Personality assessments are amazing tools for early stage companies.

Whether you’re a team of 5, 50, or 500, understanding who people are, how they work, and what motivates them is invaluable!

Personality Assessments Will Help You:

• Increase productivity
• Improve working relationships (even when they’re already good)
• Customize managing and coaching approaches
• Understand different motivations
• Get people in roles where they’ll thrive
• Let people do work they love
• Have more patience and understanding for team members
• Build camaraderie, trust, and culture

But not all personality assessments are created equal.

Below are my top 2 favorite personality assessments, pros and cons of each, plus a list of other assessment options.

Let the culture, clarity, and collaboration begin!

Assessment #1: Clifton Strengths 2.0

The Gist:

• 34 different strengths. Take a test to find out your top 5. They highlight what you are good at and what you like doing.
• Strengths can be as varied as Competition, Strategy, Focus, Maximizer, Woo, Futuristic, and Learner. (with 27 more!)
• Focus on strengths over weaknesses. Understanding and leveraging strengths makes a great workplace!

Pros:

• Deep and unique.
• Incredibly rich and deep in the insights. Much more robust than other personality assessments. It really gives a nuanced understanding of people.
• People love it!
• Every company where I’ve done Clifton Strengths, it’s been requested again and again. Teams do it for new hires, they have quarterly or annual sessions, and it becomes a database that is referenced to understand working styles, thinking patterns, and strengths.
• Tons of research and science behind it.
• Over 28 million people have taken it
• Owned by Gallup, a very reputable research company
• Based on research collected over decades, in its current form since 1999

Cons:

• Most effective with a facilitator to explain how each person’s strengths work together
• Assessments are $20-50/person + facilitation = not always within startup budget

P.S. Clay Kirkland is the facilitator I’ve used for 10+ years and he is EXCELLENT!

Assessment #2: Four Tendencies

The Gist:

• How do you respond to external and internal expectations? This is the question asked by Gretchen Rubin, author and thinker behind Four Tendencies.
• A fantastic framework to understand what will motivate someone to do something. The crux of business!
• As an Upholder, I used to get annoyed at “Rebels” (ahem, my husband) or try to force structure on them (it never worked) until I learned about the Four Tendencies. 💡🤯 🙌
• Cheat sheet ⬇️

Pros:

• Simple, quick, and powerful
• Applies to teammates and customers
• Easy to understand and assess type in others
• Motivating someone (or myself) to action is the root of company progress
• Read a book, take a free quiz, and you’re ready to go! Fast and cost effective.

Cons:

• Quite narrow. It’s focused on expectations and getting things done only. There’s more to humans than our productivity!
• Relatively new concept so not much supporting research yet.
• Gretchen is an Upholder so there might be bias toward this type. Every type has pros and cons. *BUT* it seems like there could be better names for Obligers, Questioners, and Rebels. Curious what the Obligers, Questioners, and Rebels think…

Common Personality Assessments

What else is out there? Here are some others that I’ve done or heard recommended.

Other Assessment Options:

• Enneagram
• DISC Profile
• Big Five (used in psychology research)
• Birkman Method
• HBDI (Hermann Brain Dominance Instrument)
• Myers Briggs (AVOID THIS ONE. Here’s why)

✨ COMING SOON ✨

We’ll cover tips and tricks for how to make the process of company-wide assessments work well. Helpful, not (too) cheesy, with strong internal adoption!

Have you used personality assessments with your team? How did it go? Any tips or favorites to share?

I recently did a presentation on “Understanding Venture Capital” for this year’s Main Street Entrepreneurship Seed Fund cohort out of Georgia State University.

I shared #protips on fundraising — lesser known tips and strategies for success when you’re going out to meet VCs and raise money.

Here are 3 keys to fundraising that every entrepreneur should know!

3 Secret Tips About Successful Fundraising

1. Get An Entrepreneur Intro

Investors love intros from other entrepreneurs, especially those in their portfolio.

🤔 Why?

• Entrepreneurs have an eye for founder talent. They know what it takes.  
• Mutual respect and busyness. If they make the time to meet someone and intro them, it’s going to be legit.
• No financial incentive for an entrepreneur to make an intro.

