EP 55: Unlocking SaaS Growth via Your Payment Platform with Lucas Lovell

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all right welcome back to another episode of SAS Buyers Club I’m your host Omid and I’m the managing partner of
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Optimus legal Optimus legal is a fullservice corporate Boutique Law Firm where we help SAS founders with all
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things contracts from incorporation to exit we help Founders start their
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businesses we help them draft Master Services agreements terms of service privacy policies we help with Venture
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fundraises and finally exits so pretty much anything from incorporation to exit
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that has to do with contracts that’s what we work on in addition to being managing partner of the law firm Optimus
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legal I also am the host of the SAS Buyers Club which you’re watching right now I believe that anyone that has value
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to offer to SAS Founders will help SAS founders with increasing the exit values
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of their business so the mission of SAS Buyers Club is to help SAS Founders get
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the best exit possible so with that being said I’m pleased to introduce
Introducing Lucas Lovell from Paddle
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Lucas Lovel who is the vpa product at paddle thanks am very happy to be here and looking forward to the conversation
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likewise so why don’t we just actually start tell me a little bit about paddle
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and how you became the P product at paddle sure absolutely so yeah paddle is
Understanding Paddle’s Role in SaaS Growth
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an endtoend billing and payments platform um that works with software companies all around the world we enable
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software companies and SAS companies to capture Revenue globally around the world process their payments for them we
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do that under a merchant of record model which means from a technical or legal
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perspective we are operating as a reseller and that gives us a unique set
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of advantages in terms of how we can support our customers to sell around the
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world in a compliant manner so paddle is a London founded company I’m London based I am here London I’ve been in the
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company for about four years now my experience prior to paddle was actually in Zas so I was the founder of ASAS
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company and worked on that for four or five years lots of stories in in in that realm but when I joined paddle I sort of
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jumped over the fence onto the onto the fintech and payment side and now serve SAS Founders and SAS companies and help
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them with their billing and payments all around the world so yeah been at the company four years love the company work
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with SAS Founders All Around the World initially started out as a product manager and then and then more recently
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moved into sort of a more operational product leadership prop awesome love that lots of good stuff in there to chat
The Importance of Payments in SaaS
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about so what do you want SAS Founders to get from the episode today yeah I was I was reflecting on this and I think the
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main thing that I would love a SAS founder to walk away knowing is that
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your payments partner your billing and payments partner can really be a growth lever for your business and I think most
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founders of software W companies underestimate the role that their payments platform and payments product
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and payments partner plays in the trajectory of the company I think payments platforms can help companies
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become very successful I think they have more leaders for growth inside of them
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than most people pered and think they do at the same time they can also be a headwind to growth and definitely cause
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challenges and problems in the event of an exit so I think to sum that up and to play that back I think it’s very much
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like most Founders view payments as something operational as like I need
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something to capture revenue and it’s very much you’re my operational partner and you enable me to capture Revenue but
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I would like them to think of their payments partner as a growth partner you’re you’re a partner on a product
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that can really help me get the most out of my business I think I think that’s the core message from us all right let’s
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break that down so you’re like paddle is not just you know a merchant payment
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platform where so much more we can actually like contribute to your growth rather than you know be
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uh a way that you just capture Revenue yeah yeah for sure how do you do that
Optimizing Checkout for Global Markets
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well I think about when you think about growth right you think about the three ways that you can grow your company and this is pretty well documented but
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thinking about acquisition monetization and retention right you grow your customer base you make more money from
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your customer base and you make sure you don’t lose your customers um it’s a pretty simple way of thinking about how to grow my business so what I’ll do is
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I’ll I’ll sort of rally off a few things that your payments platform can do and that pudle can do but other payments platforms do as well that can help you
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across each of those sort of core components of growth so when you think about acquiring net new customers um if
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you’re deploying a plg motion which is quite a common Motion in SAS so you’re embedding a checkout based experience on
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your website and enabling your buyers to self serve onto your product that checkout experience think the conver
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right and and there are lots and lots of things that make that checkout experience convert firstly it has to be
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a good checkout it has to meet modern buying expectations in ux secondly you
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know you need to be presenting that checkout in a currency that’s going to resonate with the buyer you need to be
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offering the right payment methods at checkout right that a buyer wants to pay with all of these things they add up to
