Zoholics 2023

How Can Pricing & Billing Strategy Improve Retention?

Pricing can be a secret weapon. However, most businesses lack the preparation, knowledge, and agility to wield it successfully. Too many companies view pricing as an isolated business unit. They only raise or lower prices reactively, often in response to changing input costs.

Instead, imagine pricing as a gear that interlocks with billing and, in turn, customer satisfaction. As one gear turns, so do the others.

When dealing with pricing, companies are challenged by three significant factors: knowledge, agility, and strategy.

• To boost your knowledge, read Pricing & Payment Flexibility: A Strategic Business Tool. This research note provides an overview of the major pricing & billing models for recurring revenue relationships and describes their typical use cases, benefits, and complications. It also details (woefully underutilized) metering attributes and common payment methods that can be combined with pricing strategy.
• To boost your agility and strategy, read Developing a Pricing and Billing Strategy for Durable Competitive Advantage. This research note explores the relationship between pricing, billing, and retention. Adopting proactive, creative approaches to pricing can take the friction out of billing and power customer satisfaction.

Why it matters | Applied correctly, pricing differentiates a brand, accelerates growth, improves profitability, opens new markets, and reduces customer churn.

The bottom line | Rapid price experimentation is good – and must be done with the billing system in mind.

• Creating new pricing models can open a world of better business results.
• Ensuring durability and scalability of those results requires agile tools for finance, billing, and customer success.

Zoholics Austin 2023

• Several hundred Zoho customers attended the Zoholics user conference in Austin last week
• Founded in 1996, Zoho is approaching 100 million users and ~$1 billion in revenues (MGI estimates – Zoho is privately held)
• What is behind the success of one of business software’s largest but least known companies?

Under the hood | Zoho proves that small companies with modest budgets should not be relegated to buying tired, old technology solutions. Zoho is best known for its CRM and Zoho One products.

• It has an exceptionally broad range of offerings – from CRM and marketing to online collaboration to core financials and subscription billing.
• While “fit and finish” may lag, the reach of overall functionality impresses nonetheless.

It has an effective freemium-to-paid online sales motion. Once viewed as lightweight, its current CRM product is capable, runs without requiring expensive admins, and yields a high value-to-cost equation. The Zoho One suite provides a lot of features (financials, inventory, expenses, billing, et al) to run a small-to-midsize operation.

• Fortune 500 customers find Zoho apps attractive for single offices, small plants, and departmental use cases.
• With its own AI (“Zia”) and a sharp focus on user privacy, Zoho shows what is possible when a software company commits to constant innovation.
• It is investing in finance areas (like billing) that help customers differentiate their business.

With low sales and marketing expense, plus India-based R&D and support, Zoho sells profitably to small businesses – even though this segment is naturally prone to high churn. The US is its largest geographic market, but it also has a meaningful customer base in Europe, Africa, and Asia (especially in India, where its value prop has strong appeal).

Why you should care | Zoho is one of the most improbable success stories in application software.

• It received no outside funding.
• It sells almost entirely online.
• Its customers are predominately “value-oriented” small-to-midsize companies – and large, established brands.
• The company excels at bringing business applications and services to buyers across a wide range of verticals all over the world.
• It delivers comparable functionality to its peers, but for a tenth of the cost.

The bottom line | As one of the few enterprise application vendors focused on selling to small and midsize companies globally, Zoho addresses an underserved segment of the market. Zoho’s value prop excels in today’s value-driven buying market.