Service providers— lawyers, accountants or consultants—may have a great intro, but they also have a clear economic interest in seeing a company raise money.

An entrepreneur intro-ed from a service provider may have a slightly higher bar to traverse into trust.

Exception: a long history of partnership with that service provider.  

What about intros from other investors?

Depending on the investor and the relationship, this could work.

There has to be a clear reason why someone passed on the investment themselves.

If a firm only invests in software, and you’re a medical device, it’s pretty clearly not a fit. If you’re deep tech and they’re consumer products, it makes sense why the investor passed.

But know – in the back of every investor’s head is — “The Exception.”

If an opportunity is amazing enough, investors expect other investors to make an exception.

*EXCEPTION* EXAMPLE

Benchmark and WeWork. Benchmark didn’t do real estate. Until WeWork. Because Adam Neumann and his vision were so compelling, they made an exception.

Despite WeWork’s fall from grace, Benchmark made a 40x return. Exception validated ✅

Best way to get an intro to a VC in order of priority:

1. Warm intro from entrepreneur
2. Warm intro from service provider or investor in unrelated space
3. Warm intro from anyone
4. Meet at an event
5. Cold outreach
6. Do nothing (Worst way to get an intro! 🤪)

2. Pitch Your “Worst First”

It seems counterintuitive.

Pitch the investors or firms you’re least excited about FIRST.

Save the ones that seem awesome or seem like a great fit for last.

🤔 Why?

• Work out the kinks when the stakes are lower.
• Get a feel for common objections and see what responses resonate.
• Learn what’s confusing in your pitch and fix it.
• Move away from memorization to deliver your pitch naturally and smoothly.

You’ll be more cohesive, polished, confident, and prepared.

THAT’S what you want to show your preferred investors.

This comes from the Salesloft playbook. They raised $245M from top tier investors using the reverse order strategy.

There’s a reason the championship game is played at the end of the season. Save the best for last.

3. Practice, Practice, Practice. Especially Q&A.

A well-rehearsed pitch is noticeably better. Practice lots. Like, hundreds of times.

(This is why you save the best investors for last!!! See #2)

To stand out even further, be excellent during question and answer time. This is what separates good from great.

How you answer investor questions can make or break your fundraise.

Check out —> this research to nail your objection handling.

If you do it right, you’ll raise 14x more money than your peers.

This raises the question…

How to practice?

PRACTICE TIP #1

Pitch meetings are like job interviews. You’ll get asked the same 20 questions over and over. (“Common investor questions” feels like a future post…) Different questions, same playbook.

ACTION: Make a list of likely questions. Plan your answers. Practice them aloud. Have a founder friend poke holes. Remember: promotion not prevention.

PRACTICE TIP #2
Go to Pitch Practice! It’s weekly. It’s free. It’s led by the awesome Jacey Cadet, VP of Marketing and Community at Atlanta Ventures. She’s fun, she’s brilliant, she creates a welcoming, safe, and entertaining environment to learn and practice.

Getting in front of someone in the industry for advice without burning an investor meeting is rare and game-changing. She’ll help your pitch and prepare you for typical investor questions.

ACTION: Sign up for Pitch Practice at the Atlanta Tech Village. Fridays at 1pm.

What other fundraising tips do you have? What is “common knowledge” in the VC world that founders may not know?

It’s a great startup strategy to hunt deer. (See this classic Mark Suster blog about rabbits, deer, and elephants.)

Deer are SMB companies who can buy your software for ~$1,000/mo. They put on a credit card with no legal, no contract negotiation, and no collections.

It’s predictable cash every month with a short sales cycle.

Of course, elephants, I mean, large companies have problems too.

And they have a lot of money to spend on solutions…as long as they don’t trample you in the process!

I sold to and managed relationships with enterprise customers at multiple companies. Every company was unique but certain patterns came up regularly.

Here are 6 key strategies if you’re a startup selling to big companies!

6 Tips When Selling To Big Companies

1. Charge Enterprise Prices

IBM expects to pay $1 million dollars for your software. I don’t even know what your software is but IBM expects to pay that much.

If enterprise companies are your target market, make sure you charge enterprise prices!

