Develop product strategy

Cadence: Next Year’s Strategy

To: CEO and Executive Team From: VP Product Decision: Make multi-location mid-market businesses our growth engine—not enterprise.

1. Diagnosis: Our constraint is focus, not deal size

I believe the enterprise-first plan is wrong for next year. Enterprise may become an attractive market, but our current evidence does not justify hiring ten enterprise AEs or orienting the roadmap around their deals.

Cadence has three materially different businesses:

Customers × average ARR.

Mid-market already generates 56% of ARR. It combines our best retention, strongest expansion, fastest acquisition payback, and highest gross margin, at 81%. A 61% win rate against our main competitor suggests a defensible product advantage. Expansion through locations and seats gives us a repeatable growth mechanism.

Enterprise offers larger contracts, but not yet a better business. Gross margin is 64%, the sales cycle averages nine months, and five of the last eight deals required custom development. Those five deals consumed approximately 70 engineer-weeks. Hiring sellers before fixing this delivery model risks scaling commitments faster than reusable product capability.

SMB is a different problem: substantial revenue with weak retention and disproportionate service demand. It generates 62% of support tickets; annual support cost averages $610 against $1,100 in ARR. Unlimited phone support on a $79 monthly plan is misaligned with self-service economics. A 4% trial conversion rate compounds the acquisition problem.

The central challenge is therefore allocating scarce product, engineering, and commercial capacity toward repeatable, retained revenue. Enterprise customization and SMB service demands are drawing capacity away from the segment where our model works best.

2. Guiding policy: Win multi-location mid-market

Where we play

Our primary customer is a mid-market business with hourly workers across multiple locations, where scheduling consistency, consolidated visibility, and payroll handoffs create recurring operational pain.

Our promise: make running the next location easier than running the first.

We will deepen that advantage and turn successful initial deployments into additional locations and seats. We will first target industries and acquisition channels where our own mid-market cohorts show the strongest retention and payback; the supplied evidence does not yet support choosing a specific vertical.

Enterprise remains a selective adjacency. SMB remains a supported, increasingly self-service business—not our primary acquisition investment.

What we stop

• Do not approve the ten-enterprise-AE hiring plan or a dedicated solutions-team buildout.
• Stop letting individual enterprise deals dictate core-team custom workflows.
• Do not commit to the entire enterprise feature bundle. SSO and audit logs must earn priority through demonstrated, reusable demand—not their “enterprise” label.
• Stop scaling SMB paid acquisition under current economics.
• End unlimited phone support as the default for new low-priced plans, while honoring existing commitments and managing any migration carefully.
• Stop broad roadmap work that cannot demonstrate a connection to mid-market acquisition, retention, expansion, or essential platform health.

We will continue supporting existing enterprise and SMB customers. Focus is not abandonment.

3. Coherent actions for next year

A. Build the multi-location growth loop

Product and Engineering: Give mid-market the clear majority of discretionary roadmap capacity, after reliability, security, and contractual obligations.

Sequence three connected capabilities:

1. Multi-location reporting: Give central operators visibility into staffing and hours across their estate.
2. Payroll integrations: Prioritize providers used by the largest share of our target accounts; reduce recurring payroll friction.
3. Shift templates: Make successful scheduling practices reusable across locations.

In Q1, validate scope with retained, expanding customers and establish adoption and workflow baselines. Release reporting and the first prioritized integration in the first half; expand integrations and template-based rollout in the second half. Measure customer outcomes and subsequent location adoption, not merely shipment.

B. Sell and expand the same repeatable product

Sales and Customer Success: Redirect incremental commercial investment toward mid-market rather than enterprise hiring.

Package a standard multi-location deployment, define onboarding milestones, and build expansion reviews around customers’ remaining locations. Align incentives with retained recurring revenue and successful activation, not bookings alone.

Increase acquisition spending in stages only while segment payback remains within our guardrail. Do not assume today’s economics survive unlimited scaling.

C. Repair SMB service economics

Support, Product, and Finance: Identify the largest ticket drivers in Q1. Improve onboarding and in-product guidance around those problems; test appropriately priced phone support and service tiers for new customers.

Pilot changes before broad rollout. Evaluate support savings alongside conversion, retention, and revenue effects. A lower ticket count caused by driving customers away is not success.

D. Keep enterprise as a bounded learning option

Sales and Product: Accept new enterprise opportunities only when they fit the standard product, require no bespoke core-team development, and meet Finance-approved deal economics.

Review enterprise quarterly. Reconsider a larger investment only after multiple customers buy and deploy substantially the same product, with improving margin and acquisition payback. One marquee logo is not proof.

E. Establish a shared economic scorecard

Finance: In Q1, reconcile acquisition costs, implementation costs, support allocation, and payback definitions across segments. Confirm whether support is already included in gross margin before subtracting it again. Track custom engineering separately so its opportunity cost remains visible.

4. How we will know it is working

These are proposed operating targets, not forecasts:

The executive team will review results monthly and resource allocation quarterly. Leading indicators are faster location activation, adoption of the new workflows, and expansion pipeline; financial outcomes remain the test.

The strategy is not “avoid enterprise.” It is “scale the repeatable business we have earned.” Mid-market gives us the strongest foundation for growth next year—and a healthier route into enterprise later.

Cadence: Next-Year Strategy

To: CEO and executive team From: VP Product Decision: Make multi-location mid-market customers our growth engine—not enterprise.

