Salesforce.com: Price Pushback

Salesforce.com customers laud the company’s namesake customer relationship management software for helping them improve sales and customer service practices. But they’d also like to see Salesforce work on a new pricing model.

R.L. Polk & Co., which provides marketing data to car makers, was one of Salesforce’s first users. In 2000, despite being a market leader, Polk had become complacent with customer service, says Wanda Dembeck, Polk’s vice president of global initiatives.

Sales leads were held in individual Rolodexes and Excel files, with no sharing. Records of customer complaints were managed the same way. This created an environment where, Dembeck says, “Management couldn’t manage.”

Polk needed a CRM system, and Salesforce.com was the answer. With the hosted software, Polk’s technology staff didn’t need to worry about maintenance. The company deployed the software in a few months; implementing an on-premise software system could have taken four times longer, Dembeck estimates.

Since deploying the tools, repeat customer complaints have dropped 75%, Dembeck says. And, she adds, customer service has improved: Positive responses by car makers to Polk’s service rose to 87% in 2006, a six-point jump from the previous year, according to internal surveys.

Speedy deployment also appealed to Hernan Vera, marketing director for transportation firm Ryder. In 2004, Ryder’s sales pipeline consisted of an Access database, with individual spreadsheets containing sales leads and deal figures being uploaded at various times. “There wasn’t even a stepping point to aggregate any customer information,” he says.

Ryder didn’t do an exhaustive vendor search; instead, Vera and his team were won over by analyst reports on Salesforce.com, boasting about its ease of use and quick time-to-value. Deploying Salesforce to its initial 150 users took a matter of hours; he says an on-premise package would have taken several months.

But those customers say Salesforce’s pricing model could be improved. Dembeck says licenses for account managers, who use the software every day, and accountants, who use it less often, cost the same.

Dembeck, for one, says she’d like to see Salesforce cut prices for casual users.

Dan Chiazza, director of global sales operations with research firm Harris Interactive, thinks a tiered license structure could actually be more lucrative for Salesforce. Then, the vendor could avoid having users pull reports and send them out in a separate format, like Excel, to give access to non-users who need to see the information.

While all customers interviewed agree that a tiered pricing model would be advantageous, none say its absence is enough to make them jump ship.

Salesforce advertises monthly costs starting at $65 per user. Some long-standing customers say the vendor cut them a deal below the sticker price, though they wouldn’t give exact figures.

Bruce Francis, Salesforce’s vice president of corporate strategy, stressed the vendor’s efforts to listen and quickly react to customer requests. Still, the call for a new pricing model was news to him: “I haven’t heard that specific thing from a specific customer.”