Pricing Strategy Case Study

Scenario

 

Company: Early stage (seed round) software company in the HR space

Problem: Unclear pricing model

Solution: Created pricing model, created external assets to communicate tiered pricing model based on usage, created internal documents to articulate messaging on value and explaining the difference between pricing tiers.

QPX was engaged to help an early stage company founder create a pricing model for an enterprise SaaS product. The product’s end users were job applicants during the hiring process, with HR team members accessing an admin dashboard that had varying levels of security hierarchy and customization.

The company had some revenue, but had no direct enterprise customers. All customers had been acquired via partner programs with complimentary but not competitive enterprise software companies.

Design

 

In order to create the pricing model we needed to understand the competitive landscape, current price appetite/strategy, and summarize key assumptions.

Reviewing competitive information we learned that key competitors used per usage pricing model. We also found out that the client’s existing pricing was lower than similar tools on the market.

This research informed the following key assumptions:

1. Per usage pricing model

2. Pricing tiers

3. Existing pricing was low, but could be used a reference/benchmark

Given these assumptions we created three pricing tiers, with bands based on volume of usage. The pricing of these tiers was based on adding 10% to existing pricing; in other words, the pricing tier with the lowest volume of usage had the highest per usage price, which was 10% higher than the existing price available via partner programs. For purposes of simplicity we created 3 standard pricing tiers.   

Documentation

 

We created three key documents in completion of this exercise:

1. Spreadsheet that documented the details of how we derived each pricing tier with adjustable inputs to visualize changes to the model in different pricing and volume scenarios.

2. External facing document that described the tiers and features

3. Internal facing document that described the tiers and the rationale behind the model, with potential objection handling and competitive framing discussion points

We also documented a process that guided customer/prospect facing staff to share pricing during the discovery phase of the conversation vs explaining details of the pricing tiers via website.

The Takeaway

This exercise helped our client better understand their competitive landscape, simplified messaging relating to pricing and improve on their ability to model revenue growth. Pricing is extremely important as you take your SaaS product to market. While it is possible to change pricing and iterate as you grow, you should have something that makes sense as you begin engaging your first enterprise customers. There are many SaaS pricing models to consider in conjunction with information above, hopefully this helps you as you grow your SaaS product. Give us a shout at growth@qpx.io if you need more perspective.  

Why You Need An SLA Between Sales and Marketing

Service level agreements are the glue the binds commitments between service providers and clients. But why implement such an agreement between two groups that are on the same team? Marketing and sales groups work closely together to accomplish the same end goal - revenue growth. On the path to revenue, there are a number of customer interactions and processes that could fall under the scope of either sales or marketing responsibilities. An SLA between sales and marketing will help clarify rules of engagement between these groups and define expectations in a manner that will avoid ongoing confusion.

A few key points to consider regarding the SLA: it should define, quantify, and provide room for review. The following will describe these points in detail.

Define

The basic most basic consideration of an SLA between sales and marketing would be to establish a common definition of key terms, important terms to define:

Lead

Prospect

Account

Contact

MQL

SQL

Other definitions should clarify team roles, responsibilities, and handoffs between the two teams.

Quantify

A more thorough sales and marketing SLA should help to improve actual performance. In order to do this, including time frames and measurable benchmarks will go a long way toward creating an SLA that serves to embed excellence in marketing and sales team performance.

Borrowing a best practice from client service delivery SLAs, a sales and marketing SLA can also include the costs associated with violation of any SLA parameter. These costs can be articulated in terms of credits, cash or even some type of company-specific currency. However it is documented, including this and other measurable performance indicators in the SLA will help close the loop on accountability and cements ownership of processes and expected results.

Review!

Finally, a mention of when the SLA should be reviewed is important as SLAs are only as useful as they are relevant to the realities of the business environment. It is always helpful for teams to consider specific events (shift in product, number of SLA breaches, new org chart, etc) that indicate a need to change the SLA to ensure that the document is consistent with the most current workflows.  

How to Maximize Outreach Attempts to Prospects

Most salespeople give up on reaching out to prospects after 3 attempts met with no response. Even though research shows that it takes 8 to 12 attempts to reach prospects, even when they are interested in the offering. The primary reasons reps do not continue to follow up are poor CRM hygiene, reward systems that incentivize prioritization of recency, and a lack of reporting to catch errors that occur.

Often salespeople do not document each attempt to contact a prospective customer, as such they do not have a good idea as to how many times an unresponsive prospect has been contacted. CRM hygiene is a common culprit as salespeople move fast and attempt to cover as much ground as possible. There are tools that sales ops leaders can add to the sales stack to ensure that salespeople execute the appropriate amount of touches, solutions like Insidesales.com and Outreach.io can help automate contact attempts and your sales ops teams should integrate these tools with your CRM app to ensure that this data is also documented via automation.

Salespeople are also frequently working within scenarios where new leads must be touched within a specific timeframe. This dynamic can cause a salesperson to fall into habits wherein recency and prospect responsiveness guide activity instead of strict adherence to a 10 attempt outreach process. One way to address this is to create a high visibility clean-up report displayed per sales rep that shows prospects who are unresponsive and have less than 10 attempts. As long as this report is used to orient procedure vs embarrass sales team members, the team will get better at truly exhausting attempts to engage prospects.

From a team organization standpoint, it should be mentioned that specialization is key to ensuring all prospects have received an adequate number of touches. Your teams should be organized in manner wherein there are separate teams for those who are focused on lead generation and those are focused on closing. Quota bearing sales reps should not spend time ensuring that each prospect has been called 10 times. This activity should be owned by someone who is solely responsible for optimizing outreach attempts to prospects.

With the rise of consumer IT in the workplace, freemium software models and democratization of decisions in the enterprise, engaging influencers is difficult. Given these dynamics it is more important than ever to support those on the front lines to successfully fill the funnel. By using right tools, encouraging best practices and organizing teams efficiently you can get the most out of both inbound and outbound prospect data.