Magazine article CRM Magazine

Will Price Win the Battle for the Customer?

Magazine article CRM Magazine

Will Price Win the Battle for the Customer?

Article excerpt

In an industry that preaches to companies "sell on service, not price," price points are becoming hotly contested as hosted and on-demand offerings multiply. Articles Editor Joshua Weinberger asked industry experts if a price war is looming--and, if it comes, what vendors might do to differentiate themselves and their services.

* Sheryl Kingstone, program manager for CRM strategies. The Yankee Group "While we will see many entrants at a lower cost, it is too soon for a price war and not in the best interest of the industry.... I am not seeing enterprises make [hosted SFA] decisions based on lowest price. I believe we are still in a value-selling mode since there are distinct differences between vendors."

* Mike Doyle, CEO, Salesnet "CRM is too critical a business strategy to be determined solely on price. Companies don't build repeatable business on discounted software. As a result of low barriers to entry, everyone and their uncle has leaped into the on-demand CRM space.... Companies that can't deliver mature technology and sophisticated infrastructure offer price slashing as a way to get noticed."

* Michael West, analyst, Saugatuck Technology "In today's buyers' market there is no substitute for price. Differentiation and custom service have not regained their appeal.... [Vendors] have to price aggressively to buy market share over the next six to twelve months, or else face elimination from the market. We expect to see the leading CRM vendors make acquisitions as hosted and on-demand CRM vendors begin to fall by the wayside."

* Erin Kinikin, vice president, Forrester Research "Low-cost, hosted CRM solutions often just mean a lower cost of failure.... Vendors that add results metrics, quarterly best-practice health checks, ease-of-use features like Outlook integration, and prepackaged customization and integration for specific vertical industries will be the long-term hosted CRM survivors. It's not about price, [but about] value for the price."

* Michael McCloskey, CEO, Front-Range Solutions "A price war in hosted CRM applications definitely is looming.... But [small--and midsize-enterprise] buyers value choice over price, because flexibility drives return on investment. [When] products are based on a common platform ... companies can migrate easily between an on-premise or hosted solution; they can also have a hybrid solution that captures the best of both worlds."

* Chris Selland, vice president of sell-side research, Aberdeen Group "A price war would be both stupid and self-defeating. …

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