How difficult is it to change the business model after 2 years? The story restarts a startup

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

the Backstory

To launch a paid version Copiny November 1, 2010, we had a few hundred free signups and hoping that 3-5% skonvertiruet in a paid subscription. Unfortunately, our expectations did not materialize. Customers do not understand the value of the service, there was formed the demand for such solutions. For each sale had to contact clients, explain the value, to make presentations, etc. In the end, the cost of sales (CAC – Customer Acquisition Costs) was much higher than the lifetime value of a customer LTV (Life Time Value). We worked at a loss.

I've always adhered to the principle: if something goes wrong, the first thing you need to look for a problem in itself. Therefore, we have sinned in our marketing, our sales, our prices, etc. We have many times changed the licensing system, tried different ways, but the point was not in it. The following is a schedule of growth in the number of registrations in the system. At the moment, was more than 10,000 communities, more than 1,000 of them are active.



However, small and medium businesses either did not have the problems that we solve, or they have not been "pain" of the company. Communicating with colleagues who are doing projects for small and medium businesses, it became clear that we are far from their targets. For example, on average we recorded not more than 15 companies a day (a drop in the ocean).

At the same time, increasingly we have begun to receive requests from large corporate customers: banks, Internet service 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 had sometimes 2 times in a week to come to Moscow for a meeting. Each session in 1 hour has a cost of 3 000 rubles and the day time spent. I started to hate the train.

It was also clear that to sell to the Bank the decision for 1980 Euro a month is ridiculous. In the end, we have begun to change the licensing system and make more expensive rates. By the summer of 2012 we got a mix of corporate clients, small and medium businesses and webmasters. 90% of all revenues it brought corporate clients. Shown below are our Monthly Recurring Revenue (MRR) — a very interesting indicator of a SaaS startup, which describes the income per month from all customers. Give absolute values, unfortunately, can not.

Search business model

First, a bit of very useful theory. There is a viable sales model for SaaS solutions, which very much differ among themselves. If you do not get one of them, you're dead. Just go this link and read an excellent article on this topic, and then come back here.

We were in the lower right corner – in a cemetery of startups. In fact, the complexity of the sales have been in Enterprise, and the cost of solutions in Self-service. To go to left half squares we couldn't, because there weren't enough requests, and customers demanded personal meetings. The only thing that we had to go to Enterprise corporate sales.

All our hope lies on small and medium business, auto sales have collapsed into smithereens. As a result, we decided to completely change the business concept:
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• a New model of sales: personal sales team of sales in Moscow.
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• a New system of licensing: no longer free of tariff, license now cost from 100 000 rubles a year.

New product: we have released a new version of the platform with additional modules (read more copiny.com/product) and new functionality for "big" customers.

sink or swim

29 may 2013 we sent out a letter to our users, VC the otor announced the closure of the free fare. Some customers accuse us that we "used" them for advertising and "threw". However, few people think about what the Copiny platform, which they use free of charge, we spent millions of rubles, thousands of hours of time and a lot of strength. Besides, we have not received prominence among corporate customers who do buy a license.

Disable the free fare was for us a very painful but necessary step. For customers, we have created a topic in a community where openly discussed the decision and answered questions. We were expecting much more negativity and was pleasantly surprised by the commendations from our customers.

What next?

Together with business model, we changed the positioning. Now it most accurately describes what the project is about: "Copiny is a platform for the organization's client communities on the Internet". Starts a new milestone in the life of our company, so to speak, second birthday =) Ahead of ambitious goals and many have already been in another business.

Article based on information from habrahabr.ru