2. Expect a Procurement Haircut

All contracts with big companies go through Procurement. Procurement’s job is to save the company money. Procurement’s success is measured by how much they negotiate down a price.

Expect a 20% haircut from Procurement and factor that into your (already high because it’s enterprise - see #1) pricing.

3. Include Implementation Services

Large companies expect to pay for software implementations.

They know they are high maintenance! #sorrynotsorry

Here’s what it will include:

• Hundreds or thousands of people, systems, and tools to account for
• Custom use cases
• Extra security
• Hand holding
• Undoing. Redoing.
• A product tweak or two.
• Lots of meetings
• Lots of trainings

It will take more time and people than you think. Plan ahead to cover your costs and provide a great experience.

4. Plan for Legal Fees

If you do a big contract with a big company, lawyers will be involved.

Lawyers want to add value. They do this by redline-ing the crap out of the boilerplate contract and terms of service you copied from the internet.

You’ll want to make sure there’s no Goliath-vs-David funny business so you’ll get a lawyer too.

ICYMI: Lawyers are not cheap.

5. Set Up Support Ground Rules

Every large company will ask for 24/7 support. This usually gets resolved amicably.

YOU: We offer support from 9a-6p Mon-Fri.
BIG COMPANY: Okay, fine.

Sometimes they really do need more support coverage. They should pay for that. (Theme of the blog . . .)

Once you price it out for them, they may realize that standard support hours are fine. Staffing for 24/7 support is expensive!

It’s also helpful to discuss who has access to support. Does every user have access or do they need to go through designated power users on their side before it gets escalated to your team?

Clarify upfront to prevent confusion, frustration, or excessive support tickets later.

6. Offer a Monthly Credit Card Option

Do Tips #1-5 make enterprise sound like a major headache? Are you throughly discouraged?? Fear not, my friends. There’s a less painful option at your finger tips.

Offer a month-to-month option that can be billed via credit card.

Most department heads can put a certain amount of spending on a credit card, no questions asked. At the very least, no lawyers or procurement asked. 😉

This strategy worked great at Rigor. A department within a Fortune500 company would sign on, paying monthly via credit card. Once we had internal traction and proven ROI, we’d start discussing a larger annual contract. Navigating the corporate approvals and negotiations went much faster. We also got fewer questions and concerns about our startup status.

Large companies can be amazing partners, fantastic marquee customers, and a huge revenue boost.

When startups move upmarket and start selling to larger customers, you’ll often hear:

It’s the same product with a different sales process.

Be prepared. Understand typical big company process and dynamics so you can align accordingly.

What tips do you have for selling to enterprise companies? What do you wish you would have known? Any strategies that have worked well for you?

Getting your first sales hire right is incredibly important. A mistake can set you back months and be costly.

What should you look for? What are red flags? What makes sense in the early stages? How do you know if they’ll be successful?

Here are 6 qualities to look for in your first sales hire.

6 Must Have Qualities For Sales Rep #1

1. Previous sales experience

Did they sell Cutco knives in high school? Advertising for the school newspaper? Look for a pattern of sales skills and find out the details of how much they sold, what they learned, and what they liked about it.

#PROTIP
Software or tech sales not required. The best sales reps I know sold copiers and Cutco knives before they started at software companies. It’s easier to train software skills than sales instincts.

2. Moved up quickly

Did they receive promotions within previous roles? Did they move up quickly? You don't get promoted from Sales Development Rep to Account Executive because you suck at sales 😉

Same is true from moving from restaurant host to server to manager. It shows leadership skills and good work ethic.

#PROTIP
This works for other roles too! Look for a fast career trajectory especially within one company. Job hopping (1 year or less at several companies) is a red flag, especially in sales!

3. Creative problem solver

As an early stage company, there’s no playbook. The first sales rep will be figuring out who to call, what talking points are most compelling, and how to find target companies. Look for someone who likes to blaze their own trail and is comfortable with ambiguity. Avoid someone who wants training or lots of guidance.

#PROTIP
Ask about the most challenging thing they’ve taught themselves or the most creative way they’ve gotten past a “gatekeeper.”

4. Hunter not farmer

Hunters find new companies. Farmers find new business within existing customers. It’s a totally different mindset and skill set. Look for a hunter.

