How Cledara Reached 1,000 Customers and Nearly Tripled Pipeline with 3 Pricing Changes (Interview with Co-Founder and COO Brad Van Leeuwen)

Introduction and Event Context

Nathan Latka

00:00Quick context. This was recorded March twenty eighth and twenty ninth. So a couple weeks ago at my live event, saasopen.com. We had a thousand software CEOs there. If you missed it, we hope to see at the next one, September fifth and sixth in New York City, sasopen.com. But for now, let's jump into the recording.

Brad Van Leeuwen

00:18>> We started flatlining on our pipe gen. So you can see that the changes that we made really did have an impact. Click through rates of get started free was nine times higher, nine times higher than Book a Demo.

Nathan Latka

00:34Hey, folks. If we haven't met yet, my name is Nathan Latka. 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 bestseller purchasing over 30,000 copies. Thank you so much for that. After the book, I launched this show and one went on to create founderpath.com. I raised a large fund to do non dilutive deals with b to b software

01:00founders. So far, we've invested in over 400 software founders totaling a $150,000,000. Here in 2024, we're doing three to four new deals per week. So if you're looking for capital and don't wanna give up equity, go sign up at founderpath.com for free to get your offer. Alright. Let's jump into the interview.

Why Cledara Changed Its Go-to-Market

Brad Van Leeuwen

01:19>> 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 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 cledara along the way, but c, you can use some of this in your own go to

01:43>> market function.

01:45>> So we changed our go to market very aggressively between Christmas and New Year 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. We could see how that was changing over time. So what we'll do what we'll talk about is how

02:14>> 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 in our sales team quotas and the buyer journey.

02:30>> 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, you know, for a long time, PipeGen was easy. Right? PipeGen was something that just happened. People would book demos. People would respond to

Pipeline Flatline and the Decision to Act

Brad Van Leeuwen

02:57>> 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 more demos. We were being consistent. It wasn't going down. But I'm I wanted to double revenue last year, and I was wanted

03:26>> to think about how we were going to double revenue again this year. And so a flat line didn't make me very, very excited.

Widening the Aperture: Going Upmarket

Brad Van Leeuwen

03:33>> And so what did we do? Right? How do 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, 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

03:58>> 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 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

04:23>> into Christmas last year, we were thinking, okay. We've tried to go up market in addition to our SMB mid market. It's not got the results we wanted. Right? We're not having a chart that's going up into 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

Sales Cycle Explosion as a Wake-Up Call

Brad Van Leeuwen

04:47>> 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 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 cledara, we were closing deals on average every took us thirty days,

05:15>> more or less, since the beginning of time for us. Thirty 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 AE's 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,

05:42>> 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 that that explosion

06:05>> in our sales cycle was a 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 cledara. Cledara is a SaaS

Introducing Cledara and Its Data Advantage

Brad Van Leeuwen

06:27>> management platform used by more than a thousand 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.

06:51>> We also get really deep data. So this is I'll quickly talk through this data here. But what this what this is is data from our 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 when our customers deploy software, we get to see their entire software state whether they whether they know they've got that software or

07:19>> 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 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 that we use between Christmas and New Year didn't just talk about the official buying processes that exist in companies. It

07:47>> actually used the reality of what was happening in our customers, in their businesses, and in the market.

Scale: 1,000 Customers, 32 Countries, 2M Daily Data Points

Brad Van Leeuwen

07:57>> 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 a thousand companies, 32 countries. In the last twelve 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 to

08:23>> buy you. Our customers buy from more than 5,000 vendors. And every day, this provides us more than 2,000,000 data points about the real time state of the of the SaaS market.

