Anyone who’s looked into buying sales software or marketing software has probably been pretty surprised by the cost of these systems. It seems like every CRM, marketing automation system, even some email marketing tools are priced in such a way that most small and mid sized companies can’t (or don’t want to) afford them.
I won’t mention them by name but you know the systems. They’re the ones that cost so much that it makes you think twice about adding new sales people because you have to add them to the user count. Or maybe you have to decide if your marketing team really needs one more person accessing the system.
This is a problem for small and mid-sized businesses
The problem here is that no one is better served by the force multipliers that sales automation and marketing automation offer to revenue growth than small and mid-sized companies than small and mid-sized businesses. The lousy thing is that they’re the ones being priced out of the market.
And why is that? Because all of these systems (at least the ones we’re most familiar with) are priced – at least partly – on a per user basis. That means that every new person you add to your team adds to the cost of your software.
That’s just not right.
Your software should absolutely not be holding you back from adding people to your team. Fortunately there are other options (ahem – Mission Suite – ahem) that don’t charge on a per user basis – and never will.
So why shouldn’t you buy per user sales software and marketing software?
There are a number of reasons that “per user” sales software and marketing software systems are a bad idea. When it comes down to it, though, they all come down to the same theme…they’re usually a bad business decision.
You see, per user systems are great for the sales software provider – it’s an easy way to create a predictable revenue forecast early in the sales process. If I’m selling you a software system based on the number of employees that you have working in your sales and marketing teams then, with some simple research, I can tell quickly and easily how much I’ll be making from your account every month. I don’t even have to have a conversation with you – a quick search in Hoovers or some light referral mining on LinkedIn will tell me most of what I need to know (within an acceptable margin of error).
As a sales person, this is a great opportunity for me to target only the prospects “worth my time”. As a sales leader or company executive, it allows me to focus my people to make sure that my forecasts are what I need them to be.
Now we can’t fault these vendor companies for creating a revenue model that seems to work for all involved. We’ve been operating this way for years – going as far back as the original versions of Microsoft. And probably even further, if we thought about it.
But here’s what it means for you as the consumer
You end up spending a lot more money than you have to – or probably should – on the sales software and marketing software that helps your team and your marketing team function at peak performance. Your sales team needs sales software, but you shouldn’t have to think about an extra software cost every time you want to make a new hire – after all, who knows if that new hire will perform? If they don’t you’ve wasted even more money and are stuck with that license for the term of the contract.
So what’s the alternative to typical sales software pricing models?
Just because we’ve been conditioned to accept the per user cost structure of sales and marketing software doesn’t mean that we’re stuck with it. Creating pricing that’s based on the size of your database typically ends up working out a lot better for the business. Here are some of the reasons that I’ve been able to identify based on my experience.
It’s more in line with the way that your company actually grows.
As much as we like to talk about growth based on headcount, your business really grows through sales. How do we increase our sales? By increasing the number of people that we’re actually talking to – also known as the size of your database.
You don’t have to worry (as much) about non or low performing sales people
I alluded to this earlier. As your revenue grows, your headcount does as well, there’s no denying that. So let’s say that you’re in a position where you have to grow your sales team by five people to keep up with the awesome work that your marketing and service teams are doing to create all of this demand.
When you go out to hire five people that will ultimately be with the company for years, you’re almost certainly going to end up with more than a few people who aren’t going to make the cut. So let’s say you hire 10 sales people with the goal of keeping five of them.
All 10 of those sales people need access to your sales software so that they can do their job. The problem here is that on top of whatever you’re paying those sales people, you have to pay for a CRM license for each of these folks as well. If they all perform – that’s awesome, the extra money you spend on those sales software licenses is nothing. If they don’t (and odds are not all of them will), you’ve wasted that extra money on sales software and marketing software.
Sure, it may not be a lot – but it’s salt in the wound.
With a system priced on database size, those extra sales people don’t cost you anything until they start performing.
You save yourself money and a headache, and your CFO will love you for being prudent.
There are always people on your team who just won’t use it
No matter how diligent of a sales team you’ve hired, in my experience, there’s one consistent truth:
Sales people don’t like data entry.
Sales people are designed to make connections and find opportunity but when it comes to data entry we’re pretty lousy. As a result, you’ll always have some members of your team that just won’t use those systems you’re paying for. But you still have to pay for them.
If you’re working with a system that is priced on a per user basis then you’re not paying for those sales people on your team that don’t use the system – only those who are actively adding people to your database.
But here’s an exception to the rule
I’ve been writing in generalities here because this has been my experience in almost every case that I’ve come across. On rare occasions, though, I have come across clients that are actually better off using a price per user system.
See, the only benefit to a price per user system is that it usually offers you an unlimited database size. There are certain situations wherein the size of your database is not directly proportional to the size of your sales team so, if you’re a small team with a massive database, it might be better to go in that direction – if you don’t need email marketing software or automation to go along with it.
The one time I’ve seen this exception in play
I was brought into a conversation with a two person recruiting team using Salesforce to manage their database of applicants. Over the course of the years, they’ve racked up a database size of almost 4,000,000 contacts. Obviously, this is a a drastic exception and not the rule but, in that situation, they’re better off with a per user system.
The pricing model
Setting aside the exception, the pricing differences between a per user model and a database model can be pretty astounding.
Let’s look at a mid-sized technology company with 10 sales people.
Each sales person is working a list of 1,000 people bringing their total database size to 10,000 contacts.
Under the per user model, here’s what the monthly cost of the system would come to
(I’m using the pricing of the most popular version of a well known SaaS CRM)
10 sales people x $150 per user = $1,500
1 VP of Sales x $150 = $150
CEO / Business Owner x $150 =$150
$1,800 per month
Now let’s take a look at the database model
(I’m using Mission Suite pricing as an example)
10 sales people x 1,000 contacts = $300
1 VP of Sales
CEO / Business Owner
The comparison here is pretty remarkable – and the savings are even more so. Saving $1,500 per month brings your annual savings to $18,000!
So what could your business do with an extra $18,000 per year?
At the end of the day, you have to do what’s best for your business
There are a lot of factors that play into the selection of sales software and marketing tools, I know that. Pricing is certainly a big one but functionality, usability and adoption are also important. I’m not telling you to sacrifice any of those simply because it saves money – sometimes it is worth spending more.
All I’m trying to do is tell you to take a good hard look at your options. While cost savings may not be the only factor you should be reviewing, it’s important enough to weigh options.
Find a system that offers all the features and functions that you need and is priced in your best interest.
Mission Suite brings the features of a CRM, marketing automation, email marketing and inbound marketing that you need to grow your business. Our pricing is based on the size of your database and will never be priced per user. We’re here to offer the force multipliers that can grow your business and make sure you can afford them.