Cledara Revenue & Funding (2024)

quick context this was recorded March 28th and 29th so a couple weeks ago at my live event SAS open.com we had a thousand software CEOs there if you missed it we hope to see at the next one September 5th and 6th in New York City SAS open.com but for now let's jump into the recording 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 book of [Music] demo hey folks if we haven't met yet my name is Nathan ladka I launched and sold my first software company back in 2015 and went on to write a book about it which you guys made a Wall Street Journal best seller purchasing over 30,000 copies thank you so much for that after the book I launched this show and went went on to create founder path.com I raised a large fund to do non-dilutive deals with B2B software Founders so far we've invested in over 400 software Founders totaling $150 million here in 2024 we're doing three to four New Deals per week so if you're looking for Capital and don't want to give up Equity go sign up at founder path.com for free to get your offer all right let's jump into the interview and so what I'll talk about today is something we've never spoken about publicly before we'll be talking about how we we changed our go to market and the decisions and puts 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 cadara along the way but see 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 um last year right so why did we do that well first of all we have a lot of data right so we could see among our customers that were buying software through us how buyer Behavior was was changing both at the initial purchase and the renewal um we could see how that was changing over time so what we'll do what we'll talk about is how we use that data what we changed how we approached pricing how we appro approached packaging how we aligned sales and marketing and then how we brought that all together in 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 I 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 you know for a long time pipe gen was easy right pipe gen was something that just happened people would book demos people would respond to our outbound and we didn't need to think about it it was it was like the air we breathed it it just happened and then last year something interesting happened we started flatlining on our pipe gen right the the quota attainment was was dropping off as we were adding more sdrs we were not booking necessarily uh more demos we were being consistent it wasn't going down but I'm I wanted to um double Revenue last year and I was wanted to think about how we were going to double Revenue again this year and so Flat Line didn't make me very very excited um and so what did we do right how did what did we think about whilst this this section of the chart was 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 right 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 we had companies that had come inbound to us that had several thousand employees so 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 we were booking and so coming into Christmas last year we were thinking okay um we've tried to go up Market in addition to our our S&B midmarket it's not got the results we wanted right 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 a 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 um really did have an impact and we'll be we'll be talking about it um as we go through so where did we start we we started by looking at our own data in our in our sales pipeline so we saw pipe was good not great but the problem was when we started looking under the hood yeah there wasn't a lot to like right here's our average sales cycle so for Clara 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 AES attention shifted away from the deals they could close quickly in in an environment we knew to finding ourselves selling to different personas with different objections um 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 longer and we had to work a lot harder for it so that that uh that explosion in our sales cycle was a real wakeup 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 cadara cadara is a SAS management platform used by more than thousand companies around the world to discover buy manage and cancel the software they use to run their business uh 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 SAS buying that exists anywhere in the world we also get really deep data so this is I quickly talk through this data here but what this what this is is data from onboarding process so when we onboard a customer the first thing that we want to do is understand what software they've got because you can't manage what you can't see so uh when our customers deploy our our software we get to see their entire software estate whether they whether they know they've got that software or not and what you can see here is that more than 60% of companies have at least 40% of their software being stuff that it Finance didn't know uh that they had right sales and finance sorry sales and marketing teams are are big offenders here and so the point of sharing this is our data that we were using at that we Ed between Christmas and New Year didn't just talk about the official buying processes that exist in companies it actually used the reality of what was happening in our customers in their businesses and in the market SAS is everywhere right SAS is everywhere in business is I put this here mostly CU I like this GIF but to get the point across that um we have a lot of data so a th000 companies 32 countries in the last 12 months our customers have purchased or renewed nearly 3/4 of a million software subscriptions if you're a SAS company in this room you sell software chances are some or many of your customers use us to to buy you our customers buy from more than 5,000 vendors and every day this provides us more more than 2 million data points about the real time state of the of the SAS 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 one for anyone who follows us on our newsletter or on LinkedIn you'll see us share data like this all the time um what this is is something we call the SAS buyers index and I'll quickly walk you through what this shows and then what we did about it the SAS buyers 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 score if they spend less we give them a score of zero if 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 that means that if the the score becomes finishes up above 100 in any given month it means the average company is increasing their software spend it's below 100 it means they're decreasing what you're 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 of smaller businesses the the bigger line are bigger buyers of software and you can see that until uh third quarter of 22 coincidentally when we raised our series a markets were pretty good right the the small buyers were buying software um at a faster rate than than bigger companies that were increasing their spend more aggressively and this feels intuitively right when markets are good buyers as smaller buyers which are more volatile perform better then markets got hard right markets got hard last year in 23 and you see the dark line outperforming the the light blue line what that meant was that bigger customers were B bigger buyers of software were more reliable and I think a lot of us found this in our businesses right 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 up market and this data kind of supports it right it says 2023 sell