How difficult is it to change the business model after 2 years? Startup restart history



    Guys, in this article I want to talk about how we restarted the business after 2 years of work, why we did it and what we got in the end. I hope this information will be useful to entrepreneurs who are trying to find a sustainable business model for their project.

    Background


    By the time the launch of the paid version of Copiny on November 1, 2010, we had several hundred free registrations and hoped that 3-5% would be converted to paid subscriptions. Unfortunately, our expectations were not fulfilled. Clients did not understand the value of the service, there was no formed demand for such solutions. For each sale I had to contact customers, clarify value, make presentations, etc. As a result, the cost of sales (CAC - Customer Acquisition Costs) significantly exceeded the lifetime value of the client LTV (Life Time Value). We worked at a loss.

    I have always adhered to the principle: if something goes wrong, then first of all you need to look for the problem in yourself. Therefore, we sinned on our marketing, our sales system, our prices, etc. We changed the licensing system many times, tried different methods of sales, but that was not the case at all. Below is a graph of the growth in the number of registrations in the system. Currently, more than 10,000 communities are registered, more than 1,000 of them are active.



    However, medium and small businesses either did not have problems that we are solving, or they were not a “pain” of the company. Communicating with colleagues who do projects for medium and small businesses, it became clear that we are far from their performance. For example, on average, we registered no more than 15 companies per day (a drop in the ocean).

    At the same time, more and more requests began to come to us from large corporate clients: banks, Internet providers, retailers, FMCG brands, etc. To sell something, you had to meet. Given the fact that at that time the whole team was in Bryansk, I sometimes had to come to Moscow for meetings 2 times a week. Each meeting at 1 hour cost 3,000 rubles and a day of time spent. I started to hate trains.

    It was also clear that selling the solution to the bank for 1980 was per month is just ridiculous. As a result, we began to change the licensing system and make more expensive tariffs. By the summer of 2012, we had a vinaigrette of corporate clients, medium and small businesses and webmasters. 90% of all revenues came from corporate customers. Below is our Monthly Recurring Revenue (MRR), a rather interesting measure of the startup’s SaaS performance, which describes monthly revenue from all customers. Unfortunately, I can’t give absolute values.



    Search for a business model


    First, a little very useful theory. There are viable sales models for SaaS solutions, which are very different from each other. If you don’t fall into one of them, you are a corpse. Just follow this link and read an excellent article on this subject, and then come back here.

    We were in the lower right corner - at the startup cemetery. In fact, we had the complexity of sales as in Enterprise, and the cost of the solution as in Self-service. We could not leave the left half of the square, because there were not enough requests, and clients demanded face-to-face meetings. The only thing left for us was to go to Enterprise: corporate sales.

    All our hope for medium and small business, for automatic sales collapsed to the smithereens. As a result, we decided to completely change the business concept:
    • New sales model: personal sales by a team of sales in Moscow.
    • New licensing system: there is no longer a free tariff, licenses now cost from 100,000 rubles per year.
    • A new approach to working with clients: a dedicated account manager, employee training, implementation project and other pleasures for corporate clients.
    • New product: we released a new version of the platform with additional modules (more info copiny.com/product ) and new functionality for the "big" customers.


    hit or miss


    On May 29, 2013, we sent a letter to our users, we informed them about the closure of the free tariff. Some clients accused us of “using” them for advertising and “throwing” them. However, few people thought that we spent millions of rubles, thousands of hours of work time and a lot of energy on the Copiny platform, which they used for free. In addition, we did not gain fame among corporate clients who really buy licenses.

    Disabling the free tariff was a very painful but necessary step for us. For clients, we created a topic in the community where we openly discussed this decision and answered questions. We expected much more negative and were pleasantly surprised by the gratitude from our customers.

    What's next?


    Together with the business model, we have changed the positioning. Now it most accurately describes what the project is: "Copiny is a platform for organizing client communities on the Internet." A new milestone begins in the life of our company, so to speak, the second birthday =) Ahead ambitious goals and a lot of work is already in a completely different business.

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