#PROTIP
Hunters like to handoff the customer relationship after closing the deal. They will usually be transparent that they like to win and make money. Farmers tend to emphasize their love of customer relationships.

5. Makes the ask

A great salesperson is not afraid to make the ask. They will be securing a meeting with the CEO of a F500, asking for next steps, and negotiating the job offer.

#PROTIP
Employees who make asks and push boundaries can be a challenge to manage. But it’s what makes them great at selling! Two sides of the same coin.

6. Hungry

Hunger beats experience in early stage startups. Someone smart, scrappy, and eager to work their ass off will be more affordable, more flexible, and, in my experience, more successful overall. The experienced sales person will want a high base salary and expect lots of resources (marketing materials, warm leads, sales engineers, demo accounts). Eventually, you’ll be big enough to hire the experienced sales pro but early on, it will be expensive and high risk.

#PROTIP
Your first sales comp packages should be low base salaries with high commissions and market rate on-target earnings (OTE). It rewards performance, aligns employee and company incentives (aka signing up paying customers), and keeps burn low. The market rate OTE attracts good candidates.

It may take a while to find a great first sales hire. It’s worth the wait!

If you can afford it, hiring a few sales people at a time can also be a great way to expedite learnings, create friendly competition, and see who rises to the top so you can recreate that.

What qualities do you look for in early sales hires? What skills or backgrounds lead to great first sales people?

Overwhelmed by startup life?

See problems everywhere but aren’t sure where to start?

Have 100 ideas but no bandwidth to implement them?

There’s an easy way to bring clarity, focus, and calm to your brain and to-do list.

I’ve used it with CEOs, teams, individuals, and on myself!

It works for startups, corporations, and personal lives.

Behold the magic of a Priority Spreadsheet…

Block off 20 minutes, use THIS TEMPLATE, and follow the 6 steps below.

Clarity is yours, my friend.

6 Steps To Take You From Chaos To Calm

1. Make a list of all-the-things!

• Projects
• Ideas
• Anything taking up headspace or stressing you out

#PROTIP
Bucket items into categories like Sales, Marketing, Product for more structure.

2. Identify the likely outcome.

• What’s the goal of each project or idea?
• What’s the expected ROI?

#PROTIP: Use dollars, numbers, or percentages. Getting specific and quantitative will clarify your hypothesis. Evaluate results later from this baseline.

3. Estimate hours and budget.

• Is it 3, 30, or 300 hours?
• How much $ will it take?
• Ballpark or ranges are fine.

#PROTIP
Double your times and dollars. As we talked about with calendar blocks, we are way too optimistic. 🤪

4. Think about execution.

• What can be outsourced to Fiverr, MyPanda, or a virtual assistant?
• Can you delegate items?
• Know an expert who could do it faster or offer advice?

#PROTIP
Conserving cash? Propose a barter of your expertise for someone else’s.

5. Prioritize.

• Think about your big picture goals.
• Mark items as High, Medium, Low. (Optional: Not Now, Never)
• Stack rank from most important to least. Keep in mind impact and effort.
• Reminder: if everything is a priority, nothing is!!  

#PROTIP
Eisenhower Matrix is a great prioritization framework. Read more here.

6. Get started!

• Take action starting at the top.
• Sleep better at night.
• Take over the world!

#PROTIP
Turn this into a project management tool. Add a “Status” column and set up a weekly meeting or Slack check-in to review progress.

Harnessing Your Superpower

Being a creative, problem-solving entrepreneur is a great thing!

Being overwhelmed or distracted by too many ideas or projects can hinder your greatness.

Finding a simple way to channel your mega brain into prioritized actions will serve you now and for years to come.

Clarity and focus is just a spreadsheet away. 🚀

What strategies work for you to manage lots of ideas? How do you prioritize when you have too much to do?

Last week I had a blast talking to founders and customer success leaders at an Atlanta Tech Village workshop.

The topic?

Customer success at startups, of course!

Want to get in on the fun? Here is the FULL SLIDE DECK with a bulleted summary below.

Not included: cheesy jokes and outstanding audience questions!

Your Customer Success Blueprint

At 1 Customer…

What Is Your Customer’s North Star?

