Weekly What If: What If We Change The Revenue Model

Weekly What If: What If We Change The Revenue Model

20 Year Old Software Company Unlocks
Explosive Growth with this “What If”

A small, well respected technology provider (name witheld) had logged years of constant technology innovation for its bank and retailer customers. As an example, this company was one of the first to enable instand credit and credit card applications directly from the department store counter. That type of continued innovation led to steady growth and a marquee list of customers. However, despite their technology achievements and customer satisfaction, the company was still relatively small and appeared to lack much real growth potential. A big challenge for the company was it had a slow sales cycle and small market. Each new product sold for over $1 million a solution.
Determined to find new ways to grow, the company explored some different “What If’s”, until they nailed the one that sent their growth soaring.
What if we create a new product or go into new markets?”
Over the course of two years the company had developed and was beta testing a completely new product in a new industry.
What If we buy another company or competitor?
Not leaving any stone unturned, they briefly considered buying another company or competitor. That What if proved difficult because other acquisitions in the same industry would likely be expensive and provided no added growth once complete.
Eventually the company began to zero in and explore an entirely new What if that was the precipitator to drive significant growth.
“What if we change our core product’s pricing model (or revenue model) from an upfront license to a pay as you go service?” (now called Software as a Service or “Saas.”)
Management theorized this could take their already well known product and make it available to small financial institutions, greatly expanding the market. Also, the sales cycle could be much shorter and the portability of the product greatly enhanced. Further, the company also believed the model could work because they already had some customers using it on a similar basis (“service bureau”).
Based on the new what if strategy, the company was able to attract capital to fund their growth, build its sales team, and even went on to acquire a customer that offered complementary services to their new target clients.
Within a year of implementing their “what if”, the company’s revenues began to grow rapidly, generating 40% annual growth overall, with over 70% annual growth coming from the new SaaS service model. Along the way the company was named Louisiana’s Technology Company of the Year. Then, after several years of record growth the company’s owners and investors chose to sell the growing business to a public company for over $90 million (cash).
I appreciate the fact that I got a chance to work with this Company and play a smart part in its achievement and to this day it stands, for me, as a reminder of the growth potential for even mature companies that have both the willingness to Explore What If and the desire to grow.

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