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your net checkout conversion rate right and your net checkout conversion rate can move by multiple percentage points
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based on all of those things so when you’re running a s company at scale right you can be leaving three four five
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six s% of growth on the table just through your checkout experience right that’s that’s one example um okay you
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also want to think about things like payment authorization and payment acceptance so is your payments partner
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the right payments partner for where you’re selling into What markets and geographies are you selling into
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payments platforms perform very differently based on where they’re located um and there are lots of
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examples of that that’s that’s another one pricing is a really important growth L your ability to be flexible on price
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is very much based on whether your payments platform allows for that flexibility so for example can you price
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based on region lots of payments platforms might enable you to price based on currency but that means that
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you’re deploying one price in Euros across the whole Euro Zone meaning that you’re unable to adjust your pricing
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based on willingness to pay that’s another example of how pricing is another important component of growth
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and again is relying on your payments partner so there’s two or three examples just through the lens of acquisition
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right just through the lens of like acquiring that new customers and then you think about monetization as well so how are you how are you sort of um
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making more money from those customers once they’re on board with you and you think about things like billing
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flexibility that enables you to do effective cross selling and upselling again a lot of those levers exist within
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your endtoend billing and payment system um again you think about payment authorization on renewals right also
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going to help you monetize more effectively and then if you think about retaining customers right of course the
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best way to retain the customer is to have a great product um and to make sure that they’re realizing the value of your product but another role that payments
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platforms typically play is the role of capturing Revenue right so recovering
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failed payments and you know we think about the world with the lens of like churn and involuntary churn and
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voluntary churn voluntary churn is tough to capture but involuntary churn is churn you shouldn’t that shouldn’t have
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happened in the first place which is like I love your product I think it’s great my car just happened to expire at
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the wrong time and I’ve lost access so how can you make sure that you’re deploying the right tooling to make sure
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you’re capturing that revenue and recovering that lost Revenue so you start to add all that up right you start to add all that up across like a lot of
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variables monetization retention and you go okay have I gone thought really
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deeply about my implementation of that tooling such that I’m getting the most out of what I’m doing with my business
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and I’ll pause that but that’s that’s that’s the core message okay got it yeah
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lot of different things to dig in there and the main point that you concluded with was am I thinking about the
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implementation of the payments platform the right way because there are all these different variables these
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different levers that can be pulled essentially you know whether it’s ux whether it’s know in the currency
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whether it’s by region whether you know all these other variables that you had that you had mentioned so walk me
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through like how you would help a SAS founder understand like like give me
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some examples of how you’ve helped SAS Founders pull these different levers sure sure um so I think it depends on
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size and scale and I think the approach that we take is different based on the majority of the company we’ve worked
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with some much larger companies that might have built a lot of their Billing System inh housee natively and they’re
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very much constrained by something that was built five or six years ago I won’t name names but I know I know household
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SAS companies that are only billing in USD globally because they’re constrained
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by their billing logic right now I know based on the data that we collect for
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thousands of software companies that if you’re billing in AUD in Australia and GBP in the UK your conversion rates are
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going much higher right so the first thing is like establishing I think where is that company at on their Journey
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right what are the current constraints that they’re that they’re facing and how can we help them alleviate some of them
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and unlock more growths through sort of better implementation of of payments I think that’s one piece the second piece
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I think um which somewhat applies more for earlier stage SAS is is is thinking about their
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ambition so what is your ambition as as a SAS company you know we we tend to
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think about software and SAS being Global from day one we use that use that phrase quite a lot supporting their
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their sort of understanding and and and Learning Journey around what it takes to expand into new markets right I think
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you know there’s a lot of talk and lots of companies understand you know the idea that I need to have a checkout that
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can be deployed in a certain market and having a product that’s built and can work in that particular Market but then
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what we do with them then is going okay well if you want to be really successful in China right you need to be you need
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to be deploying alip pay as a payment method right because the majority of the
