SaaS Interviews with CEOs, Startups, Founders
How to 3x your revenue with 3 simple pricing changes
23 May 2024
Chapter 1: What is the main topic discussed in this episode?
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We started flatlining on our pipe gen. So you can see that the changes that we made really did have an impact. Click-through rate of Get Started Free was nine times higher, nine times higher than Booker Demo. And so what I'll talk about today is something we've never spoken about publicly before. We'll be talking about how we changed our go-to-market and the decisions and inputs we had for that.
And my hope today is that we all go back to the office on Monday and at least, A, you've learned something, B, you sign up to Cladara along the way, but C, you can use some of this in your own go-to-market function. So we changed our go-to-market very aggressively between Christmas and New Year last year. So why did we do that? Well, first of all, we have a lot of data.
So we could see among our customers that were buying software through us how buyer behavior was changing both at the initial purchase and the renewal. We could see how that was changing over time. So what we'll talk about is how we use that data
what we changed, how we approach pricing, how we approach packaging, how we align sales and marketing, and then how we brought that all together in our sales team quotas and the buyer journey. So hands up, who found last year challenging? Who felt like they got punched in the face? We've heard that before. Who got punched in the face a little bit last year?
Yeah, everyone's got their hands up and probably everyone else that didn't put their hands up is not being entirely truthful. So for us, for a long time, PypeGen was easy. PypeGen was something that just happened. People would book demos. People would respond to our outbound. We didn't need to think about it. It was like the air we breathed. It just happened.
And then last year, something interesting happened. We started flatlining on our pipe gen. The quota attainment was dropping off as we were adding more SDRs. We were not booking necessarily more demos. We were being consistent. It wasn't going down. But I wanted to double revenue last year. And I wanted to think about how we were going to double revenue again this year.
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Chapter 2: What strategies did Cledara use to improve their revenue?
And so a flat line didn't make me very, very excited. And so what did we do? What did we think about whilst this section of the chart was flat? What did we do to respond? So what we did was probably what a lot of companies did. We decided to widen our aperture. Instead of just selling to our ICP, we said, well, you know what? The market's tough. It's especially tough for smaller companies.
let's go a little bit bigger, right? We had companies that had come inbound to us that had several thousand employees. We're like, well, let's go see if we can generate more deals there, as well as sell to our standard customer, 50 to 500 people. And, you know, what was interesting about it was though we did book opportunities with buyers of that size and though we closed them,
it didn't really have an impact on the total amount of pipeline we were booking. And so coming into Christmas last year, we were thinking, OK, we've tried to go upmarket in addition to our SMB mid-market. It's not got the results we wanted. We're not having a chart that's going up and to the right. We need to make a change. And you can see that last bar there.
This is an index of our pipe generation from Q1 this year till about two days ago. So you can see that the changes that we made really did have an impact, and we'll be talking about it as we go through. So where did we start? We started by looking at our own data in our sales pipeline. So we saw pipe was good, not great.
But the problem was when we started looking under the hood, there wasn't a lot to like, right? Here's our average sales cycle. So for Clodara, we were closing deals on average every, took us 30 days more or less since the beginning of time for us. 30 days, we had the machine that got deals done.
But as we widened that aperture, what happened was, well, we were working on deals that were a little less familiar, right? So some of our attention shifted away from the deals they could close quickly in an environment we knew to finding ourselves selling to different personas with different objections. you know, big buying committees that we'd never dealt with before.
And look, this is probably not a surprise to anyone that runs revenue in this room, but that was not a place we wanted to be. We wanted our AEs to focus on deals that we could close in a predictable way. Interestingly, our win rate didn't change. It just took a lot longer and we had to work a lot harder for it. So that explosion in our sales cycle was a real wake-up call.
And what we decided to do was we needed to go one level deeper. We needed to look at more data to see what was happening and how we could use that to think about our strategy. So before I talk about the data we look at, I want to share where we get this data from. So I'd like you to all meet Clodara.
Clodara is a SaaS management platform used by more than 1,000 companies around the world to discover, buy, manage, and cancel the software they use to run their business. We save our customers a bunch of money. We save our customers a bunch of time. But really interestingly, it gives us probably the best real-time view of SaaS buying that exists anywhere in the world.
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Chapter 3: How did Cledara analyze buyer behavior before changing pricing?
It actually used the reality of what was happening in our customers, in their businesses, and in the market. SaaS is everywhere, right? SaaS is everywhere in businesses. I put this here mostly because I like this GIF. But to get the point across that we have a lot of data, so 1,000 companies, 32 countries, in the last 12 months,
Our customers have purchased or renewed nearly three-quarters of a million software subscriptions. If you're a SaaS company in this room, you sell software, chances are some or many of your customers use us to buy you. Our customers buy from more than 5,000 vendors. And every day, this provides us more than 2 million data points about the real-time state of the SaaS market.
So what do we do with all that data and what did we do with that data to figure out how we should change our sales strategy? So for anyone who follows us on our newsletter or on LinkedIn, you'll see us share data like this all the time. What this is is something we call the SaaS Buyer's Index. And I'll quickly walk you through what this shows and then what we did about it.
The SaaS Buyer's Index asks a very simple question. We look at one single company and we say, did they spend more on software this month than they did last month? If they spent more on software, we give them a score of 200. If they spend less, we give them a score of zero. It's about the same. We give them 100.
Then we run that algorithm across every single company that buys software through us and average all those zeros, 100s, and 200s.
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Chapter 4: What changes did Cledara implement in their go-to-market strategy?
That means that if the score finishes up above 100 in any given month, it means the average company is increasing their software spend. Because below 100, it means they're decreasing. What you're looking at here is that data segmented by the size of the buyer, right? And segmented by the size of the buyer over time. So you can see the light blue line are smaller businesses.
The bigger line are bigger buyers of software. And you can see that until Third quarter of 22, coincidentally, when we raised our series A, markets were pretty good, right? The small buyers were buying software at a faster rate than bigger companies that were increasing their spend more aggressively. And this feels intuitively right.
When markets are good, smaller buyers, which are more volatile, perform better. Then markets got hard. Markets got hard last year in 23. And you see the dark line outperforming the light blue line. What that meant was that bigger customers, bigger buyers of software were more reliable. And I think a lot of us found this in our businesses. If we were selling to different customer segments,
the bigger buyers seemed like a safer place to be. Many of our boards were probably telling us, or our investors, telling us to go upmarket. And this data kind of supports it, right? It says, 2023, sell to bigger customers, and you'll get better results. The interesting thing happened Q3 last year. So around Web Summit last year, we gave a State of the Union on SaaS, and we said,
It's interesting. The small buyers come back. The small buyers started outperforming the big buyers for the first time in a long time. And those lines had just started crossing. What was interesting about it is that for the rest of Q4, that trend was confirmed.
One thing to say here, and this is something that we took heavily into changing our go-to-market, was that if you haven't yet gone up market, if you've seen through the VC winter, you're probably finding things a little bit easier right now. So maybe don't be in a hurry to change. This trend seems strong. Even this last line here is February this year. March data is looking great as well.
But this is one of the data points that had us consider what our go-to-market should be. The other thing we look at is how do buyers behave between purchases of new software versus renewals. 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.
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