Two weeks ago, our head of growth began raising some concerns. We were seeing a moderate spike in churn, much of it due to declined credit cards and the majority of them were annual plans. The reasons for the disruption quickly became apparent… It was last year’s Black Friday signups coming up for renewal.
You may have noticed that we did not run a Black Friday sale this year, nor did we run a Cyber Monday sale. We had not been planning one for a variety of reasons – We now have a free plan, our pricing is already low ($8 per month to schedule all of your meetings!) – but seeing the attrition in our metrics validated that decision further.
You see, Black Friday is a construct of the retail world; TVs, iPhones, Cabbage Patch Kids. Perhaps it makes less sense for a SaaS product. After all, as much as I love x.ai, I do not think I would be thrilled getting it as a holiday present, so why run a sale ahead of the holidays? SaaS products are not retail goods and are therefore, in my opinion, not suitable for the type of discounting done on these shopping holidays. So why did we run one last year?
The answer is simple… We wanted to juke our numbers a bit at the end of the year. Nothing wrong with that, right?
So why are we not running one this year?
We simply do not feel that it added long-term loyal customers to our business.
Think about it… If our product is not worth $8 per month to people, is making it $4 per month really going to change the value for them, perceived or real? Are the customers we acquire with steep discounting going to add long term value to our business if an elevated percentage of them churn out twelve months later? Some did, for sure, but at a lower rate than other channels. And really, if our product is not worth $8 to someone then we’ve done a poor job of communicating the value, because it pays for itself immediately.
A better solution, one that we’ve leaned into this year, is to offer a free version of our product so anyone can try it out with no risk. We then add on premium features in paid tiers that offer real value at a price that is highly competitive.
Yes, we’re foregoing a short-term jump in sales. Yes, we’re missing an opportunity to add to the inbox noise after the Thanksgiving holiday (you’re welcome).
But we’re here to build a business, not a short-term revenue spike. Real long-term customer value is earned, not induced. We hope to earn yours.