This email may be worth millions of dollars in sales | Hacker News Reader

This email may be worth millions of dollars in sales

josephwalla.com

I do this all the time, and it always works. Just today someone asked for a discount, and I wrote a similar email to this one, explaining why we don't give discounts, our products are great value, etc. I did offer them an extra 1 month trial for free, as they were just starting a new business, and they were very happy with that and will probably become a long-term customer.

I think people are just programmed to ask for discounts. However unless there is another product which gives them all the features they want for a lower price, they will almost certainly buy your product even if you don't give them a discount (as long as you're nice about it). The only time I would give a discount is if the person genuinely can't afford it, but that very rarely happens (as my prices are pretty reasonable).

Price is itself a signal of value. If a company is constantly willing to give deep discounts, it signals that they themselves don't believe that their value proposition is very good.

Quite a few companies refuse to offer discounts at all, or tie their discounts to some logical system (like discounting for volume). Over time this supports their own story about how valuable their product or service is. This is why you almost never see current-gen Apple products sold for less than MSRP.

For the engineers reading this: yes, it's pure marketing. But to survive, a company needs sales, and marketing helps achieve sales because humans are emotional, irrational creatures.

Another nice aspect of avoiding discounting is that customers who demand big discounts up front often tend to be pains in the butt when it comes to support. Being willing to let a few of those folks "get away" might be beneficial in the long run.

I would like to swap "people" in your sentence for "americans". It's a cultural thing, not a human thing.

Seriously? Bargaining, or discounts, in this example is very, very common all over the world. I have found Americans do less of it than in most parts of the world, such as China, Turkey, Thailand, Morocco, etc.

I've assumed that my experience is accurate and that it is more common in rural areas (where ad-hoc/informal barter systems still prevail) and poor areas that see significant numbers of (relatively) richer visitors (i.e. tourists).

In the latter case the price starts high (to catch the people who will just pay anyway) then the price goes down, or there is a bait & switch (the bargain item advertised in the window is sold out, could we interest you in this instead?), or both. Perhaps the poster above is conflating "loud, brash, confident tourists bargaining" with "American tourists" - a pair of populations that certainly do intersect though not as much as commonly held stereotypes would suggest.

It's actually the opposite: http://en.wikipedia.org/wiki/Bargaining#Regional_differences

Actually, it is mostly Indian customers who seem to automatically ask for a discount, and they generally aren't too bothered when they don't get it. As another comment pointed out, bargaining is a way of life in India, so this shouldn't be too surprising.

American customers usually have a reason for asking for a discount ("do you have educational discounts" or "we're just a startup").

Generally larger businesses don't ask for any discounts, although that could just be because my prices are low for them.

Larger businesses don't ask for discounts... before they purchase the product. They ask for discounts when it's actually time to pay up and they've started using the service.

Seem like pretty vanilla sales tactics to me. Even if choosing the more expensive company was the better investment, this is just rationalisation.

Some really good tips (I thought) for selling at a higher price than your competition: http://everyonenegotiates.com/selling-high-price.php

You should also write to the cheaper company. Or was the lesson supposed to be that writing meaningless platitudes like 'race to the bottom' is good marketing? Perhaps it is, but personally, I would feel insulted.

There's no worse assumption that cheaper product is worse, especially when it comes to SaaS. What if FooCorp has automated much more than Acme, and even with lower prices actually has both better profits per sale and better functionality?

Sure, FooCorp should work on their marketing, but that's in their interest, not yours. A perfect company from the customer's PoV is one that is almost unknown, provides the best value per money unit, and has just enough customers to be alive. Then you have a competitive advantage over competition using popular and expensive solutions.

"Just enough customers to be alive"? Would you really trust a SaaS that is about to lose money and go bankrupt at any time?

Furthermore, if the company has just enough customers to be alive then there's a pretty big chance that their founders or employees are working over time in order to keep costs low. They might get sick any time, making the company fall over. Not a sustainable situation. Would you really trust your data with that?

>Would you really trust a SaaS that is about to lose money and go bankrupt at any time?

I meant a company that has just a bit more profit and revenue than that. Perhaps I should have written that in some other way.

Yes, you can get great service from such companies. But you also take the risk of the company shutting down because they lost 2 customers and it cannot afford to be alive anymore - and then you have the added costs of switching to another (more popular and expensive) solution.

Right. The striking thing is that op's decision to choose the more expensive solution is now both confirmed by the fact that the solution was better because more expensive and by the fact that it works.

An email from the cheaper company explaining why they were cheaper could have had the exact same effect.

If I got an e-mail like this, I'd most likely go with the competitor.

> 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.

AKA. "Our competition suck and it shows."

> Our product, Acme, is different.

Of course.

> Look, FooCorp's customers are switching to Acme in droves because we're investing heavily in great customer service and innovation.

Yeah? I'd like to see data that supports it. This is one of the most common blatant lies in marketing (sure, it is true for some specific values of customers, switching and in droves) and I see no reason to trust it at face value; the sole inclusion of this sentence feels like evidence against company quality.

The same e-mail could be sent by FooCorp or any other competitor in that space. There's no Acme-product-specific information here, just universal marketing slogans.

