How difficult is it to change a 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 for entrepreneurs who are trying to find a sustainable business model for their project.

Prehistory

By the time the Copiny paid version was launched on November 1, 2010, we had several hundred free registrations and hoped that 3-5% would be converted into paid subscriptions. Unfortunately, our expectations were not met. Customers did not understand the value of the service, there was no established demand for such solutions. For each sale, you had to contact customers, explain the value, make presentations, etc. As a result, the cost of sale (CAC - Customer Acquisition Costs) significantly exceeded the lifetime value of the LTV (Life Time Value) client. 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 a problem in yourself. Therefore, we sinned on our marketing, our sales system, our prices, etc. We changed the licensing system many times, tried different ways of sales, but it turned out not to be the case. Below is a graph of the growth in the number of registrations in the system. Currently, over 10,000 communities have been registered, more than 1,000 of them are active.
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However, medium and small businesses either did not have problems that we solve, or they were not the "pain" of the company. Communicating with colleagues who make projects for small and medium businesses, it became clear that we are far from their indicators. 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 from large corporate clients began to arrive to us: banks, Internet providers, retailers, FMCG-brands, etc. To sell something, you had to meet. Taking into account 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 o'clock cost 3,000 rubles and a day spent time. I started to hate trains.

It was also clear that the decision to sell the bank for 1980 p. a month is 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 clients. Below is our Monthly Recurring Revenue (MRR), a rather interesting indicator of a SaaS startup that describes monthly revenue from all customers. Unfortunately, I cannot give absolute values.

Search business model

First, some very useful theory. There are viable sales models for SaaS solutions that are very different. If you do not get into one of them - you're dead. Just follow this link and read the excellent article on this topic, and then come back here.

We were in the lower right corner - in the cemetery of startups. In fact, we had the complexity of sales as in Enterprise, and the cost of the solution as in Self-service. We could not go to the left half of the squares, because there were not enough requests, and customers demanded personal meetings. The only thing we had to do was go to Enterprise: corporate sales.

All our hope for a medium and small business, for automatic sales, has been crumbling to smithereens. As a result, we decided to completely change the concept of business:

• New sales model: personal sales by the sales team in Moscow.
• New licensing system: there is no more free tariff, licenses now cost from 100,000 rubles a year.
• A new approach to working with clients: a dedicated account manager, employee training, implementation project and other joys for corporate clients.
• New product: we have released a new version of the platform with additional modules (more info copiny.com/product ) and new functionality for “big” customers.

hit or miss

On May 29, 2013, we sent a letter to our users, who told us 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 working time and a lot of effort on the Copiny platform, which they used for free. In addition, we have not received fame among corporate clients who actually buy licenses.

Turning off the free fare 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 a lot more negativity and were pleasantly surprised by thanks from our customers.

What's next?

Together with the business model, we also changed 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 of ambitious goals and a lot of work is almost in another business.