The “Cost of Doing Business” vs. the “Cost TO Your Business”

A few months ago I was made wise about how jacks up its price for European customers. The fact that customers may pay up to 50% more shocked me, especially considering how SugarCRM does NOT have an increased price for EU organizations (in fact you could argue it costs less for some EU buyers).

Well now, more and more people are taking notice of this fact. IrishDev, a tech publication out of Ireland, has made note of the price differential for US and EU customers. In the article, notes that the increased cost is a result of the “cost of doing business” for them in the EU. This is probably true, and it is difficult for a US business to sell direct in the EU without seeing tax and other fees eat into margin. Thus, the SugarCRM model which leverages partners can help keep the costs low (oh, in addition to leveraging open-source and other methods of providing value and passings costs on to buyers).

We have great partners (like Provident’s CRM practice in Ireland and the UK for example) who are living testaments to the attractiveness of this model. By leveraging the cloud, open source and simply not looking to gouge customers – they have built a strong business for themselves.

But back to Salesforce and its issue with the “cost of doing business.” This situation reminded me of a lot of what has gone on in customer support over the years. What I mean is that customer support has always been a cost of business, ebbing and flowing as staffing and technology rise and drop in terms of margin. But most companies would not raise their price arbitrarily because the cost of a call center agent went up – they would just deal with the shift in costs internally. (I know this is a tough comparison with the Salesforce pricing, since so many US companies do charge higher prices in Europe – but I think that is beginning to end across the board and salesforce is a bit behind the times here.)

Social media is facing a similar issue. Will companies start to consider social outreach, marketing etc. a recognized cost of business, and plan accordingly? What needs to be done to mainstream the use of social platforms in all businesses – the way almost all companies have some sort of customer service operation.

And how to you rectify costs?  We are in serious need of some baselines, KPIs, and other metrics in order to standardize the deployment of social channels inside support (and even sales and marketing) organizations. Because while we are starting to recognize that social channels are going to be an accepted cost to doing business –  soon after we will see that not having a social strategy will prove too costly to our businesses.

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