• Seek a deep understanding of your customer’s pain, motivation, and what they get measured on.
• Build your product around this! (Duh. 😂)

What Customer Experience Will You Deliver?

• Start thinking about this now!
• Consider customer preferences, market standards, and competitive advantages.

Tools For Growth

• Start a support@company.com email
• #support Slack channel
• Talk to your customers!!!

At 10 Customers…

Your First Customer Success Hire

• What to look for & how to assess candidates
• It’s hard to go wrong with smart, positive generalists.

Tools For Growth

• Playbooks (TEMPLATE)
• Simple is great.
• Internal playbooks become customer resources and training tools.
• Slack channel for each customer
• Customer Service 101 Training Deck (TEMPLATE)
• Talk to your customers!!!

At 100 Customers…

Team Specialization

• Generalists become Support, Implementation, Account Management, and more.

Upgrades and Renewals - Sales or Customer Success?

• A timeless quandary worthy of its own post. 😉

Core Values

• Define them now if you haven’t already.
• Hire well, stay aligned, make decisions quickly, and deliver a consistent customer experience!

Tools For Growth

• CRM
• Help Desk/Support Ticketing
• Bonus
• Knowledge Base or Wiki
• Idea Exchange for Product Suggestions
• TALK TO CUSTOMERS!!! (Are you noticing a trend? 😁😁😁)

What tools, strategies, or systems work well for early customers? Any early stage customer challenges The O’Daily should cover?

Want More?

• Your Customer Success Starter Pack
• 6 Keys To Planning Your Customer Success Hiring
• 3 Customer Onboarding Stages To Prepare For As You Grow
• 1 Tweak To Massively Increase Customer Adoption

When Pardot was acquired by Salesforce, we worked with Salesforce’s pricing strategy department to update our packages.

These folks knew their shit!

We were doing pretty well considering pricing wasn’t our day job. We had a strong foundation and we evolved our packages based on learnings and market shifts.

But nothing beats learning from experts.

Apparently when you get an MBA in pricing strategy and then do pricing strategy all day every day for multiple products, you know a thing or two.

The final product was great, of course. But seeing their process was eye-opening too.

Here’s how the pricing gurus at the world’s largest SaaS company conduct pricing research. (And how you can apply these techniques at your startup today!)

3 Research Steps of the Pricing Pros

1. Analyze customer usage.

We gave the pricing strategy team a huge download of data:

• What components and features were allowed in each package
• What components customers were actually using (and how much)
• How many of each type of user
• Price for that usage (we had a mix of legacy pricing plans)

They did fancy spreadsheet things to learn:

• What things did customers use the most
• What things did customers not use
• When did people most often hit their usage limits
• Possible “breakpoints” for future packaging

Sounds obvious in hindsight but with a small team of generalists (early stage startups don’t hire pricing strategists 😂), we were usually putting out fires or working off of good instincts.

Startup Tip: Thinking about a pricing revamp? Take a look at current customer usage data to spot trends and insights. Keep it lightweight or partner with a local MBA class that looks for “real” business projects to work on.

Bonus: Analyzing customer usage data can also provide roadmap guidance. What should you invest in? What should you end-of-life because no one uses? What could be a good path to upsells?

2. Talk to customers. Talk to sales and customer success.

In addition to the data, the pricing strategy team gathered anecdotal info on:

• What customers valued in the sales process
• What customers valued when they used the product

This was particularly important because at this point, we didn’t have much feature differentiation between packages. We had 3 pricing tiers (mostly) based on usage amounts.

We needed info on what features could incentivize an upgrade.  

Startup Tip: Gather info from the front lines especially if there are gaps in data. Pricing models include qualitative and quantitative input. Listen for what functionality is most valuable, not just “how much” something is being used.

3. Look at competitor offerings.

Stalking, I mean, researching competitors is an area where we aligned with the top pricing strategists 😁

• The sales team knew competitor pricing inside and out, including what features or pricing could put a deal at risk.
• We had recorded lost deal data for years to track which competitors we lost to and why. (Shout out Derek Grant, VP Sales & SaaS scaling pro!)

The pricing gurus collected this info, looked at it holistically, and used it to determine a competitive updated offering.

