This email may be worth millions of dollars in sales

We were comparing two SaaS applications. One gave us a better quote, so we asked the second if they would match it. They wouldn’t, but their founder, wrote us an email explaining: 

  • Why their software is better
  • How their software would save us a lot of money and time 
After reading it, we immediately picked the more expensive choice.  I thought the email was so compelling that I wanted to share it as a great example of how to position a product for value vs. cost.  I've anonymized the company: 

Subject: Re: demo follow up

No worries...  short answer is no, we aren't able to compete on price against FooCorp.

The FooCorps's of the world have spent a couple decades now in a the race to the bottom and it shows.  I have no doubt you can get their product (or a whole raft of others) for a few bucks cheaper than us.

Our product, Acme, is different.  We're designed to help improve your'e company's performance in the critical area of XYZ.  The ROI on doing that is enormous.  

Now, not every organization sees the value in investing in XYZ.  I get that.  But if yours does, Acme is one of the most leveraged investments you can make.

Assume HelloSign does 5-6 transactions in the [XYZ field], that's going to run 300-600k per year (so figure this is a $1-2MM investment over 3 years).  The value of each transaction will be maybe 2-5x that if they're done well, whereas a bad one we know can actually destroy value.

On the cost side, great transactions churn over at less than half the rate of low performing ones - which means if you do a better job at XYZ,  you'll save 10's of thousands in new transaction costs as they stay longer.  And on and on....  

So ultimately if you think Acme will help you do this better - even just a little bit - the whole thing is peanuts.  The cost difference between our product and the others, even less.  

Look, FooCorp's customers are switching to Acme in droves because we're investing heavily in great customer service and innovation.  Those things cost money but, as we see above, they drive tons of value so the market is happy to pay.  

We'd love to have HelloSign on board as a customer and I'd be happy to have another chat with you or them if you think it would be useful.  Let me know!

Regards,
Acme CEO

The point is, instead of doing a price cut, it may be worth explaining why your product is worth more. This email will probably be worth millions of dollars over the lifetime of their company. 

Either way, he was right. The minor different in price was worth it. The product is amazing.

40 responses
but what's the product!? :) Thanks for writing this Joseph.
Yah what's the product lol
Leo Polovets upvoted this post.
The Product doesn't matter as much as the positioning. Great email, and thanks for sharing.
If I may, I am not really impressed by a sales tactic which consists of bad mouthing competition. How do you know for sure that customers are "switching to Acme in droves"? When I chose a supplier for the long term, I want to be able to trust him. How can you be sure that, when (and if) HelloSign decide to no longer use his product, and if asked about it, he will not just simply reply: "Oh well, that's because HelloSign are crap and don't know what's good for them?".
"FooCorp's customers are switching to Acme in droves ". This is the less impressive statement a supplier can use when trying to convice me. Mostly disqualifying.
This behaviour is terribly bad. If this is being purchased by a mature organisation with a mature purchasing department this would immediately be disqualified.
Not really anonymized is it? "Assume HelloSign does 5-6 transactions in the [XYZ field]"
oops, my bad. Didn't realize HelloSign is you. lulz
While I don't agree with directly bashing the competition in a sales email, it's implicit in all sales that if a product isn't cheaper it has to be better. It's tough to sell a more expensive & crappier product without extreme arm-twisting, which I've seen happen. The rest of his points are valid if they make commercial sense to you and tally with your own experience. I guess the lesson is that the supplier has to show they understand the client's business and the business imperative for using their product. They also have to be a brazen about explaining that to the customer or the customer will just pick the cheapest option.
Thank you sharing this.
Couldn't agree more. Last week, I sent a "WeMail" to my subscribers about this very topic - "Save time. Feel good. Make money." Read the WeMail here: http://chsweb.me/1p4pMgU
Loved this email! To paraphrase Seth Godin, when we participate in a race to the bottom, everyone loses.
I love it. What's really interesting, and I haven't seen it been mentioned anywhere, was the fact that you asked them to match the price, which to me already indicates that there was a strong desire to work with them (ie. I sense the message you were sending was: Someone else has beaten your price, but we prefer working with YOU, so can you match their price to give us peace of mind?). Which is extremely valuable for the context of the situation.
Quote: PRICE is what I pay. VALUE is what I get. -Warren Buffet
So many geniuses making comments... folks, entrepreneurship isn't for you if you don't understand the purpose of the article. Great example, well written.
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