08:37>> 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. What this is is something we call the SaaS buyers index. And I'll quickly walk you through what this shows and then what we did about it. The SaaS buyers

The SaaS Buyers Index and Market Trends

Brad Van Leeuwen

09:01>> 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. 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

09:27>> those zeros, one hundreds, and two hundreds. 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. Because 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 are smaller businesses. The

09:55>> the bigger line are are bigger buyers of software. And you can see that until third quarter of twenty two, coincidentally, we raised our series a, markets were pretty good. Right? The the small buyers were buying software 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 are smaller buyers, which are more volatile, perform better. Then markets got hard. Right? Markets got hard

10:27>> last year in '23, and you see the dark line outperforming the the light blue line. What that meant was that bigger customers were 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

10:52>> this data kind of supports it. Right? It says, 2023, sell to bigger customers, and you'll get better results. The interesting thing happened q three last year. So around web summit last year, we we gave us a state of the union on 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

11:22>> interesting about it is that for the rest of q four, 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 a little bit easier right now. So you maybe don't be in a hurry to change. This

11:46>> trend seems strong. Even this last line here is February this 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

Renewal vs New Purchase Buyer Behavior

Brad Van Leeuwen

12:01>> 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 budget to renewals, not new purchases. Right? So what's happening at the stage of renewal is is really important. What this shows is that buyers are

12:34>> 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 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

Old Pricing Structure and Its Problems

Brad Van Leeuwen

12:59>> 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 increase your increase your revenue with that customer. So what do 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

13:26>> better and buying more software were had a high entry point to to to Cloudera. The other thing that we 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

13:55>> was slowing slowing us down.

Pricing and Packaging Overhaul

Brad Van Leeuwen

14:00>> And, you know, that slowdown again, just to highlight it, caused that big ugly spike in our in our go to 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

14:25>> one buyer And so we could deal with one one champion, one set of objections. We took out all the IT features, but they were valuable and they 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

14:50>> value, we had a roadmap 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 thousand customers that are all paying us something. Right? So we didn't want our existing customer base to be 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

15:14>> 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.

15:26>> There we go.

Introducing the Free Plan and New CTAs

Brad Van Leeuwen

15:29>> 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 grow

15:50>> grow with them. But it wasn't just about our pricing and packaging. We decided to lean heavily into that free plan as a way to drive 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 who wants to give up

16:20>> thirty 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 and you taking

16:44>> a demo before you saw the product, it still converted a lot better. The other the other thing that we had to think about was where else did that CTA appear? So it wasn't just on our website in the the top right. It wasn't just on our landing pages. We do outbound. So the CTA from all our SDRs doing outbound was driving people to a demo. We had them test, you know, get started free, and we noticed

17:11>> a similar increase in conversion. So we that immediately helped our our pipeline.

Streamlining the Demo and One-Call Close

Brad Van Leeuwen

17:20>> 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 thirty minute discovery call where we asked them questions. What we wanted to do was to make sure that we showed

17:42>> them the demo on the first call. So we would we reduced our discovery to eight minutes. We embedded that in the in the demo call, and we just focused the demo on the pain points 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 sign up call, a sign up process with us whilst they're on the

18:05>> call. We also are currently testing quotas. Right? So a lot of people here will do quotas around revenue, so dollars. We're testing driving quotas on logos. Right? Incentivizing that that speed and and driving urgency, and the initial results 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

18:36>> buyer that I I mentioned earlier.

18:39>> 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 buying our product. But more importantly, we refocused. We were reminded that our ICP coincided with the type of buyer that was performing well at this time. Good reminder as well that whilst there's a lot of received wisdom in driving go to market and software

Results: Pipeline Nearly Tripled

Brad Van Leeuwen

19:05>> companies, Actually, lot of it's true. But if you back it up with data, you can make changes very, very quickly.

19:14>> So a couple of quick 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, it's the biggest leader you've probably got. Right? This is the first thing the first thing that everyone tries to find out. They the buyer is looking to

Key Takeaways on SMB, Pricing, and Simplicity

Brad Van Leeuwen

19:36>> 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 leaders 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, you've you've got a big you've got a

20:00>> big opportunity to accelerate pipeline a lot. So thank you very much. This data we publish quarterly. And so if you would like that data, 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 every three months. Thank you very much.