Startup Tip: Add two “Lost Deal” fields to your CRM - “Reason for Loss” and “Vendor Selected.” Same for customer attrition. It’s a light lift but invaluable data.

Skip the MBA and F500 acquisition. The O’Daily is here to cherry pick the low hanging pricing strategy fruit for you. 😉

These are relatively simple tactics that can provide big value today and long term.

Curious about the output of this research? Here’s the learnings from the final product.

What other research has honed your pricing strategy? Have you borrowed any big company strategies and applied them to your startup pricing?

Oh Hello, Pricing Experts

When Pardot was acquired by Salesforce, we were fortunate to get the chance to work with some of the top pricing strategists in software!

We had a pretty solid pricing base:

• 3 pricing tiers, following the model of Good, Better, Best
• Our revenue grew as customers were more successful
• Customers easily understood our pricing
• Pricing packages and levers had evolved as the industry did

But when you have a chance to learn from the best, you do it!

And when you have a chance to share these learnings on the O’Daily, you do it!

Here are the top 4 lessons I learned from the world’s best software pricing strategists.

4 Game-Changing Pricing Tips From Top Strategists

1. Include feature differentiation.

The top mind-blowing lesson I learned from the pricing ninjas at Salesforce is this:

PUT THINGS PEOPLE WANT INTO HIGHER TIERS!! 🤯🤯🤯

Sounds obvious, right? Lord knows, we’re used to it in other areas.

Spotify’s paid version has 12 features I don’t care about. But I really, really, really like to download songs to my phone. Here’s $13/mo, you cagey Spotify pricing ninjas.  

It’s brilliant. It’s annoying. It’s highly effective.

In Pardot Pricing v.1, we differentiated mostly on usage. If you sent a lot of emails or needed lots of forms, you’d be on the Enterprise Plan.

In Pardot Pricing v.Ninja, we included desirable, advanced functionality in higher tiers. So even if you didn’t send a high volume of emails, if you wanted specialized email testing, you’d move to a higher plan.

BOOM. More feature value at each pricing tier. Makes sense, right? You may even be asking, “Why didn’t those silly Pardashians do this earlier?”

Here’s the thing: you can’t do this on Day One. You literally don’t have enough features yet 😂

You also don’t know what people value most. Keep pricing simple while you focus on customer growth and adoption. Once you have good traction and a robust feature set, it’s time for this Jedi pricing move!

Startup Tip: As your company and the market matures, keep an eye out for ways to evolve your pricing that encourages meaningful differentiation between tiers. People understand and expect to pay more for additional value and advanced functionality.

2. Move customers off of legacy pricing.

As a scrappy, customer-focused startup, we honored all legacy pricing and packaging. We loved offering this and customers appreciated it.

It was also a huge mess behind the scenes!

What made it complicated:

• Keeping up with a database of all pricing package details and related upgrade options ever offered.
• Tracking 10-12 different pricing packages within the CRM and the app.
• Onboarding new team members to this complex process. We had a new hire every few weeks!
• Confusing for clients since “their” pricing wasn’t on the website.

Salesforce showed us a simpler way:

1. Move everyone to a modern day plan.
2. Give an appropriate blanket discount to honor previous pricing.

Instead of being on the $500 package from 2009, a customer would be on the 2015 package with a 50% discount. All of the customer service feels, none of the time-intensive administration or frustration.

Another way that also works:

1. Customer can stay on their legacy plan.
2. If they upgrade, they move to current plans and current pricing.

Startup Tip: How can you keep pricing and packaging as simple as possible on the backend? Do you have any legacy plans that can convert to newer plans?

3. Skip the small stuff.

As part of the pricing revamp, we retired very small upgrade options.

We started these in the early days when upgrades of any size were exciting and worth it.

We were finally large enough that it didn’t make sense to do really small upgrades, especially since it was handled manually by a busy team. But we had done $50 upgrades for so long, we didn’t realize we had outgrown it!

The Salesforce pricing ninjas pointed out that customers could upgrade to the next tier or work within the limits.

It was a huge time savings that let teams focus on more strategic conversations and initiatives.

Startup Tip: Are there any pricing practices that you’ve outgrown or aren’t worth the effort?