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Chinese market prefer to pay with alip pay now the the way we sort of approach
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that conversation is very much like an education process around you know if you’re in the UK or Australia or the US
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you know it’s very credit card dominant countries right a lot of the western world and the English speaking world is
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dominated by card netw Works Visa Mastercard AMX Etc but countries like
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China very very low adoption of those sorts of rails Brazil was another great example you know fast growing e-commerce
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industry Brazil um they have very high adoption of local payment methods local
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payment method in Brazil is called picks yeah so if your ambition is to expand into Brazil we’re going to talk to you
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about like what are the different things that you need to think about to be successful in Brazil to make sure that you’re capturing payments and and
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localizing your offering most effectively interesting we do that we did that through data as well like we like we look at different conversion
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rates based on different implementation types um and make sure that we’re supporting our customers to get to get
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the noce out of of P I love when I go to purchase something online and I can use
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Apple pay spot on I literally Rejoice I’m like oh I only have to click one button I don’t have to get my credit
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card out and I can’t remember you know my security code was it like this
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three-digit number because I have so many cards or was it that three digigit number like if I can just like one click
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purchase with Apple pay I’m likeo so easy love it totally I mean I I won’t
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turn off like if I can’t like well it it also just depends like you know it’s
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like okay how bad do I really want to like purchase this product you know exactly and and that’s where we think
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about the concept of buying intent a lot as well so if if you’re the sort of company that is deploying a product that
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has a that might be introduced to the product with low buying intent Apple pay is super important because people aren’t
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going to bother getting out their CS right now if you’re like more of an Enterprise or like let’s say you’re a
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B2B SAS company where you’re selling to businesses right buying intent is probably a little bit higher like if I
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want to buy slack from my team of 12 people I’m probably going to buy slack irrespective of whether there’s an Apple
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pay button or whether it’s just like a card field that really matters as well and like this is these are the sorts of conversations that we have with with
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with SAS Founders around how can you can you leverage your payments platform okay so that was that’s a great point in
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terms of um Market appropriateness of how to enable
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checkout conversion right so that’s what you just pointed out in China you want
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to use alipay in Brazil you want to use picks and you know these are different
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advices that you give to sth Founders what are some other conversations that you’re often having with SAS Founders
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yeah great question I think growth is a really important part of it and we’ sort of touched on that we’re also having a lot of conversations with SAS Founders
Compliance and Sales Tax Challenges
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around compliance so liabilities sales tax and compliance and I think if you
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think about like the pain of influence or the surface area of like a payments product right when you’re thinking about
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a liquidity event you have the growth angle which we just touched on I think there’s a data component so data
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reliability is an inor part as well and I think the last two I very much centered around liabilities and sales
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tax so making sure that you’re you’re all buttoned up from a sales tax perspective and making sure that you’re
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selling compliantly all over the world right and because you know payments and
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finance and revenue capturers you know riddled with compliance and regulation
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that is quite that varies around the world I can give you some great examples of that and I think when companies are
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are sort of approaching some sort of liquidity event or maturing in a way and and and doesn’t have to be a liquidity EV by the way like it can be anything
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but we have lots of conversations around I want to expand into the EU or I want to expand into this country like I I
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Google it and I see all these articles about law this regulation that and like I need you to help me walk through that
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and how can you best support me so that’s the other part of it let’s big I think okay and how do you help what does
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it look like for you to actually support these companies in the expansion outside of under understanding you know uh
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optimization of checkout conversion yeah so so pad’s a record what I mean the
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main value proposition of paddle right is that as a merchant of record we take
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up full liability for the transaction so this is why we’re very popular with high
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growth ambitious SAS companies who want to go and expand around the world without the additional overhead and
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compliance burden and sales tax burden of doing so so our model as a MIP record is that we are registered in in all
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jurisdictions around the world and we operate as the principle of the transaction and therefore we calculate
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sales tax and then we remit the sales tax before we pay our customers out right it means that you can sell around
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the world and don’t worry about it it’s our job to stay compliant right it’s our job to make sure that we’re adhering to
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local laws and regulations and changes in those things so you can sell around the world hassle
