A lot has changed in SaaS the past 2-3 years, and so much of the old go-go days sales playbook just doesn’t work today. So a lot of SaaS companies experiencing slow or even no growth are running what I call the Brutish Sales Playbook.
What do I mean? It’s growing revenue at any cost. I get it. But also, it’s brutal.
I see a lot of b2b startups moving to multiyear pricing from monthly or annual. I think this is usually a bad idea. It hides customer delight issues. It lengthens sales cycles. Overall, it just reduces the signal startups need.
— Brian Halligan (@bhalligan) August 2, 2024
Some examples. And you are probably running some of these plays too. Even though just a few years ago — you never would have:
1. Incessant Price Increases on The Base
They just keep going up and up and up. Especially unearned price increases on the existing customer base. Same product, same features, now priced higher. Many have raised prices every year the past 3 years. We used to hesitate here, to keep NPS up. But if growth has slowed to say 20%? Then a price increase is the simplest way to hit the plan. On paper at least. Raise prices for new customers? At least they get to choose. Force annual pricing increases on existing customers? That’s something quite different.
2. CRO Constantly Pushing Upsells
I’ve seen this so many times. Heads of Sales jumping into every top customer call, not to help — but to find some pressure point to ask for even more money. The other day, we did a vendor call with a VP of CS. The CRO joined 20 minutes late — and asked for $50,000 to fix a critical bug. Personally, I no longer want to talk to a CRO after a deal is signed.
3. Threats on Cancellation
SaaS used to be … a service. Easy to sign up. Easy to get going. And yes, while less discussed — easy to leave. But now many vendors are making threats on cancellation. Keeping your data hostage, or restricting access to data that used to be allowed post-termination. Roach Hotels in SaaS are becoming more and more common — by design.
4. Games on Overages and “Upgrades”
A leading SaaS vendor has done this to use twice recently. Told us misleadingly we had to upgrade to a much more expensive edition (which we didn’t have to) — and that we have to move to a pre-paid multi-year contract (vs monthly). They twice sent us a document to e-sign without even giving us a heads-up or a convo.
5. Charging Now For Stuff That Should be Free or Included or That Used To Be
Ok this one is a bit more subtle. Some of it I think is OK for new customers. But a vendor we’ve used for 7 years now is charging us $20,000 a year to use their API. For 7 years, it was included. We don’t need one more bit of functionality than we did last year. Not cool.
Is this you? At all? Even just a bit?
"Put too much pressure on the product team to increase revenue ASAP, and dark-ish tactics come up" @lennysan + me pic.twitter.com/AxTL9CtvDj
— Jason ✨????SaaStr.AI Sept 10-12✨ Lemkin (@jasonlk) July 15, 2024
I get tougher times can lead to tougher measures. But at least as founders, make sure you are 100% sure what the team is doing here. It may break your heart if you aren’t listening to the calls and seeing what’s actually happening.
At least ask yourself — would you want to be treated this way?
If not … you know this isn’t the way to build something great in the long term. Sometimes you have to do certain things to survive. At least don’t make them permanent.