4. Increase prices.

If pricing gurus don’t raise prices, are they even pricing gurus??!!?? 🤔

When something increases the value of your offering – like the largest SaaS company in the world backing you – your price should go up!

Before Salesforce, we were usually 80-90% the cost of our larger competitors. After Salesforce, we were a large competitor. Our updated pricing reflected this.

Startup Tip: Be aware of market conditions, product development, or other factors that warrant a price increase. Regular price increases are an important part of company growth and value confirmation.

Cheat Codes

At Pardot, we learned from Salesforce, an enterprise software company 20 years ahead of us. It was a gift that accelerated our growth much faster than if we had learned it on our own.

Now, you have the cheat codes too! All the pricing knowledge of a F500 acquisition and top pricing strategy team in only 4 bullet points. 😉

Next week, we’ll dive into the pricing research and analysis that happened behind the scenes. The insights will be helpful now and lay a strong foundation for future optimization.

Savvy pricing is an important tool for growth. Small tweaks can make a big impact! 🚀

What pricing strategies have you learned from more experienced companies or teams? Any pricing changes that seemed obvious in hindsight?

Pricing Evolution in the Wild

Last week, we talked about the 4 key components of your startup pricing strategy.

This week, we’ll see what pricing strategy looks like in a real startup.

Here is the real life pricing evolution of Pardot — as told by the pricing page archives — a B2B Saas company with explosive growth that is now part of Salesforce.

I joined as employee #9 and launched and lead the Customer Success Management team. As CSMs, we were on the front lines of pricing, handling customer upgrades, renewals, and attrition.

Join me for a trip down pricing memory lane with strategy, pros and cons, and the behind-the-scenes details.

February 2009

Setting the Stage:

We’re at 80 customers, 3 pricing tiers, and customers upgrade when they need more users.

“Available” broken image = ✅
See full February 2009 pricing page here.

What’s Working:

• Good, better, best pricing tiers.
• 95% of customers sign up for Professional or Enterprise. The limitations of the Group tier (no email or CRM connectors) naturally move buyers towards Professional while still offering an entry level for budget-conscious customers.
• Simplicity.
• Put it on a credit card, no annual contract.
• Month-to-month contracts help sell early customers before you have a track record.
• “We win your business every month” and “Low risk to try us out” are common sales talking points.
• Our target customers understand user-based pricing because of software tools like Salesforce and Netsuite.
  

What’s Not Working:

• User based pricing = customers are incentivized to not add others users to keep costs down.
• This hurts overall adoption.
• Ideally pricing aligns with customer value and encourages deeper usage. We fix this soon. 😉
• Limits on components like forms, landing pages, and analytics result in small upgrade requests (for those items only) which are hard to track and not much revenue.

Pricing v.1 works (among many other things like authentic demand and product market fit)! Pardot is growing quickly. Which leads us to Pricing v2…

March 2010

Setting the Stage:

We have a couple hundred customers now. We’re pricing primarily off of email usage (users are unlimited). The market is heating up. We’ve raised prices and offer an annual prepay discount in addition to monthly pricing.

“Available” broken image = ✅

See full March 2010 pricing page here.

What’s Working:

• Email as a pricing lever aligns much better with customer value.
• Unlimited users = encourages adding sales users, more marketing users, and giving execs access to reporting. Product “stickiness” improves.
• Get 30k emails for $1000/mo or get 3x more emails for only 50% more in dollars ($1500/mo) → value-based pressure to move to Enterprise.
• Pricing Strategy 101.
• It works.

What’s Not Working:

• Email sending and contact storage (# of emails in customer’s database) are the two most expensive technical costs. If a customer has a small database but sends a TON of emails, we could lose money.
• Only “feature” differentiator between Professional and Enterprise is the amount of stuff you get. There’s no advanced product functionality at Enterprise to encourage customers to upgrade.

Meanwhile, competitors are starting to charge on database size…

March 2013

Setting the Stage:

Pardot has been acquired by Exact Target! (Nine months later Exact Target will be acquired by Salesforce.) The customer count is around 4 digits. Selling into enterprise accounts has begun. Pricing scales to capture value (and budget) of larger accounts. It increased to match the current market rates and the product advancement. Way more product feature offerings than v.1!

