It’s been a while since I wrote my last blog. While I love writing, my time and focus have been primarily directed at more important issues regarding Maître. After 18 months running the business we had to ask ourselves some very important questions. Where are we heading and what do we want to be. This post is about sharing with you our answers to these questions.
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When we launched Maître 18 months ago we went for a one-off payment business model. For the most part, it was a choice dictated by lack of time and resources and our willingness to put something out as soon as possible. Luckily, it paid off. People started paying right away and revenues grew steadily for 12 straight months.
Yet, we knew that sooner or later we should switch to a subscription model. In the end, Saas models are considered the golden standard in the industry. Predictable, consistent, recurring revenues are every entrepreneurs dream and so, 5 months ago, we went for it.
It was a disaster.
In the first couple of months things were actually good. We had more customers than the previous months (on a monthly basis), but quite soon we figured something was wrong.
Though more people were subscribing, a lot of people were also churning. After 4 months our churn rate was a rather discouraging 25%. For people unfamiliar with Saas metrics, it means that every month we were losing 1 out of 4 customers.
It was pretty obvious we had to do something. At this rate, it would have become extremely difficult (and expensive) to keep customers and stay profitable.
So, we decided to take action.
Our goal was to figure out why people were abandoning Maître after an average of a couple of months. We did two things:
The results of both the survey and the calls were mind blowing.
It turns out that people were actually happy with Maître. The level of happiness measured as a score from 0 to 10 (on the survey) was 8.7 on average. The calls went even better. 23 out 25 people said they were very happy with Maître, would use it again and would recommend it to a friend.
So what was going on?!?
People were not leaving because they were unhappy with Maître.
People were leaving simply because their campaign was over.
When we figured this out it was a revelation.
Our assumption was that people would have kept running contests forever but this is true only for larger companies. In retrospect it was fairly obvious; people use Maître to run referral contests, most of which last for a limited amount of time. The majority of people run a campaign for 1 to 3 months, then stop it and maybe run another one after a few months.
As such our Saas model didn’t fit our customers’ needs. They didn’t want to be charged monthly for something they would use sporadically.
Ultimately, switching to a subscription model had some serious repercussions on our cash flow and long-term stability. One of the key metrics in a Saas business is Lifetime Value (LTV). Our LTV was low and our revenues had shrunk too (we almost halved the pricing for the monthly plans).
In short, it was a lose-lose situation.
We have decided to go back to a one-off payment business model with 3 tiers: Basic, Pro and Managed. The differences are well explained on our new pricing page.
The main news is that now users won’t pay monthly anymore but will be able to use their widgets for as long as they want.
Not much. They will continue to stay on the monthly subscription unless they want to opt-out.
If you are an existing customer with an active subscription and would like to switch to one-off, please get in touch. We will ask you to pay the difference (in case you have paid less) or we’ll give you a free account if you have paid more.
Our commitment to offer the best tools to run a referral contest hasn’t changed. In fact, we are going to double up.
We are working on some very exciting new projects, including a universal referral API and a way to reward subscribers for any action, whether is a download or a purchase.
We have definitely learned a tonne in the last couple of months.
First, we have learned that a subscription model in not the right model for every online business. If you are considering it, think about how LTV and churn rate of your target market affect your revenues.
We have learned that less is more.
You might say “Duh!”, but it’s sometimes very difficult to get out of your own bubble and see things for what they truly are.
In our case the survey was the key.
We tried to be smart about it: we asked people to categorize themselves into groups (e-commerces, consultants, agencies, etc). With that information it was then relatively easy to analyze different segments. For example, it turned out that medium companies are a better fit for our solutions. Kickstarter campaigns, product launches and ongoing contests seem to work incredibly well with Maître.
We realised our users love integrations and analytics and we are going to improve them even further. They also love our Engagement emails. Expect some pretty exciting news on that front.
We have decided to focus exclusively on referral contests.
We tried to be the “one-size-fits-all” company, but it probably wasn’t a good idea. Instead, by focusing our energies and resources on a very specific group of use cases, we are going to continue improving and providing value. In retrospect, this should have not been a surprise, but it’s nice when your instincts are backed by data.
As we narrow our focus, we have also decided to remove things that are not part of our core business. Our Slack group, for example, will be closed down this week.
One area we would love to experiment with is e-commerce and customer referral programs. We have some cool things coming up soon, make sure to sign up to our newsletter to be the first to know 😉
* People hate surveys. To make people excited we offered a $150 Amazon Gift card to 3 random people who answered the survey. Though this usually leads to low quality answers, we structured our questions so to avoid spammers. It cost us $450 but the return on investment in terms of data was well worth it.
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