This is the second blog post in our series about Raising SaaS Prices For Legacy Customers. You can read the first introductory post here.
After careful consideration, we decided to move forward with migrating our legacy customers into our new pricing structure. Brian and I agreed that I would run point on the project, so I drafted several emails to customers that would explain and announce the changes. My original plan was to select the accounts which would be impacted and send them an email at the same time, and then wait for their response. I planned to give them 90 days to make a decision and enroll in the new program. I had hoped to convert half of the customers.
As a company, we were mentally prepared to lose half of our legacy customers in the name of higher ARPU (average revenue per unit) and a more streamlined set of pricing plans. If 50% of our customers converted to the new pricing structure, our revenue would remain the same, but our customer roster would be less. We felt this was an attainable goal. As we got closer to our deadline to communicate with our customers, however, something didn't sit right with me. Rather than sending out a blast as planned, I sent out five emails to test both our message and our customer's reaction.
I was shocked by the first three responses I received. I immediately received one cancellation. Another said they would cancel at the end of the year, and a third sent a long note to tell me how offended he was about the changes. I was 24 hours into this project and 60% of the responses were negative. I had lost one customer, sent another searching for alternatives, and offended a long standing client.
While these responses were upsetting, they confirmed what my gut was telling me; our approach was not quite right and needed to be refined. My brother and I took a long walk around Coral Gables (aka City Beautiful) to get some coffee and discuss our entire game plan. He suggested that I call some customers and get their input before sending any more emails. A light bulb went off in my head, so that's what I did.