447: Launching a Starter Plan
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Today on The Startup Chat, Steli and Hiten talk about launching a starter plan.
Recently, the team at Close.com introduced a Starter Plan for their software – a plan that’s designed for 1 – 3 person teams and costs $35 a month. This comes after years of focusing on bigger companies and charging a lot more for their CRM
In today’s episode of the show, Steli and Hiten talk dive into why Close decided to introduce a starter plan, one of the main philosophies at Close, how fear preventing the team from introducing a lower priced plan and much more.
Time Stamped Show Notes:
00:00 About today’s topic
00:32 Why this topic was chosen.
02:20 Why Close decided to introduce a starter plan.
03:11 One of the main philosophies at Close.
03:38 How Close discourages certain companies from buying their product.
04:21 How Close’s reach grew over the years.
07:55 How fear preventing the team from introducing a lower priced plan.
08:43 How Close is now ready to support smaller customers.
10:00 How a lot of companies focus on startups initially and move on to bigger customers.
3 Key Points:
- We never wanted to compete on price.
- We always believed in the founders of small and medium companies.
- We’ve probably told a thousand companies not to buy our product.
Steli Efti: Hey everybody, this is Steli Efti.
Hiten Shah: And this is Hiten Shah. And today on the Startup Chat we’re going to talk about something that I see a lot of companies do. And I just saw the folks at Close.com, happens to be Steli’s company, do this a very recently. I think a little quietly. But I go stalk his pricing page and his site sometimes. So I saw this. And so I’d love to talk about it. So what they’ve recently done, and I’d love to hear the thinking behind it, is for their CRM, they’ve launched a starter plan. And that’s for one to three person teams, and it’s at $35 per month if you pay monthly. And it’s right under $29.75 if you pay annually. And prior to that, their lowest plan was actually $65 per month if you pay monthly. And $55.25 if you pay annually. So with that, I’d love to hear your thoughts on this, because this is a very common practice that companies do. And I’d love to just understand how you folks thought about it. And I think it’d be really beneficial to our audience to kind of hear what this sort of thinking was like.
Steli Efti: Yeah. So this took us a very long time to launch, right? So we from day one … We launched in January 2013 with Close. And from day one our lowest tier plan was 65 bucks a month if you paid monthly. And from day one, we had a lot of competitors that offered a lot cheaper products and entry prices. But they were always, if you looked at their kind of a comparable product, we were always at the same range or even a bit more affordable. We just never wanted to compete based on price. We always wanted to build and create the most value, and built the best fucking product for our type of customer, which are small and medium sized businesses. And wanted to just crush it, help companies close more deals and drive more revenue where it wouldn’t matter if you close a couple of deals more a month, because you have the right tool in your hands. That’s tens of thousands dollars more in value to your business. It doesn’t matter if you’re paying 65 or 45, or 35, or whatever bucks a month per user. So that was our philosophy from day one. And I think that philosophy served us pretty well in the early days. I think one thing that happened kind of slowly, and it built up more and more over time. And I think we were a bit tone deaf to it, and a bit kind of with a blind spot around that was that … I mean, we always believed in, and invested in founders, and startups, and the smallest companies possible. We always knew that we are probably going to be one of the few, if not the only CRM that’s fully dedicated on small and medium size businesses, and never gets pressure from the market to go up market and go after the enterprise. So we always invested a ton in teaching entrepreneurs and teaching freelancers and designers, and teaching small tiny businesses how to do sales, and how to do sales right in today’s world. And we never cared if these people can purchase our product or if our product is too expensive. We actually had a whole thing of telling them not to buy our product. There’s a whole email sequence and there’s a … I don’t know. Probably by now we have told … Yeah, probably a couple of 1000 companies not to purchase our product, right? “Proactively, don’t buy our product. Buy something less expensive or use this other free tool at first.” Or, “It’s too early for you. You’re too small, too early stage.” And so we always cared about supporting the entrepreneurial in kind of the smaller side in the S in the SMB. But we never, we thought … Always thought of it as a long-term play where eventually as they grow to more mature teams, they would come to us when they need the right tool. And they will be loyal to us and they’ll feel connected to us, because we taught them how to sell in the very early days. And so we never really worried about it too much. One thing that started happening … A couple of things that started happening, one is our reach grew quite significantly over the years. In the first couple of years, there were maybe were a couple of 1000 people that were in the bucket of small single founders, tiny