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right that Val by the way is is is probably the thing that differentiates par from like aely for example right
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like a sh doesn’t operate under AER reg you beat me to the punch yeah exactly that was gonna be my that was gonna be
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one of my questions I was gonna be like why panel vers stripe there you go so we win a lot of customers from strip right
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strap are an amazing company one of the most successful te companies ever at I I will say that every day right yeah but
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people are getting upset with stripe because of like all the holdbacks and you know things like that like holding
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you know tens of thousands of dollars from you know various different companies we see it a lot in the Ecom
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space I don’t I I don’t necessarily see it that much in the in the SAS space necessarily but for sure like yeah
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absolutely absolutely but I think like the whole area around Z tax and compliance it’s just a common area of
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ignorance for a SAS founder like like like if I’m running a SAS company I I don’t want to be waking up thinking
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about like have I calculated the run and out of sales tax in France I want to think about how can I make my product
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better how can I support my customers and make sure that they’re receiving value from from the product and how am I
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supporting the team that is you know Blood Sweat and Tears building the thing and supporting our customers I don’t
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want to be thinking about sales tax calculations and sales tax writtens all over the world it’s almost like you
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think of right you think of growth the conversation we had before as a thing that can push you right thing that can
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make you more successful give you percentage points in in growth that you may not have had otherwise but you think
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of like compliance and sales tax as like a headwind it’s a thing that stops you
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being successful it’s a thing that like pushes you back a little bit right so sales tax is one but there there are
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others as well like I can give you some examples Consumer Protection Law around the world is is getting much stricter
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yeah there are states in the US that are leading on this um the EU is doing a lot in this like California in
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in canel all that sort of stuff right yeah it’s a lot to keep up with right
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and in the US it’s at a state level in the EU it’s at a country level and then you throw in all the other countries around the world as well um so like
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could to cancel FTC us simplified cancellation process now in law yeah you
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got to adhere to that now lots of other states have what we call uh pre-billing requirements so if you have renewals
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that are running at like an annual cycle right people have subscription fatigue as hum who have subscription fatigue
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everything is like on a on a on a subscription now so um the governments are saying well you have to send
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reminders now before you’re going to renew and charge that person again and we’re going to make that a law right and
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then you have like again this isn’t like one state gets 14 days before renewal
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another state it’s 30 days before renewal in Germany it’s something different in France has something different right so how do you stand on
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top of all of that that’s another example of how the payments platform needs to support you staying compliant
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selling around the world successfully and how do you like you do you like does
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the platform itself like track those compliance measures and yeah like implements them like there’s like email
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flows like built into paddle for example oh that’s fascinating is that the case
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yeah yeah so all that is built into paddle and we have we have compliance teams here at paddle who are doing all
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of that so the 3,000 customers that use paddle don’t have to do that right so
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like we do a once and it applies to all of our customers so you inherit it by using the product got it okay what
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else um I’d say I’d say growth as we spoke about and compliance are probably
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the two biggest things I’d say and I think under compliance with sales tax and we got billing notifications and
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consumer protection the other one that I think is interesting is is the importance of data right data
Data Accuracy and Financial Health
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access like access to the r data and then also data accuracy and reliability
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I’ll frame like this right as a payment platform we see your Revenue before you
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do yeah like the money comes to us and this is the same irrespective of whether
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you’re with sort of paddle or Stripe Right as companies we we we pay our customers out like once we receive the
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fund we’ll pay you out on a cadus yeah so all of your Revenue data is sort of
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contusion on your payments platform right because usually most customers are
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taking paddle data and then piping it into their workflows like they might be piping it into metu or pping it into a
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Biol to sort of track Revenue right so so that data needs to be good needs to be accessible it needs to be accurate it
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needs to be reliable because the numers the life but of the business the revenue is the life but of business having a
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payments platform that you can trust has data that’s accurate and reliable is super important right and I think you
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know due diligence when you get to it if we’re talking in the context of an exit can
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uncover accounting errors this this isn’t my w house but like can uncover uncover a lot of errors in sort of
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financial records we work with a lot of companies on Revenue recognition for example right so are you calculating and
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doing ReRe properly again it’s something that early stage SAS Founders typically
