Packaging & Pricing project

BACKGROUND. This B2B SaaS company had an installed base of  some 2,000 customers and a growth rate just above 10%. The customer base, which had been obtained over two decades, was diverse – different product versions, different contracts, different integrations, different price points, etc, making service and retention costs high.

Also, the customer base had a large untapped upsell potential. Large part of the product offering had low penetration in some markets and segments as there had been no consistent upsell or customer success strategy in the company. The company was aiming to increase growth and developing a consistent packaging & pricing both for new logo sales but more importantly to upsell on the installed base was a logical next step.

THE PROJECT. The company set a high ambition level for the initiative with a full reset of the packaging and pricing of the product and service offering. External expertise was engaged for a three-month project to develop new packaging of the customer offering, to be used both for new logo sales and the installed customer base. A new GBB (Good, Better, Best) offering was developed and each existing customer was mapped to the package with the best fit. Price levels varied a lot in the installed base and a clear aim was to harmonize prices. In parallel to the design project, the implementation project was prepared, which involved most parts of the company:

• The Product unit adapted the products to the new packages and made them sellable.
  
• Back Office prepared billing systems and processes for the new price plans.
  
• The Marketing Department prepared Sales and marketing collateral
  
• Revenue Operations planned and conduct sales enablement and training on the new packages, as well as managed the implementation project. A pricing function was also established to secure price adherence and monitor annual uplifts, etc.
  
• Customer Success prepared  and executed on the migration of the customer base, by far the most important part of the project with the largest potential to drive upsell and increase prices. The customers were migrated at the time of their contract renewal, which made the project manageable for the CS team as roughly 1/12 of the base was up for migration each month.
  
• The customer contracts were re-designed to SaaS standard T&Cs and as part of the migration the customers were moved to the new contracts. Before, there were +30 different contract versions with different T&Cs without a central depository, causing unnecessary customer disputes and admin.

BENEFITS. Done right, packaging and pricing are among the initiatives that have the largest potential to boost growth and lower operational costs. A migration project can easily yield a one-time revenue lift of 10% without materially increased churn levels, driven by a combination of the upsell effects, general price increases and harmonising prices cross the base. You should also expect better growth in new logo sales from a clearly defined offering that is easy to buy, sell and onboard.

A P&P project is also a great opportunity to lower CAC as well as operational costs in onboarding and support.  CAC benefits from more effective marketing as well as efficiency gains in sales with more consistent sales processes and faster onboarding of new sales staff. Tighter packaging will also allow for quicker onboarding with higher level of automation. The support team will over time have dramatically fewer one-off cases to solve  making way for standard solutions to most tickets.

Finally, don’t underestimate the positive effects on customer satisfaction from a more coherent offering allowing for a smother customer journey and ownership over time.

SUCCESS FACTORS.

• Data foundation. A project like this depends on having your customer data in order. The pricing analysis and migration mapping is fuelled by the customer data and if that is faulty, so will the results be. Before launching a project like this – secure that the data is in order or make room in the project plan for data preparation (usually several months).
  
• Buy-in and anchoring. Make sure to involve the people and functions that will be affected by the changes throughout the design phase to secure their buy-in. You will save a lot of time and avoid friction in the implementation phase by making sure that everyone from the Product unit, to Sales, Support and Back-office feels that they have been part of the design work.
  
• Train and incentivise. Make sure to incentivise those who do the heavy lifting. In this case, Customer Success had to make a full overhaul of their tasks and focus areas. Good training and collateral is essential to make these changes possible, but it is equally important to change KPIs and adjust incentives to encourage the desired behaviour.