team, less than three people working on a project that were reading our blog and being on our email list. And over the years, that number is grown to probably more than half a million people a month that fit into that category that consume our content, and learn from us how to sell in the very, very early days. So the scale of audience went up significantly. With that, the amount of people at first when I would get maybe once a quarter, I would get an email from somebody that said, “Steli. Team at Close, you changed my life. I closed my first deal because of this blog post, or this ebook, or this video, or this talk. I can’t tell you how much this means to me. I can’t tell you how much I appreciate what you guys have done and taught me. Unfortunately, I’m not a Close customer, because it’s too expensive. I’m just starting out and I bought this cheaper tool. But I can’t wait for the day where my business can afford to be your customer. It’s going to be a milestone for me.” First time I read a message like that, honestly it was kind of cool for my ego. I was like, “That’s kind of cool when people can’t wait to become your customers.” That’s a nice thing to be an aspirational product. Right? That’s kind of cool. And I love the idea of helping people even before they can be customers to make a change and have a real impact in the business. That happened once. Then it happened twice. Then it started happening instead of once a quarter, it started happening once a month. Then it started happening once a week. Then it started happening multiple times a week. And at that point I started thinking, “Well, if there’s seven, eight people week that email me with this content, more or less. How many are in this bucket that aren’t emailing me?” Right?
Hiten Shah: Yeah.
Steli Efti: Because there’s only a small group that emails me. And maybe instead of being proud and touting that, “Wow, we have this massively growing group of people that like to pay us money, and they’re going to our competitors to pay them money. Maybe this isn’t such a great thing.” Maybe today as our business has scaled, as our team has grown, as our resources are much more rich, our business can support making supporting a lot more customers and investing in the customer journey a lot more earlier. And honestly, even people that say they’re going to purchase our product and they’re go and buy a competitor’s product, the reality is a lot of them will either stay with that competitor for much longer than they could technically afford to come over to us. Because there’s lock-in into having a CRM. There’s habits, there’s processes, there’s familiarity. And it’s also not maybe in the early days we’re top of mind that we’re learning a lot from us. But as their business grew that kind of forgot. And then when they look again into a CRM, maybe they’re not as bought in and as emotionally connected. So there was a moment in time we had a really close relationship. Instead of converting that relationship into a more committed relationship, into a business relationship, where they are customers that we can now keep investing in them and they invest in us. We pushed them away to somebody else in the hopes that eventually in the future they will remember. And just eventually just as the business grew, it seemed less and less of a smart idea. And this year we made a decision and said, “You know what? We can make some really big bets. We can make a lot bigger investments.” In the early years, I have to tell you, Hiten, we were also a bit afraid honestly, to invest in these smaller customers. Because we were like, “Can we really do the support for them? Will this mean a lot of distraction? We really don’t just want to have massive volume of customers. We really want to just have the most awesome customers. And we don’t want to get distracted by these super tiny customers that churn maybe at a much higher rate, because they start a side project for a month and then they stop it again. And maybe three months later they start again and they stop again. And will this be more distraction than it’s worth it?” So I think that was a lot of internal debates in the first two or three years when we were discussing this. Today as our business is not a startup anymore and we are a much bigger company with much more scale, it just seems like such an obvious investment to make in our market, in our audience, in our customer base, and in our business. And we know that we can support them and we can invest in them. And we know that we’re just going to be able to create a lot more value to that. Because the type of people that read our content and learn from us how to sell and get their first couple of sales, they are the type of people that will benefit from our tool, because we build Close, the software, based on our philosophy of selling. So they love our philosophy enough. Our philosophy works for them and creates results. Our software will create results. So after many years of being in the market and being not accessible to the largest grouping of our audience, of our readership, we’re now officially opening up ourselves to these customers and make a bigger investment, bigger commitment to the S in the SMB. The smaller startups, the tiny and early stage founders and entrepreneurs, and freelancers. And we’re giving them an entry point that’s much more affordable and allow them to kind of grow into a more powerful feature suite down the line.