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ignore you probably can get away with it early stage right but as you start to evolve and get more mature and bigger
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you definitely need to be thinking about Revenue recognition and making sure that like we part of or whoever your payments
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partner is is delivering delivering your data in a way that enables you to do your books in the right way is is is
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super critical and then I think there’s another lens to this which is the difference between performance data and
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financial data right I think performance and in the way I think about this is very much through the lens of the
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consumer or the the Persona so I think of performance data when we when we’re
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building all our metrics and analytics tools right from a performance perspective how’s your company going
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what’s your n Mr what’s your NR what’s your churn rate what’s your LTV where’s your CAC at right I’m very much thinking
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of more of a CEO Persona who wants to just understand Business Health and then on the financial data side you’re
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thinking more of a CFO Persona who wants the raw data the Raw numers transaction line items PP it into here
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make sure it all reconciles and matches and those two threads are both important right so I think a lot of SAS Founders
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early doors they focus on performance data because that’s the part that’s telling them whether their business is doing well and then when they get to an
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exit they go oh I need to get my financial data sorder like I hav’t really thought about how are all my
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ducks in a row from like a financial records perspective so yeah it’s CR spoiler alert they never are exactly
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exactly right so Financial dat suddenly becomes critical based on some other
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there’s usually a catalyst right sometimes it’s like oh I’ve hired I’ve hired quite a seasoned CFO because I’m
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ready for that or it might be like I’m raising a bunch of money or I’m gonna sell my company and it’s like oh God I
The Importance of Performance Data
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need to I need to get that in order run right and it hasn’t been a focus beforehand but it is a focus now whereas
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I think performance data typically is always Focus throughout the life cycle of the company and we see lots of
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companies sort of realize that they’re a little bit behind in this regard and start start chasing tail okay so talk to
Introduction to the Paddle Platform
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me about the platform itself and how the platform functions with respect to these
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things that you’ve mentioned specifically on the data piece how does it differ from other Platforms in terms
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of ensuring that SAS Founders have the reliable accurate data and and and what
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is the actual data collection and data display look like on the paddle platform
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sure sure so I think I I think I sort of alluded to this just then but we we very
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much think about the provision of data through the lens of financial data and
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through like Insight based data so how can we give you data that is going to
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help you generate Insight better right to help you understand your company what
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are things you think about it from like the CEO perspective yeah yeah so we have a we have a product called metrix you
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might have had a profit well profit well is a company that pattle acquired a couple of years back and they had a they
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had sort of best-in-class SAS metrics and that now works natively with P not
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quite natively but very close to works works with Carle and so Prov well gives
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you all sorts of stuff across Mr churn AR LTV all the classic SAS
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nrr coo analysis segmentation being able to drill down into sort of segmentation
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based on geography based on different code Boards of customers etc etc and that is a really powerful tool to
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understand the help of your company and that’s that’s available with paddle so you you get that out of the box right you create a c you create a cuddle
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account you have a metrix account as soon as you plug paddle in and you start you implement paddle or you’re
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using paddle to capture payments all of that data just flows through seamlessly you open the dashboard and you see all
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your numbers there you can sort of gauge how your business is performing really useful from from from sort of a
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performance and and and Business Health perspective we then have what you probably call financial reporting Which
Financial Reporting and Data Accessibility
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is less about displaying you one Mr figure and giving you all the data that
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went into that figure so it’s like if you want to give me a transaction report show me every single transaction in a
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given time period like a balance sheet so on and so forth so you’re downloading
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reports and you can access so it’s almost like Quick Books built into paddle I probably wouldn’t go that far I
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think I think that would probably be this a little bit misleading because it’s not an accounting platform but what
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it what it will do is give the data that you can feed into an accounting platform so if you’re using Quicks QuickBooks or
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zero or you’re using net Suite right our apis will just pass all the data in there like you know and and and most of
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our customers will set that up right when they when they join paddle so that data getting all the transactional sort
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of line out and level data in the right format and then we’ll also do things like like payout payout reports where
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when we pay you out we’ll tell you how much money you made and all the different like all the fees that paddle to along the way and like FX stuff like
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how we calculated vant exchange rates all that sort of stuff so basically like all of the underpinning raw data that
