Business type: SaaS startup
Industry: Financial Services
Product: Fraud and financial crime prevention
Platform: Sales
Result: Ability to generate a price in minutes vs. 2-3 days with previous process; Projected 20% increase in Annual Recurring Revenue (ARR)
CLIENT SITUATION
Our client experienced rapid growth since their inception in 2013. A major source of their growth was their market differentiated ability to detect fraud and financial crime. Due in part to the quick increase in volume of online transactions and therefore fraud, the company provided a substantial return. Even a slight increase in fraud detection or a slight reduction in false positives translated to millions of dollars saved to their customers.
The company, like many young B2B companies, created custom pricing for each deal to reflect the unique requirements posed. Unfortunately, the process took days and sometimes weeks using valuable company resources, and more importantly, adding time to the sales cycle. As the company rapidly scaled, this lack of consistency limited growth and made benchmarking performance across deals increasingly challenging.
INITIAL FINDINGS
Our initial findings indicated several key challenges that informed our recommended strategy.
- Customers clearly see the differentiated value offered. Value-interviews showed our client had a top tier solution that was often 15-20% better than the next best competitor.
- Not all customers are ready for the best-in class technology. Although our client had differentiated technology, not all of their customers had the internal infrastructure to implement.
- A higher value solution did not always mean a higher price. Although it was clear our client offered more value to their customers than competitors, the value was not consistently reflected in price. Sales teams often found that higher prices resulted in the deal stalling or falling apart.
Over the course of the project, it became evident that the sales team had exceptional relationships with their clients, and the product was among the top tier, if not the best. However, pricing was highly variable and often heavily discounted from the initial proposal. The organization had strengths they were blind to.
BUSINESS IMPACT
Within a month, the Holden Advisors team worked closely with the product team to understand product features essential to the functionality of a base level offering vs. those that were premium or could further enhance results. The deliverable included product features, descriptions, and classifications that had not been previously identified in a format that was useable. The document allowed us to:
- Create a range of packages with functionality reflective of the customer need
- Grow with customers when they were ready for more sophisticated functionality
- Clearly and easily communicate product features in a way that is reflective of value
Key takeaways:
- Good-better-best options can be created based on key value drivers of the product to provide flexibility in budget and value for customers
- Introduce very simple Give-Gets into the sales process for more effective negotiations
- Pricing strategy/structure is best created early in a business’ growth to allow for effective and efficient scaling. Simplicity with those packages is key. As the business grows, predictive models can then be leveraged to plan for future growth.
- Create a pricing tool that allows salespeople to provide pricing on the spot during a phone call versus taking calculations into a workshop for days or weeks