And as predicted, we now price on database size instead of emails.

See full March 2013 pricing page here.

What’s Working:

• Database pricing.
• Pardot followed this market trend and updated accordingly.
• Pricing is more closely aligned with customer value. A customer’s marketing improves because of Pardot → more leads → Pardot account grows.
• Annual contracts.
• These are the norm now. Paid annually or quarterly.
• Maturity and social proof in the market make annual contracts easy.
• Many buyers are repeat users, marketing automation consultants are a thing (and recommend us), and we have lots of customer case studies, references, and reviews.
• Bye bye, Group tier.
• Still 3 tiers but the Group juice was not worth the squeeze.
• The “Ultimate” tier was added as Pardot moved upmarket.

What’s Not Working:

• Differentiation between tiers.
• The difference between pricing tiers is still primarily usage-based (e.g. 50 landing pages → unlimited landing pages).
• Ideally there are functionality-based reasons to upgrade also (e.g. get advanced email features in Ultimate only).  

Where Is Pardot Pricing Today?

When Pardot was acquired by Salesforce, we worked with some of the top SaaS software pricing strategists in the world to further iterate on the pricing tiers and offering.

Stay tuned for the next installment of The O’Daily where we dive into the ultra-advanced, Navy Seal-esque learnings of pricing strategy at a F500 level!

Any great startup pricing case studies to share? Any fun screen grabs or stories from the pricing “early days” of a company’s history?

How Should You Price Your Product?

Startup pricing is both art and science. Many companies have 5, 10, even 20 iterations.

As you grow, build out your offering, and the market develops, your pricing model will evolve.

So where do you begin? What should you anchor on when thinking about the right pricing for your company, product, and market?

Here are 4 key considerations to nail your startup pricing strategy!

These principles will guide you on Day 1, Day 1000, and through all the pricing mistakes learnings along the way.

4 Key Considerations For Great Pricing

1. Alignment With Customer Value

• What is your customer measured on? What do they care about and does your pricing show understanding of that?
• As customers get more value, do you make more money?

Test It

Imagine your largest customer is so happy they want to increase their usage by 10x. Yay! What would their total spend look like? What are the margins for you?

Another Fun Thought Experiment

I heard this pricing framework recently and loved it!

IBM expects to pay $1 million for a B2B software. If IBM buys your product, how will they pay $1 million?

(Sorry, IBM. Secret’s out 😉)

2. Simplicity

• Is the pricing easy for customers to understand?
• Is pricing easy to implement and track within the app?
• Is pricing predictable (e.g. not hugely variable or requiring custom calculations) for you and customers?
• Can customers put it on a credit card, charged monthly? (Avoid lawyers and procurement!)
• Is it easy to manage on your end with minimal invoicing, collections, or variation from client to client?  

Simplicity is hard but worth it. It’s better to leave a little money on the table than get bogged down with administration and management of complicated pricing. Simplicity speeds up the sales cycle too!

3. Cost To You (aka COGS - Cost of Goods Sold)

• What are your costs? What are the largest technical expenses? Any other costs to consider like customer support reps needed?
• Does the price increase as your costs increase?

Here’s what you don’t want: a customer paying $100/mo with hosting fees of $1000/mo. Or customer paying $100/mo that needs 3 support reps to manage their tickets. Sooooo, yeah. Avoid stuff like that.

4. Industry Norms

• How are customers used to thinking about pricing for similar products?
• What budget line items already exist?

New Kid #ProTip

If you are on the forefront of innovation or creating a new market, it may help to align with an established budget item to start out.

We saw this at Pardot. Marketers understood “email marketing” costs before they had a “marketing automation” budget. To start, pricing was based around monthly emails sent, just like an email marketing tool.

Another great example comes from the world of robotic mowers. Lawn care companies are used to paying for workers during mowing season but not accustomed to paying for a year-round Saas software. Voila! The “robotic worker” line item that is billed during mowing season only.

Can Pricing Be Perfect?

Pricing is complicated and requires thoughtful tradeoffs and balance. There’s a reason large software companies have whole departments for pricing strategy!

The right pricing today will probably be wildly different than the right pricing next year. Like with all things at startups, pricing is a journey.

Test, learn, and improve as you go!