Brad Leeuwen

What this line is, it's a very simple ratio of the average spent on a renewal versus the average spent on a new software purchase.

And this is important because we see that buyers of software allocate 95% of their annual software budget to renewals, not new purchases.

So what's happening at the stage of renewal is really important.

What this shows is that buyers are willing to spend, on average, 30% more for a renewal than a new purchase.

Now, for us, this was interesting.

It did raise a lot of questions, though, because there's a lot of ways you can interpret it.

The two that we were thinking about was, well, these are partly vendors leaning into their customer base last year when it was tough to get new logos.

But the other thing that we thought was, well, this actually really validates in data the land and expand approach to go to market.

So if you can get your foot in the door, if you close a deal, there's the opportunity there to increase your revenue with that customer.

So what did we do?

So this was our pricing before we made the change.

What you'll see is we had a relatively high entry price, especially for our smaller buyers.

So the companies that were performing better and buying more software had a high entry point to Cloudera.

The other thing that we had is our product had grown over time.

SaaS management was a challenging problem that affected finance and IT.

And so we ended up with a lot of finance and IT features together in our plans.

And so those complex buying committees that I was talking about earlier was happening all across the size spectrum for us.

So this was slowing us down.

And that slowdown, again, just to highlight it, caused that big, ugly spike in our sales cycle.

So what did we do about it?