Price vs Value

Although everyone this morning is talking about Paris Hilton and her release from jail, we decided to be mavericks and talk about somewhat of a different topic.

We recently met with the VP of marketing at a mid sized company who had invested over $250,000 in an email marketing/contact management system. He went out of a limb to get the necessary funding to purchase the new system and ended up blowing almost his entire quarterly budget on this one piece of software. The sales people he had worked with prior to the purchase promised him everything he needed - Easy to setup and track marketing campaigns that would seamlessly integrate into his existing CRM system.

Right from the get go there were huge problems. The system took forever for the vendor to install and configure and once it was finally up and running performance was painfully slow. The vendor recommended installing a dedicated server to resolve the issues, which after thousands of more dollars, and weeks more of work, only slightly improved the bottleneck. The first quarter came and went without a single email campaign being sent... From there things just went down hill. The user interface to the system continued to be slow, confusing, and did not allow marketing to customize the emails and web forms to match their corporate look and feel. The "easy to setup" campaigns turned out to be so difficult the marketing department had to offload large portions of the work to programmers in their IT department.

After almost 3 full quarters the first email marketing campaign was finally sent. Calls immediately started coming in. Some people were unable to read the emails, some people complained the opt out forms weren't working, and almost everyone agreed the website associated with the marketing campaign was incredibly slow. To add insult to injury, when the reports about the success of the campaign were finally ran, the data was definitely off.

For the next 6 months they continued to try and streamline the process, work the kinks out of the system, and find a way to capitalize on the rather large investment they had made. Unfortunately despite trying everything imaginable (including flying the vendor out for personalized 1 on 1 training) they were unable to find a way to make the software work for them. They had to make the hard decision to walk away.

A couple mistakes this VP of Marketing mentioned to us:

  1. He didn't involve his IT department in the decision. These people are paid for their knowledge and expertise in technology, but he failed to leverage their skills to help him make an informed technology investment. In retrospect there were several issues they would have raised the red flag on right away.
  2. Brand Recognition got the Better of him. Because the vendor who made the email marketing software also manufactured the CRM his company was already using, he assumed this product was the only logical choice.
  3. He didn't outline his specific needs. During the purchase process he never clearly outlined the details of exactly what he needed to accomplish and how his department was planning on accomplishing it. Relaying this information to the vendor and having them respond on the specifics of how their tool could accomplish these goals would have either given him insight into some of the shortcomings of the software, or given him ammunition for a partial refund when things ended up not working out.

The 4th thing that became clear during the course of our discussion was that he assumed any piece of software that was $250,000 had to be able to do the simple things he had envisioned, plus a whole lot more. He thought anything with that sort of price tag just had to be an enterprise class solution they would be using for years to come. He found himself making the unfortunate, but common assumption that the price was an indication of the value.

As a company, Big Step often runs into that same sort of thinking. Companies often wonder how our price tag is so much lower than other companies competing in the same market. They make the unfortunate assumption that our price is an indication of the value we can deliver. Normally after a quick discussion with them about how we keep our overhead low, utilize our time and resources efficiently, and leverage existing pieces of code, they realize that the value we can deliver (especially considering our price) is rather exceptional.

This story does have a happy ending. We helped work with this VP to find a new hosted email marketing solution that met all his needs. With a little integration work the new solution is now talking to their in house CRM software. Marketing campaigns are taking days (not months) for them to design, target and launch. Perhaps best of all the new solution only runs them a few hundred dollars per month.

If you don't want to fall into the trap of paying too much for your next technology investment, we encourage you to contact us over at Big Step Consulting. Whether you need an affordable website, desktop application, or just some cost effective technology consulting, we can help work with you to deliver an immense amount of value, without a ridiculous price tag.

Tags: Web Development , Consulting , Pricing ,

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