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you need access to in order to run your company um and you can you can access that through API so just by calling our
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apis and ping that directly into an accounting platform of sorts or you can
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download reports like lots of customers just download csvs and get the raw files and manipulate and go about their
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business so I think I think it’s really like for us it’s about and and again like pel isn’t a colic platform by by by
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no means we’re still evolving and getting better and and and providing more for our customers but data
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accessibility um is is is a big theme for us like making sure that we’re giving giving the amount of data that
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that that our customers desire and then also performance data and there might be there might be one more which
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is we’re not really there yet as a company um to be very candid but it’s more around benchmarking data so okay
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how can we how can we help you better understand like we’re you need this figure is that figure good or is that figure not so good or how can I be doing
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better is there more upside is there not much more upside like am I maxed out on checkout conversion like what do I have
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much more to play with from a checkout conversion perspective or do I not and I think we’re we we’re still maturing in
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that space and that’s something that we’re we’re really interested in moving forward let’s drill into that a little
Benchmarking and SaaS Index
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bit like uh it sounds like you have some good insight to share on the benchmarking piece in terms of you know
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maxing out on conversions and so on and so forth how do SAS Founders yeah like
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what do SAS Founders need to know about that that you could potentially share with them that would be valuable so we
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have something called the SAS index that we publish which tracks basically
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Aggregates data from all about three three and a half thousand customers
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around the world and it’s actually a lot more than that who use metric so you can use our metric product without using
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paddle so actually like powering metrics we have more like 20 25 30,000 customers
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who who who wear seeing all that data so you can use metrix with SH if you wanted to the offering with paddle is better
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but you still can so we so we have a lot of data on the performance of software cies around the world that we’re sitting
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on everything from sort of growth rates basic Bally like like are you are you
29:00
growing at at at the me or the meeting are you above or below for a particular segment or type of customer that’s
29:06
really interesting sometimes um SAS companies might get dips in growth and
29:14
they might think what am I doing wrong and you know the SAS index might be a be oh there’s actually been Global dipping
29:20
growth because of the macro and and you know that that’s that’s that’s useful information to have and you can sort of
29:25
Benchmark yourself whether your your growth is dips more or less than other than other companies that are similar in
29:31
size and stage and type to you I think that’s interesting I think things like payment acceptance are really
29:36
interesting as well so um payment acceptance uh around the world varies
29:43
massively and there are lots of inputs into payment acceptance and like you know you might have a s a SAS company
29:49
that has global payment acceptance of 76% and you might have another SAS company that’s at 66% and you sort of
29:55
want to sort of Benchmark whereever you at um against other companies checkout conversion is a good example as well so
30:01
I think checkout conversion is a really good sort of barometer for like your buying experience like are you when
30:07
customers land on your sort of payment flow are they going all the way through the payment flow and succeeding what’s
30:13
the average checkout experience conversion rate that you would say I don’t want to put you on spot in terms
30:19
of metrics but yeah it’s not really a metric that I mean you have to drill down into sort of
30:26
size and type and stage of company because like there are so many variables and that’s the tough thing with this
30:31
data is that there are so many variables right um so I don’t have I don’t have a
30:36
number off the top of my head that’s okay that’s okay we think about we think more about movements in check back
30:42
conversion than aggregate numbers so like your check conversion was
30:48
24% and by turning on thing X or by localizing currency or by offering
30:54
payment acceptance we’ve seen a 10% increase you know we had a company who were selling into China to you an
31:00
example and their revenue in China went up by 9x just by deploying Ali payers a
31:09
payment method their Chinese Revenue 9x and that’s because Chinese buyers were
31:14
landing on their website and going oh you don’t take Ali T not interested and falling off or dropping off the buying
31:21
experience and as soon as you you you you provide the local payment method conversion through the buying experience
31:26
or conversion through the check out goes up that’s a lot more money for you so
31:32
that I’m using I’m using a Revenue data point but it’s because of the checkout conversion that their volume their revenue volume increase by 9x yeah I
31:39
mean 9x is not a small amount of increase I think you know that’s an
31:45
example where if you meet the market with what the market is looking for you can you know get exponential results and
31:51
you could think that maybe the market wasn’t working for you and then you
31:57
tweak or adjust just you know something as simple as you know just using the
32:02
payment experience that people are looking for and all of a sudden the market works for you so people could
32:08
want the product but it’s just that you’re not you know creating the the channel for them to to get to get the
32:15
product the way that they want to yeah and another good example is um so South Korea is another good example we
32:20
deployed some functionality in South Korea um early this year where we offered a South Korean payment method of
32:27
offering and and since then um I’ll throw some numbers at year that I’ve got increase in checkout conversion across
32:34
all the customers who are now using those South Korean payment methods has gone up by between 2 and 8% and buyer
32:40
adoption which is really interesting is now at 70% and that means
32:45
that 70% of South Korean buyers are now choosing to use those payment methods
32:53
that are specific to South Korea and the other met to throw in there is that off rates have increased
32:59
by about 20% which is like if you that the the the rate of authorization of
33:04
that payment I.E you know when you hit pay and it goes payment succeeded or payment failed succeeded that that’s
33:10
basically your off rate has gone up by 20% so you can see like the upside is huge if you do it right and if you
33:15
deploy this stuff in the right way fascinating what other stories like case
Case Studies and Success Stories
33:21
study stories do you have for me about how paddle has been a facility
33:28
of growth for various SAS companies we have trying to think off the top of my
