Here's a marketing guy quick tip for your sales staff, brought to you courtesy of a recent meeting with Salesforce.com regarding a price increase that they have decided to drop on our account.
If your business develops messaging to explain a price increase and that messaging doesn't land well with your customers, arguing with them in an effort to "help" them to accept your messaging will not make things better.
Balancing the Churn Equation
The bottom line with a price increase on an enterprise SaaS product is that it's an effort to manipulate the existing balance between mining equity from the business (for shareholders) against the retention equity of the customers. The big question underlying the whole equation is the availability of competitive alternatives and the cost to switch.
But there is an invisible part of the scale, hidden from the immediate balance. It's the place where the little things accumulate. Maybe it's dropped calls and disconnects for your cell phone carrier. Or that time at the restaurant when they got your order wrong. It's the little moments that begin adding up -- yet another brick in the wall -- building toward an opportunity to switch.
It makes for an interesting question. If there was a direct competitor to Salesforce.com with none of the traditional baggage of a company like Oracle or SAP -- say if Workday did CRM -- what do you think the landscape would look like? Would you switch?
While the 'viable alternative' question is a little hazy, one thing is clear. With many of it's business practices, Salesforce.com is very efficient at moving bricks into the desire to change side of the opportunity-to-switch equation.
I've going to write more about this whole price-increase thing in the next couple of days. This is just one brick.
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