Hiten Shah: Yeah. I think it’s really smart for companies to do this, because what ends up happening is they start with startups. Then they move away from startups. In SaaS especially. And then you introduce to startup starter plan at some point. In your case, you didn’t quite do that. It felt like you always knew the market you were in and going after it. And then it’s nice to see that the kind of market pulled you towards it. So I think that’s a really awesome way to think about this, which is the market pulled you towards it. And once you just couldn’t take it anymore, you just had to deliver on the value. Right? I really like that. I think it’s awesome that you folks have done this. It makes Close more accessible. I know a lot of folks, obviously thousands of people and companies love your product. So it’s really nice to see you open up the market like that. Look forward to what comes next. Just as someone who watches all this stuff, I’ve been very aware of the ideology that companies use to sort of grow early on, on the backs of smaller companies. Paying a little bit of money, and then over time shed that. And then new companies come in and sort of go after that low end, and start out that way because you can get a lot of feedback on the low end. And then sort of move up. So it’s just nice to see you folks do this and support earlier stage companies with a sort of limited plan. That’s great. And I’m excited to see kind of what happens with that ,and kind of follow up on this in a few months or something. To see if people are actually coming onto it, and are successful using it.
Steli Efti: Yeah. We’ll definitely do a followup episode on this. I think that what’s important to keep in mind at the end of the day is that … And the big lesson I think that we have learned, I think we were too slow. We could have launched a year or two earlier probably. And we’ll see what the outcome is going to be on it, but the early results seem super promising, and I’m super pumped about it. But I think that there’s all these … Whatever created your success, one of the big challenges in life and in business is that whatever is your biggest strength is your biggest weakness. And some of the philosophies that have created a massive amount of success are the philosophies that you’re going to be most calcified around, most kind of stuck on, and most convinced on because it generated success. And it’s hard to change your mind on some of these things, or soften up on some of these things. And staying flexibly committed to ideas is kind of the challenge. And I think that for us it was that our philosophy on pricing has always been, so far has always been serving us really, really well. But I think on this topic on when to decide to actually offer a more kind of entry level plan, and why. I think we’re a bit too dogmatic, a bit too afraid, a bit too stuck in our ways, which ended up just leading us waiting a bit longer than we probably needed to. So that’s the big lesson that I would share with people kind of early on of staying committed to the ideas that have served you well, but still keeping a certain level of flexibility. The other thing that I’ll say in kind of my … As a call out to all the people that are listening to the Startup Chat that are close customers, or that were thinking about being close customers. If you ever thought about buying Close, and you check it out and you thought that the product was awesome, but the pricing was privative. Just send me a quick email about it. Steli@close.com. Say, “I was one of them.” Or, “It was too expensive for me,” in the subject line. You don’t even have to expand on it. I just want to hear it. I just want to get that feedback to see how many people out there would out themselves and raise their hand and say, “Yeah, I also wanted to buy your product, but it was just too expensive for me at the time.” I’d love to hear from listeners that are in that boat. And for those of you that are excited hearing that we are now kind of more affordable for the smaller kind of companies out there, give it a try and I’ll be your personal sales person. I’ll be your personal support persons. Steli@close.com. Check out the product. Let me know what you think of it. Let me know how much success or value you’re getting out of it. Or if you have any challenges, I’m always there. I’m always happy to help in any way I can. And I’ll make sure that in a couple of months once we have more results and more data, we’ll do a followup episode on what the impact of this was to our business.
Hiten Shah: Awesome.
Steli Efti: All right. This is it from us for this episode. We’ll hear you very soon.
Hiten Shah: So you.