33:33
head um I definitely got like examples I I I can’t throw bigas at you off the top
33:40
of my head but I’ve got some examples of companies who have deployed our retention software which we haven’t
33:46
really spoken about yet um to help them capture loss Revenue so oh you have a a
33:51
turn prevention yes into paddle as well it sounds like you do everything yeah yeah
33:57
do a lot it’sit the surface area of the product is quite big but it’s great um so with the wind
34:03
there is actually there there’s a company they use as battle that um we recently did a case study with um you
34:09
can find on the website if you go to our website we have lots of case studies um who increased their retention rate by
34:17
25% just through capturing pay like through through payment recovery basically and through fou payments that
34:24
they will that like our system will retry fou payments um intelligently um which is super
34:31
interesting and you’d be blown away by how many how many payments you capture thereafter there’s so so many reasons
34:36
why a payment can fail right and you know insufficient funds is one decline
34:42
code but there are so many decline codes sometimes the banks just decide yeah not not taking that payment for a reason
34:48
that is even unknown to us as a payments platform so it’s a bit of a black box um
34:54
and it’s really important to retry payments after renewal period um so the
35:00
the tool that we have helps or does that on behalf of our customers and recharge those payments we also have um things
35:08
like cancellation flows so the product is called retain and you can use retain
35:14
to deploy cancellation flows that are that are best inclass cancellation flows so if you have a cancel button in your
35:21
app which you should because it’s you have to and you can trigger a trigger trigger a cancellation flow we have
35:27
office so things like turn optimization which is basically using data to decide
35:33
when best to trigger like an upsell opportunity or or or a shift from like a
35:38
monthly plan to an annual plan to drive LTV so there’s lots of really interesting leads you can pull in our in
35:44
our retention tooling as well and we’ve got some really good case studies that have sort of helped companies increase
35:49
their retention rates by 20 25% what do you think is the coolest thing about the plat what what are you
35:55
most excited about about the paddle platform oh that is a good question that is a
36:01
good question I think what I’m most excited about
36:07
is the fact that there are like I’ve listed off and spoken about a lot of
36:13
leavers for growth but I think what I’m most excited about which we’re working on right now is how we can more
36:22
intelligently and more automatically help customers grow their businesses through datadriven insights and
36:29
recommendations so by being able to use our enormous data set right of of of
36:36
payments and Revenue data to make really smart recommendations to our customers
36:42
um that can help them grow I’m not one for AI washing but I think that the technology that’s now available um to us
36:50
and to many companies to to really do amazing things with with data and
36:55
intelligently help our customers grow is super exciting so I think it’s like building on top of of of of what we
37:01
consider to be a foundation um and and and really supporting the growth of our customers in the future got it so it’s
37:08
like um you know the 3,000 plus paddle customers because of all the data that
37:14
you have you know um in terms of buyer
37:20
Behavior you can make recommendations to your customers through your platform
37:26
itself like hey you should offer a 20% discount code to your uh to your
37:31
customers because this subset of your customers will absolutely convert at a
37:38
annual pricing plan right now they’re on a monthly pricing plan plan but if you give them an annual pricing plan with a
37:44
20% discount you’ll convert at a much higher rate for example spot on spot on yeah well all by going listen like at
37:51
that price point your checkout conversion is too low which indicates to us that your price is too high try
37:57
dropping your price by a dollar or $150 and we expect your checkout conversion to go up by 15% netting out a positive
38:05
Revenue upside of like $10,000 a month or something like being got to just automate the delivery of those
38:11
recommendations to our customers or willingness to pay in purchasing power is shifted in Southeast Asia we
38:17
recommend that you know in Vietnam or Thailand or wherever like you adjust your pricing by x% or you can click this
38:24
button and we’ll do it all for you right I think I think that’s very much like the way we’re thinking about the future
38:30
and about really helping our customers grow very cool so I mean you guys work with like 3,000 customers right so what
38:37
are some trends that you see in the space with respect to you know various
38:43
Founders um that you can speak to and when I say trends like what are you
38:48
seeing that works what are you seeing that doesn’t work yeah either one can
38:54
would be great yeah I think I think the one that jumps to mind is usage based pricing is a really interesting Trend so
Trends in SaaS Pricing Models
39:01
I think I think with the with with with AI companies we’ve in
39:07
a big shift towards like charging based on or billing your customers based on value and based on what you’ve consumed
39:13
in the product so I guess it’s like this shift away from like the good better best plan model where you have like the
39:19
S the pro and the premium right sort of pricing and billing mechanisms that are
39:24
much more closely tied to the value that you’re receiving from the product so price invas on consumption is what we
39:30
call it or Meed billing or consumption based billing or usage based billing this is a really interesting Trend I
39:35
think at the moment I think especially I mean it’s been around for a while right like things like AWS have always sold on
39:40
that like you buy credits and then you you based on the consumption of the credits how you build but I think more
39:46
and more companies are shifting to sort of that real usage based value based pricing um which is interesting I think
39:52
it works for some I don’t think it works for every company one of the drawbacks of of of us based pricing is that it’s
39:58
less predictable so if you’re budgeting like if you’re a CFO or if you’re managing a budget and you’re you’re
40:05
buying lots of products that are all usage based you can’t sort of easily predict exactly how much you’re going to
40:10
spend with vendor X or vendor y so I think it’s it’s something that you have to be a little bit careful and clever with and we’ve seen we’ve seen sort of
40:18
companies deploy like hybrid monetization techniques I think that’s another Trend which is like really
40:23
thinking about building a different pricing models into one core offering so you know good better best 20 20 bucks
40:30
50 bucks custom sort of model of going like actually you know what you can get you know you pay $10 a month for access
40:36
to the platform and then you might buy credits for additional pieces yeah like do you sign like smashes me with these
40:44
with this model because I’m like sending out you know I have my typical plan and
40:50
then they they’re their pricing was like fascinating I have you know my annual subscription and then I hit the number
40:56
of envelope on my annual subscription and they were like well if you move to well it was monthly and then they bumped
41:02
me up to annual to give me like 40 more envelopes and then I ran out of those four envelopes and then they were like
41:09
well you could buy a minimum of a 100 envelopes yeah yeah exactly I think one
41:14
of the really interesting things about this is not making it too complex I think one of the big big drawbacks of or
41:22
tradeoffs of going too deeply into like a complex hybrid monetization model is
41:27
that it can turn consumers off when they’re staring at your pricing page going oh I just don’t get it this is too
