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An Achille’s Heel for Competitors to Strike

A few days ago I blogged about how SalesForce.com’s contracts force you to pay for the maximum licenses you’ve needed instead of the number you currently need.

Let’s think about this from a SalesForce.com’s competitor’s standpoint. If I were a competitor of SalesForce.com, I would scream as loudly as possible that "Unlike SalesForce.com, our contracts allow you to downside licenses so you pay only what you need today, not the maximum you needed in the past!"

What do you think?  Do I have any takers?

6 Responses to “An Achille’s Heel for Competitors to Strike”

  • Bubba responded:

    You’re a remarkably transparent shill.

  • Mike Schinkel responded:

    Bubba,

    So I’m “a remarkable transparent shill?” For WHOM, would you say?!? RightNow, because I point to them?!? HA!!! Now that’s a nice one. LOL!!!

    No, ACTUALLY, I am an CUSTOMER of Salesforce.com via my company Guides, Inc. (www.guidesinc.com) I currently have ABSOLUTELY NO INVOLVEMENT WHATSOEVER in SalesNet or RightNow. I am just disgusted in many ways with SalesForce’s policies, know that SalesNet (purchased by RightNow) was very agressive in targeting SalesForce.com, and finally know that competition improves the breed.

    (BTW, the notice of your comment went to my spam folder and I didn’t see it until just now.)

    I would be very interested in hearing your response to this. I would also be willing to provide you any evidence you need to support anything I am saying. :-)

  • Tom Stefano responded:

    If you are a Salesforce.com Team Edition customer with 5 users and would like to add one more, you will be forced to upgrade all your users to the professional edition which means an increase of cost from $16.60/user/month to $65/user a month. Thatís an increase of %391 in subscription fees!

    Another good one: You canít mix and match editions. If you have 20 users Professional Edition, and need Enterprise Edition functionality for one user, you will be forced to upgrade all 20 to Enterprise Edition which is an increase of %191 in subscription fees.

    I can think of many others.

  • Mike Schinkel responded:

    Tom, thanks for your totally relevent comments. But I do have to correct you on one fine point just to be fair to Salesforce and give credit where credit is due. Their Team Edition customer can go up to 10 users for an addition $495/year as per http://www.salesforce.com/products/team.jsp

    However that page states the price is good thru 7/31/2006 which implies it might not be possible afterwards, so I don’t know if it is a one-time deal or not.

    But all your other points are totally spot-on. Bottom line, Salesforce.com definitely hasn’t figured out that they can get more flies with honey then they can with vinegar. Rather then try and trap their customers in a contract, they should allow their customers to come and go as they please and instead focus on making sure they customers want to stay.

    I notice you are with a Saleforce.com competitor SalesBoom at http://www.salesboom.com - You have my full permission and actually my explicit invitation to tell me and my readers more about SalesBoom and how it compares to SalesForce in the comments of this post, if you desire.

    I look forward to your comments.

  • Tom Stefano responded:

    Yes indeed you are right about the Salesforce.com offer to the Team Edition customers, but just remember it is an offer, and when they announced it a month or so ago, their stock price dropped by 7% in one day! So I do believe this offer was in direct response to other RIVALS, and I am sure they will not continue with it.

    http://www.marketwatch.com/News/Story/Story.aspx?guid=%7B55040310%2D1699%2D4911%2D899F%2D633B7CBA8250%7D&source=blq%2Fyhoo&dist=yhoo&siteid=yhoo

    I will blog again soon about Salesboom as you requested.

  • Tom Stefano responded:

    Oh, by the way 7% loss of Salesforce.com market cap is more than $170 million dollars lost when they announced the Team Edition offer!

    Tell me they will still run it again! :)

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