to bigger customers um and you'll get better results the interesting thing happened um Q3 last year so around uh web Summit last year we we gave a a state of the union on on SAS and we said it's interesting the small buyers come back the small buyer 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 was confirmed so one thing to say here and this is something that we we took heavily into our changing our go to market was that if you did if you haven't yet gone up Market if you've if you've seen through the VC winter you're probably finding things uh 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 this year U 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 at is um 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 right and this is important because we see that buyers of software allocate 95% of their annual software budgets renewals not new purchases right so um what's happening at the stage of renewal is is really important what this shows is that buyers are willing to spend on average 30% more for a renewal than a 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 this is these are partly vendors you know 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 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 to um increase your increase your Revenue with that customer so what did we do so this was our pricing before we made the change um 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 were um had a high entry point to to to Clara the other thing that we we had is our product had grown over time sus 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 slowing us down um and you know that slowdown again just to highlight it caused that big ugly spike in our in our goto in our sales cycle so what did we what did we do about it so the first thing we did was we decided to overhaul our our pricing structure so we looked at every single feature that we had and we took out everything that was for it we asked ourselves the question how could we just sell to one buyer and so we could s deal with one one Champion one set of objections we took out all the it features but they were valuable and they uh they help our customers a lot so we shifted them to a set of add-ons and the interesting thing here for us was we felt that this gave us the opportunity to drive that expansion right so for people that were already happy with our product and wanted to get more value we had a road map for them to do that that aligned with us getting more revenue from them in time the other thing we had to do is we have a th customers that are all paying us something right so we didn't want our existing customer base to be can cannibalized so the other thing you'll notice is we had to design our pricing such that if you got all the same features as you had before you'd be paying us the same so the the pricing of the add-ons and the pricing of the plans all ended up adding up to the the same place um there we go the next thing we did so it wasn't just about pricing and packaging we decided to go all in on conversion so you would have seen on the previous slide we added a free plan right our our churn is very very low so we believe that we can get a company even earlier than we would we would normally Target them because we know that we add so much value that we can keep them forever and and go grow with them but it wasn't just about our pricing and packaging we decided to lean heavily into that uh free plan as a way to drive uh to drive interest and Intrigue so we decided to test different calls to action previously our call to action was all about book a demo right now it's a new category we've got a lot of buyer education to do getting a demo is really valuable for us but you know who wants to give up 30 minutes of their time to do Discovery and and all these things and see a product why don't you just let someone start so we tested different calls to action we started one of the first ones we tested was get started free and the interesting thing was the click-through rate of get started free was nine times higher nine times higher than book a demo right even if get started free did end up in you taking a demo before you saw the product um it still converted a lot better the other the other thing um that we had to think about was where else did that CTA appear so it wasn't just on our website in the top right it wasn't just on our landing pages we do outbound so the CTA from all our sdrs doing outbound um was driving people to a demo we had them test you know get started free and we noticed a similar increase in conversion so we that immediately helped our our Pipeline and like I said it didn't just touch our call to actions it didn't just touch our pricing and packaging it touched all the parts of our pipeline so we're we're selling speed here we want to deliver value really fast and so we did wanted to make sure we didn't subject any of our prospects to that annoying 30-minute Discovery call where we asked them questions what we wanted to do was to make sure that we showed them the demo on the first call so we would we reduced our Discovery to 8 minutes we embedded that in the in the demo call and we just focused the demo on the pain points uh during that during the demo the pain points that we identified during Discovery our objective is to now drive a a one call close even getting them to go through the signup call uh a sign up process with us whilst they're on the call we also um are currently testing uh quotas right so a lot of people here will do quotas around uh Revenue so dollars um we're testing driving uh quotas on logos right incentivizing that that speed and driving urgency and the initial results are are really good the idea is that we want to keep that momentum into our customer onboarding and reduce the time to Value as much as possible again these are types of behaviors that are well suited to that small buyer that I I mentioned earlier so here's the result so nearly tripled pipeline from one quarter to the next right so how did we do that we went all in on conversion we focused on the buyers that were um buying our product but more importantly we refocused we were reminded that our ICP coincided with the type of buyer that was performing well um at this time good reminder as well that whilst there's a lot of received wisdom in driving go to market and software companies actually a lot of it's true but if you back it up with data you can make changes very very quickly so couple of key takeaways if you've heard the SMB is dead I can tell you it ain't it's doing really well right now but you've got to make it easier to buy and my challenge to you is how easy can you make it to buy pricing and packaging I it's the biggest lever you've probably got right this is the first thing the first thing that everyone tries to find out they the buyer looking to qualify you out as much as you're looking to qualify them and pricing is a big way to do this and so if you feel like things are slowing down do look at your pricing but also your packaging because you've got a lot of levers there and do whatever you can to simplify that process so if you can remove people from the buying committee by changing your pricing and packaging um you've you've got a big you've got a big opportunity to accelerate pipeline a lot so thank you very much this data we publish quarterly um and so if you would like that data uh the QR code there will allow you to to download it and we'll sign you up and you'll get this data in your inbox every three months thank you very much [Music]