1. Diagnosis: Our constraint is profitable, repeatable growth

I think the enterprise-first plan is wrong for next year. Enterprise may become attractive, but our current evidence does not justify hiring ten enterprise AEs, adding a solutions team, and committing the core product team to enterprise features simultaneously. That would scale a motion we have not yet made repeatable.

Our strongest business is already mid-market:

¹Customers multiplied by average ARR.

Mid-market contributes approximately 56% of current ARR, has the best retention and margins, and expands through additional locations and seats. Its 61% win rate against our main competitor suggests a competitive advantage worth reinforcing.

Enterprise has larger contracts, but not better economics. Sales take nine months; five of the last eight deals required custom features, consuming approximately 70 engineer-weeks. Those deals impose an opportunity cost beyond their acquisition expense: the core team cannot simultaneously build bespoke workflows and improve the product that drives our best-performing segment. Enterprise NRR of 104% provides little evidence that expansion will compensate for that burden.

SMB is also not an efficient growth engine today. Trial conversion is 4%, annual churn is 34%, and SMB generates 62% of support tickets. Unlimited phone support on a predominantly $79/month plan is a service promise poorly matched to customer value.

We should validate how support costs enter reported gross margin and payback before constructing a fully loaded profitability model. But the segment ranking is clear enough to act.

The central problem is resource allocation: we are tempted by large contracts while underinvesting in the customers where acquisition, retention, expansion, and product fit already reinforce one another.

2. Guiding policy: Win repeatable multi-location growth

Where we play: Businesses with hourly workers operating multiple locations, within our existing mid-market segment. We will refine that profile by industry, location count, and integration needs using our strongest retained and expanding cohorts—not assume every mid-market customer is equally attractive.

How we win: Make it easier to run scheduling, time tracking, and payroll handoffs consistently across locations. Land with a repeatable implementation, then grow as customers add locations and seats.

What we stop:

• Do not execute the proposed enterprise hiring plan. No ten-AE expansion or dedicated solutions-team buildout next year.
• Stop allowing individual prospects to commandeer the core roadmap. Custom workflows are not a strategic product category.
• Stop optimizing SMB for signup volume while ignoring conversion, churn, and support burden.
• Stop promising unlimited phone support to new low-price SMB customers. Change existing commitments carefully at renewal, with notice and clear alternatives.

We will retain and serve existing enterprise customers and accept selective new opportunities that fit the standard product. Enterprise remains an option to prove—not the company’s organizing strategy.

3. Coherent actions for next year

A. Build the multi-location operating backbone

Owners: Product and Engineering

Commit at least 70% of planned product capacity to the mid-market growth loop and its enabling reliability work.

Prioritize the three requests supported by current customer evidence:

1. Multi-location reporting: Give operators a consistent view across sites.
2. Payroll integrations: Reduce manual handoffs and implementation friction; prioritize providers used by our target customers.
3. Shift templates: Make repeatable scheduling easier across locations.

In Q1, confirm priority and scope through customer research, usage data, and lost-deal analysis. Ship in staged releases during Q2–Q3, then use Q4 to improve adoption and remove rollout friction. Success means customers using these capabilities—not merely features released.

SSO and audit logs enter the roadmap only where they unlock repeatable demand from our target segment or address necessary security obligations. We will not bundle them with speculative custom workflows.

B. Align selling and customer success around location expansion

Owners: Sales and Customer Success

Reallocate growth investment toward mid-market rather than enterprise headcount. Increase selling capacity in stages, conditional on cohort payback remaining healthy.

Create a standard qualification and implementation playbook. Establish an explicit location-expansion plan for suitable customers, including rollout milestones, adoption checkpoints, and commercial packaging that makes expansion straightforward.

Track why we win against our main competitor and turn that evidence into positioning, demonstrations, and onboarding. Product adoption, selling, and expansion should reinforce the same promise.

C. Repair SMB economics without abandoning customers

Owners: Growth and Support

For new customers, introduce clear support tiers, reserving phone support for appropriately priced plans. Improve onboarding and self-service around the largest ticket drivers. Test packaging and onboarding changes before broad rollout.

Do not increase SMB acquisition spending until conversion and cohort payback improve. Existing customers receive a transparent transition, not a surprise withdrawal of service.

D. Put enterprise behind an investment gate

Owners: CEO, Sales, Finance, and Product

Require executive approval for exceptions, with engineering effort and opportunity cost recorded before signing. Prefer standard-product deals; do not hide custom development inside revenue targets.

Reconsider a dedicated enterprise expansion only when successive cohorts demonstrate materially improved margins, payback approaching 12–15 months, and wins that do not depend on bespoke core-team work. A handful of large bookings is insufficient evidence.

4. How we will know it is working

Finance will establish consistent cohort definitions and quarterly reporting in Q1. Our proposed operating targets are:

• Mid-market: NRR at least 120%; annual logo churn no worse than 7%; gross margin at least 80%; CAC payback no worse than 12 months as we scale.
• Competitive position: Maintain at least a 60% win rate against our main competitor, using a consistent opportunity definition.
• Product impact: Improve time to activate additional locations and adoption of reporting, integrations, and templates against Q1 baselines.
• SMB repair: Lower tickets per customer and support cost per customer, improve trial conversion, and shorten new-cohort payback without worsening retention.
• Execution discipline: Deliver the agreed mid-market capacity allocation and report every enterprise customization exception.

These are targets, not a revenue forecast. Finance should translate the strategy into a funded operating plan.

Bottom line: Next year should prove that Cadence can compound a repeatable advantage. Mid-market already shows that pattern. Enterprise currently does not.