Hey - Marc here.

Happy Saturday evening, motivated B2B SaaS Founders!

Here's at least one tip to keep in mind as you grow your B2B SaaS company:

Today's issue takes about 5 minutes to read.

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In today's issue, I share some key takeaways from LuxLock CEO and founder Casey Golden’s presentation at Nathan Latka's conference “SaaS Open 2023” in New York. She discussed how they upsell discounted customers to generate 10x more in MRR.

Casey is a futurist that’s no stranger to the reality of retail. She is an experienced operator in both fashion and enterprise supply chain technology. A career she’s committed to digital enablement in the luxury sector as a personalization innovator and experience economy evangelist.

About LuxLock

LuxLock is designed for luxury brands to provide a unified omni-retail experience. Their cross-channel experience platform personalizes every interaction at scale to engage shoppers and drive unprecedented growth with the power of unified shopper and product data.

They discovered that if they charged by accounts for their SaaS fees, they would leave a billion dollars on the table. If they charged for user licenses, they would bottleneck adoption. They built free user licenses into their model, which they leverage as a negotiation point instead of touching their SaaS fee.

The company takes 5% of their lift rather than any type of professional services. They have gone from pre-product to $85k in beta to $871k and are on track for their first year out of beta to hit $5 million ARR just in the SaaS fees.

PS They teared up an additional SaaS fee for $6k a month, which they have four customers using right now, which was just an additional feature set. Most of their customers start at the $4k a month fee, and all user licenses are free.

Challenges

They compete with a lot of enterprise retail tech companies.

They wanted to make sure they were blending the best of SaaS with what they knew the appetite was for their industry. They tiered their pricing strategy to be more of a psychological sales cycle to ensure they got what they wanted, and everyone was paying the same price.

Advice to Other Founders

Find a blended model that sells without compromising your pricing strategy.

They started with a founder program where they removed discounts from their pilot accounts and began selling full price enterprise. The model they developed is not about the size of the account but the type of account they are dealing with.

Don’t price too low.

They went with a startup program that allowed founders to bring their own price. They went out and saw some of the best emerging luxury brands that they knew would be successful and get venture-backed. They broke the program down into four steps and agreed on a 5x return – which is better than Facebook.

Create a norm where customers are comfortable seeing larger invoices.

Communicate the value that your software brings to the table, even if it means invoicing a higher amount than what customers may be used to. Rather than aiming for a 5x return, strive for a 30x return, which will make it easier for customers to justify the cost.

TL;DR

Casey Golden spoke about how her company scaled up from pilots to an enterprise-ready level at the SaaS Open event. With their blended model of selling to vertical SaaS and professional services customers, LuxLock found a way to keep pricing consistent. They used a foundering program to position themselves at the top of the market, removing discounts from pilot accounts and selling full-priced enterprise solutions. By leveraging free user licenses as a negotiation point instead of touching the SaaS fee, they avoided bottlenecks in adoption and left a billion dollars on the table by not charging by accounts for their SaaS fees. Instead, they took 5% of their lift and built a startup program that allowed founders to bring their own price. By focusing on full-price payments, they helped emerging luxury brands increase their revenue, resulting in a 30X return on investment.

PS Here is a link to the full interview if you are interested in listening to the full episode: How to upsell discounted customers to generate 10x more in MRR

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See you again next week.

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