41:34
much for me right um so it’s about that balance right getting that balance right between Simplicity and like
41:39
consumability of your pricing model with something that’s going to maximize monetization for you as a company is
41:45
really interesting totally I mean it was also annoying in that in that experience too because when I bought the monthly
41:52
plan I didn’t think about what would happen if when I ran out out of those
41:57
envelopes and then I didn’t really have options when I ran out of the envelopes I was forced to go through docu signs
42:06
like pricing model and follow the pricing model but then I was annoyed I was like okay well I’m going to keep
42:12
bumping up against this and now I’m like kind of getting extorted yeah yeah yeah yeah absolutely
42:19
really interesting does the paddle platform have any
42:24
functionality because I think you know this this concept of of pricing model
42:30
and intuitive pricing model is like so important for SAS companies so you
42:36
mentioned this like new feature functionality that might improve like conversions for example based on on
42:42
pricing models but will it address this specifically like will it say like okay
42:48
hey you know SAS company if people use your product up until this point then
42:53
you can charge them this and then you should think about charging them like this at that point so it will do that
42:58
those things too I mean I’d love to see that I think it will at some point it doesn’t yet but that’s definitely the
43:04
vision right to have to have that level of sort of sophistication built into the product like the platform itself is very
43:10
flexible so you can deploy most pricing models using paddle just by using our apis right and it’s it’s not super
43:17
complex to do we have great developer documentation that helps developers through like deploying different pricing
43:22
models and and I we the way we work with our customers is very much much as growth advisors like we want to help
43:28
them get the most out of their business and get the most out of p and help them grow and so we’ll often advise on that
43:34
right I think I think productizing that sort of channel of advice is going to be interesting but like we definitely work
43:40
with our customers on like based on your product like how should you be thinking about pricing how should you be thinking
43:45
about building out your different packaging for your product and and and and what sort of model should should you
43:50
be deploying so yeah it’s definitely something that we do a lot of for sure who should fast Founders talk to on the
43:56
paddle team about getting access to these you know various benefits is it just their customer account manager like
44:04
yeah yeah true the CSM team and customer success team who who support our customers we run lots of webinars as
44:10
well so we do like Ono one stuff and also one to many stuff one of our one of our core core sort of principles of
44:16
paddle is to be the most helpful brand in SAS and it’s e that for the last few years and it’s something we really
44:22
believe in so um we want to give as much to the SAS industry as we can we do that
44:27
through content we do that through webinars in in in the one to many sense
44:33
we publish things like the SAS index which have Aggregates data but we also do it on a onetoone basis as well with
44:39
customers um through our through our customer success team to make sure that that they’re getting they they’re
44:44
getting the most out of tile and and and setting up that business for Success got it I like one or two more questions for
44:52
you I kind of already asked this one um but yeah predictions for 2025 for the
44:58
market for you know the SAS Market I’m just curious I think I think um SAS in
Future Predictions for SaaS and Paddle
45:05
2025 is gonna have a good year I’m I’m I’m bullish on 2025 um I think it’s going to be better
45:11
than 2024 I think we’re going to see a really big evolution in pricing models
45:16
um I think we’re going to start to see companies deploy pricing models that we haven’t seen before um I think I think
45:22
this typically comes in like you know the sort of innovation plateau and then it kicks up again I think I think you know we’ve been in a in a world where
45:29
SAS is relatively mature and the way you price price SAS has sort of been more or less the same for the last sort of three
45:35
or four years I think we’re about to I think it wouldn’t surprise me if this year in 2025 we see like the next
45:41
evolution of sort of pricing for for SASS and software I think AI is going to drive a lot of that I think like agentic
45:48
AI like agent driven Ai and agents performing tasks and how do they bill and charge for those things had a great
45:54
conversation with a guy yesterday about that I think that’s going to be interesting so yeah I think I think good year for S and I think um we’re going to
46:01
see uh a really interesting evolution in in in pricing models this year and then
46:06
as VP of product what can people expect from paddle in 2025 that maybe they
46:12
didn’t get in 2024 you know before that sure sure lots of new payment methods
46:18
this is going to be a big year for us from a payment method offering perspective um we have quite a few
46:23
payment methods um that we built over the last nine or 10 years of PD existence I think we’re going to double
46:28
it in one year is my prediction so so sort of increase that number of payment methods by a lot which I’m I’m really
46:34
excited about I think that’s been something that has been asked for for a long time for our customers so really
46:40
leveling up on localization and payment methods is super exciting um I think
46:46
we’re gonna I think that’s probably something that a lot of my customers will really like to hear and I think the growth pie the growth recommendations so
46:52
using using data and insights to to generate growth opportunities for our customers I think we’re working on a lot
46:58
of that now I think you’ll start to see that one I know you’ll start to see that come into the product over the course of
47:04
the year it will start small you’ll start to see small interventions and it will grow into something more
47:09
sophisticated but I think that’s going to be really exciting as well and say those are the two things I’m most pumped
47:14
about more localization more payment methods expanding our Global offering and then also really getting into how
47:21
can we help help our customers grow um in really unique and interesting ways
47:27
awesome man um this has been a really insightful and valuable conversation I’ve definitely learned a lot um I had
Final Thoughts and Contact Information
47:34
no idea that yeah the that a payment provider could be like so robust in the
47:40
the ways that they you know work with their customers to just increase growth and you know really be a supporter of
47:46
growth in that way and I very much see it so I really appreciate your time and and for jumping on the show with me is
47:52
there like a any last kind of message you want to leave SAS founders with or
47:58
anything you feel that uh they should know that maybe we didn’t cover so far no I think it’s all good thanks very
48:03
much for having me on the show it’s been great I think the only thing I would leave with is like as I mentioned before we we want to be the most helpful brand
48:10
in SAS so please don’t hesitate to reach out to me on LinkedIn or X or wherever
48:15
or contact anyone from paddle we embrace the Sass industry with open arms and we really want to help and learn from you
48:20
as well so yeah thanks for having me on it’s been awesome absolutely Lucas thanks so much for everyone else out
48:27
there uh his contact information will be in the show notes below as usual if you’ve ever seen the show it’s how it
48:33
goes but um and make sure to reach out to him and if you’re watching uh please
48:38
make sure to subscribe like comment let me know who else you want to see on the show or if there are any topics that
48:45
you’d like for us to cover and as always see you next week