The how and when of our pivot

When we talked about the pivot last week, I tried to focus on the highlights and make sure everyone understood the big picture of why we are pivoting and what the pivot entails. In this post, I’d like to focus more on how and when the pivot begins.

Our pivot is primarily driven by the realization that 64% of the Colorado market (businesses with one location) would likely remain out of reach under our old pricing structure. If we want to grab meaningful market share among these single-location businesses, we need to have a more affordable entry point. It really is that simple.

New Pricing Structure

As discussed in our pivot meeting, the new pricing structure introduces two fundamental changes.

1. We are changing the basis from per-license to per-location. This makes the price substantially lower for businesses that have fewer locations than licenses, which is most of them. It also makes more sense for the businesses that have multiple licenses of the same license type.
2. We are changing the individual features from a la carte pricing to bundle pricing. Certain non-marijuana checklists such as the one planned for the Agricultural Worker Protection Standard will retain a la carte pricing to make revenue sharing with partners easier, but our intent is for all other features to be bundled and priced accordingly. This means we have an affordable base package for small businesses while larger businesses can still opt for the features they want via these bundles.

Here’s how those changes play out:

• Base Package is $49/month/location. It includes all of the features in production today with the notable exception of local checklists.
• Local Checklists are $10/month/location for the locations where local regulations have been implemented. As an example, Native Roots has 27 locations, but only seven in cities with local marijuana regs.

John and I have already met and worked out the impact on our existing clients. Are you sitting down for this? Clients will save an average of 48%! I’m excited that we are able to do this and slightly terrified by a 48% revenue decline in the short term. But let’s remind ourselves that we weren’t exactly setting the cannabis world on fire with our former pricing structure and in fact, we were completely locked out of the smaller businesses. On top of that, the value prop wasn’t sitting well with several clients and we didn’t have a structure that could be applied nationally. On the whole, we are taking one step back so that we can take three or four steps forward.

New Sales Strategy

The new pricing structure rejuvenates our sales effort, but it is just one piece of the sales strategy. I’ll reserve the detail for Brooke, but you can expect process improvements in how we approach prospects, how we utilize feedback, in the application of a sales funnel, and in how we use the free trial period.

New Perspective on Client Management

The same way that new pricing gives us a reason to reach back out to prospects that declined the first time, it also gives us a reason to proactively communicate with clients. The key word is “proactive.” I think we’ve been a little too passive about managing clients, basically waiting for them to say something and then reacting accordingly. Our reactions have been fine, but as a startup with an immature product we can’t afford to wait for clients to say something.

Also, I want us to have this proactive mindset before the business becomes a paying customer. More specifically, John is taking the lead on redesigning our trial period. We want to pull users through the system in a way that helps them quickly understand its value proposition. It involves coding changes in the app to automate parts of the initial setup and to immediately dive into an audit. It includes more helpful visual cues that suggest what users should do next. And it includes scheduled emails and phone calls from John to make sure users are properly engaged.

If users are properly engaged, our conversion rate – the percentage of prospects that choose to become paying clients at the end of the trial period – should be 80% or more. To date, we’ve been running at about 20% because we’ve expected the app to sell itself. Those days are over.

New Focus on Colorado

About 10 years ago, Under Armour came out with an ad campaign called Protect This House. Initially, it was about football teams needing, at a minimum, to capitalize on their home field advantage. If you can’t win at home, you probably can’t win on the road. As you’ll see in the video, the campaign eventually morphed into something bigger – athletes in both team and individual sports willing to put in the work required for elite performance and athletic achievement. The slogan changed to “Protect This House, I Will.” Sounds like something Yoda would say, doesn’t it?

The analogy holds for Simplifya. If we can’t get traction in our home state of Colorado, we probably won’t be successful in other states. As individual employees, we each need to do our part to help Simplifya succeed in Colorado. At a company retreat where we’re all standing in a circle, I might ask you to say “I will” to a series of questions about your personal work ethic and commitment to the team. We’d end with hugs and high fives, and drink beer while we bask in the glow of our newfound energy and motivation. Here’s the thing. If you can imagine it, we don’t need to do it!

The clear implication is that when push comes to shove, we will prioritize success in Colorado over work in other states. Protect This House, We Will.

Author’s Note: You may have noticed that I stopped short of providing some details that would have been appropriate to share in this post – namely, pricing data for feature bundles, our bundling strategy, our sales goals, a definition of “success in Colorado,” and a timeline for bringing this to market. The challenge is that while this site is for Simplifya employees and blocked from search engines, it is still a public site that a competitor could find if they had a mind to type in the URL. So while I’m happy to be transparent with you in the office and during meetings, I hope you understand why I’m not being totally transparent in this post.