of the integration
Another primary consideration is the complexity of the integration. ProfitWell is known for the accuracy of its data; when you have as much data at your fingertips as ProfitWell does, a 1% error can be highly detrimental to customers.
If the integration is complex, ProfitWell needs to ensure the third-party API is documented and developer-friendly (like Stripe’s, for example)—or they risk giving their customers erroneous data.
Define the engineering resources required
Given that integrations between 2 apps only need one of the apps to enable the integration, Profitwell doesn’t always build the integration.
For example, since ProfitWell is much larger than a smaller subscription revenue platform like Unscreen, ProfitWell likely expects Unscreen to build the integration (since they stand to gain more from the partnership).
Partnerships are good only if the company is small. In addition, own the integration experience—if your partner doesn’t do an excellent job of it, it reflects poorly on you.
Potential marketing opportunities
As part of its analysis, ProfitWell also investigates marketing opportunities that the integration might unlock, such as partnerships, joint webinars, and other co-marketing events with the integrated product. However, these considerations play a more minor role in ProfitWell’s integration prioritization process than the other factors above.
Navigating tradeoff decisions and challenges around prioritization
As you likely gathered from the process outlined above, working out which integration to build is not always as straightforward for ProfitWell. With every decision that relates to the product roadmap, there are always challenges and trade-offs.
As you've probably experienced internally at your company, Profitwell's integrationProfitWell’s integration decisions are also heavily influenced by the feature requests their sales and customer success departments pass on to the product team. Typically, sales will point out that they can’t close a group of deals because of a missing feature/integration— perhaps one that a competitor offers.
If the product team declines or backlogs the feature request, the sales team will get frustrated, which is not an easy challenge.
Navigating the sales conversation
To ensure sales (and customer success) continue to be open in weekly meetings about the issues they see in their deals around product integrations and features, ProfitWell’s product team is transparent about their process for prioritizing integrations. It’s a data-driven process that forces sales to rely on insights such as:
- The number of people who have requested the integration
- The size of the companies that have requested the integration
- How much revenue ProfitWell could expect from the integration
- And the predicted conversion rate from the integration
This enables all teams to remove emotions and recency bias from their current challenges when discussing priorities and focus on the objective value of any feature/integration they ask the product team for.
Using data from your CRO
They source this data directly from the CRO, which gives it a measure of authority if there’s any push-back from the departments who have requested the new integration.
And they share the data openly with other departments who are involved in deciding whether to build the integration, as follows:
- They include sales and marketing in the go-to-market strategy
- They involve engineering to determine the complexity of the integration
- And they involve the executive team in assessing the potential of any partnerships that might emerge from the integration
In the podcast interview, Neel also highlighted that his team asks sales and customer success not to ask for too many feature requests or integrations. ProfitWell can’t build every requested integration.
It’s easy for a sales rep to think a particular integration is essential because they heard it mentioned once in a recent sales call. In cases like this, ProfitWell’s team is mindful of recency bias—just because something came up in a recent conversation with a client doesn’t mean it’s the be-all and end-all.
Finding a balance
But even with such a transparent process, there is still a degree of misalignment between sales, which is more short-term focused, and product, which tends to think medium- or longer-term. And there are always trade-offs that must be made, not least of all balancing integrations that stem from feature requests against integrations built proactively for a new market.
If all else fails, Neel’s favorite question is to ask directly whether the integration in question is a dealbreaker. More often than not, if sales and CS are honest with themselves, it’s a nice-to-have.
Challenges with integration maintenance
In the podcast episode, Neel highlights that many SaaS companies overlook the ongoing costs of maintenance when they build integrations. Those costs typically relate to things like:
- API changes
- Changing endpoints
- New workflows requested by customers
ProfitWell takes maintenance seriously, especially the latter example. They constantly receive feature requests from paying customers, so ProfitWell doesn’t keep an exhaustive list of use cases since new ones always come up. However, provided these requests are reasonable, it’s difficult for ProfitWell to say no to a paying customer.
That being said, because of ProfitWell’s commitment to data accuracy, they need to ensure that third-party integrations are as up-to-date as possible. Fortunately, since the company employs many engineers, they don’t need to pivot an engineer to ensure any bugs are patched up.
How does ProfitWell measure the ROI of integrations?
To ensure the resources they invest in integrations are well spent, ProfitWell’s team is careful to evaluate the success of their technical partnerships regularly.
The most important metric they track is revenue, which Neel refers to like the podcast's North Star Metric (NSM). ProfitWell follows MRR and ARR by integration and the number of active users per integration.
ProfitWell also segments its support tickets by integration. If they come across many bugs for one integration, it could sign that the third-party API isn’t great. On the other hand, if customers aren’t getting as much as ProfitWell assumed, that shows strong organic interest.
For more qualitative metrics, it’s beneficial for ProfitWell’s product team to spend a few minutes with the sales department weekly. After as little as 10 minutes, it’s easy to see which integrations are coming up the most frequently in sales demos. In particular, the product team has noticed that having a Salesforce integration drives trust in ProfitWell, merely by association.
What is ProfitWell excited about moving forward?
Going forward, ProfitWell shows no sign of slowing down when bringing out new integrations. If there’s anything the product team has learned over the last few years, the more features they launch, the more integrations customers will ask for.
And with Paddle’s additional injection of venture capital, the company is well placed to add more integrations that help their customers reduce churn and rewrite one of their current integrations after a sensitive API change.
Beyond integrations, Neel also hosts a podcast, Retention Talk, where he meets with product leaders to explore what subscription companies are doing to drive retention. The episodes cover strategic matters like integrations and mechanical aspects such as cancellation flow and how customers upgrade or downgrade.
This is one of 10 different shows that ProfitWell produces as part of its content marketing strategy, each aligned with a different buyer persona.
With such a comprehensive approach to planning integrations and measuring their impact, we’re confident that the future looks bright for ProfitWell. So, if you want to accelerate your integration roadmap but don’t want to hire many engineers, book a demo of Paragon today!