So 2023 was a year where growth proved much harder than before, and many SaaS leaders turned up the screws on existing customers:
- Large price increases were everywhere
- We raised prices — without adding more value
- Customer Success teams turned into upsell teams
- Customers were threatened to sign long term contracts instead of monthly ones
- And so on
With new net logo growth slowing for many, short term thinking thrived: How Can We Get Even More Money Out of Our Base?
If your customers love and trust you, they buy more from you
More products, more seats, bigger editions, more use cases
Seen this in every single SaaS company I've ever worked with
Few do everything they could here
— Jason ✨Be Kind✨ Lemkin (@jasonlk) August 27, 2023
In simpler times, this thinking is a positive. It gets you to build that new edition, go upmarket, add more value, compete in new market segments. When you have to earn more revenue from the base.
But late 2022 and 2023 was different: we enforced more revenue from the base. We didn’t earn it. We forced it.
The peak moment for us was when a vendor we pay monthly for sent us a threatening email on the last days of a quarter telling us we had to now pre-pay for 4 years at a much higher annual price. For no benefit to us at all.
This happened everywhere. Best case, unscheduled price increases were rolled out — without a commensurate increase in value. Worst case, customers were threatened. Customers came to fear that call from. Customer Success, instead of appreciating it.
OK well what’s done is done. Sometimes, you have to do what it takes to survive in a startup, scale-up, or even public SaaS company.
The truth is, customers likely will give you one pass on selfish behavior here. But not a second, and definitely not a third.
Let’s make 2024 the Year of Adding Value Again. Of earning that higher ACV. Of building and shipping so much more great software, so many new products, that customers are happy to pay more for them.
In 2023, SaaS vendors didn’t put in the work to earn those price increases, those longer terms, those high pressure tactics. It worked, forcing them to pay. But no one put in the real work to earn it. Almost no one.
Earn that price increase with new products, new features, new editions, and new magical workflows. And let 2023 be a one-off.
(put in work image from here)