It sounds like you don't like that the email is part of the company's marketing. But wouldn't it be crazy if they sent such an email without making it part of their marketing?

Also, there is differentiation, and explanation of why that's valuable. "We're designed to help improve your'e company's performance in the critical area of XYZ. The ROI on doing that is enormous."

Yes, any competitor could have sent such an email outlining their USP / positioning. But most of them won't, and that's what makes this an excellent example.

No, I get that the e-mail is part of company's marketing. But I don't like that marketing. The e-mail is pretty much empty of content.

> Yes, any competitor could have sent such an email outlining their USP / positioning. But most of them won't, and that's what makes this an excellent example.

Sure. The act of sending that e-mail is a plus for the company. Still, you could replace their company name with any of their competitors and get an equally valid e-mail - which suggests that there isn't much more than buzzwords in it.

> AKA. "Our competition suck and it shows."

While it might seem ingracious for a competing company to explicitly state this, it doesn't mean it isn't true, or even obvious. And if it is the case, it's definitely something you want to both know and base your decision on.

I agree. Still, there's a difference between saying that our competitors fail in this-and-this way, while we have managed to avoid their mistakes, and our competition sucks while we're special. Calling them "FooCorps's of the world" isn't nice either. I'm not trying to nit-pick here, it's the whole tone of the letter that irks me.

That letter feels devoid of any factual comparison with competitors while still managing to insult them. I tend to steer away from companies that give such messages.

You seem to believe the point of the email was to convince Joseph that Acme was better than FooCorp. I suspect that Joseph already knew that, and the Acme CEO knew that Joseph knew that, and the point of the CEO's email was to put the price difference in context of the increased value given that Acme was better.

You would make a business decision based on the tone of an email?

Not solely on that, but of course I would. I actively avoid doing business with people and companies that are dishonest or rude. Tone correlates with consciousness and general human decency.

Sales 101 is being able to take the conversation away from "price" and change it to "value". 20 years ago, my friend was selling IBM desktops and servers to educational institutes and I learned this from him. There was no way IBM could compete against the prices of those small computer stores, so he had to actively show how buying IBM would save money over the long run, etc. He was a very good salesman so it worked pretty well.

IBM used FUD (fear, uncertainty, doubt) to sell computers. Not unlike the sales tactics in this email. The actual positive "value" is only vaguely described.

http://en.wikipedia.org/wiki/Fear,_uncertainty_and_doubt#Def...

And yet, eventually IBM pulled out of the consumer PC business.

That was a proactive move that turned out quite well for them. They saw that the consumer PC business was going to shrink significantly over the next 10 years, so they sold off while the price was still high.

I don't think anyone in their right mind is second guessing IBM's decision to get out of the PC business. In hindsight, it was a great move executed with perfect timing.

Completely agree.

But they took this decision because they saw that the superior quality of their product(which having owned older Thinkpads I can say it's true) wasn't profitable enough when competing with lower cost "good enough" alternatives.

IBM's core strategy is one of technological differentiation through R&D; not price leadership. It's absolutely part of that strategy to exit commoditizing markets (which is why they got out of x86 servers as well) where product differentiation is difficult.

This blog post may have been worth millions of dollars in sales for Acme if we knew the actual context.

Acme has chosen to provide a better value prop. They use this to justify their additional cost 100 times a day. The CEO noted that the value prop was subjective (does your company value XYZ?), and simply justified the gap. It's not magic, its logic.

Would have loved to give the name, but the founder asked not to be named. Sorry about that. It was his email, so I deferred to his judgement.

Thank you for respecting their choice, though I'm concerned they've done themselves a disservice somewhat by missing out on free publicity, especially for something as glowing as this.

If the author of that email reads this I do hope you claim ownership so that I can reward your company with my patronage.

Maybe Acme is afraid of exploding into too much volume, and not being able to provide that aforementioned exceptional customer service.

Maybe they just choose to be humble and let their actions do the talking!

Either way, this to me is speaking volumes to the type of company this is, but I do share your desire to know what the name of the company is.

Or maybe Acme is afraid that FooCorp will refute their argument about a so-called "race to the bottom"... Maybe, just maybe, Acme is lying about "customers [...] switching to Acme in droves "...

I am not really impressed when a potential supplier is bad mouthing competition to get ahead of the pack. I would have a hard time trusting them, and being confident that at some stage they wouldn't bad mouth my company if I was no longer a client for XYZ reason later on....

Deleted comment

HelloSign is the author's company. He left off the names of the two competing companies who wanted HelloSign's business.

That's the prospective client, not the company which created the product.

Maybe this is due to lack of context, but with all that "designed to improve your company performance in the critical area" and "investing heavily in great customer service and innovation" that email sounds terribly enterpriesey to me. It all could be boiled down to a one-liner in spirit of "Sorry, but we can't offer our services any cheaper. Our prices are indeed higher, but the services are better than competitors and we actually provide more value per price unit. Please, take this into consideration."

And maybe that's just my tastes, but negative commenting on competitors with all that "race to the bottom" and "customers are switching in droves" stuff doesn't sound any good to me. Even if competitor is really a complete shit.

Just my opinion. I'm not a businessman.

> Just my opinion. I'm not a businessman.

It shows :) No offense, but this is an engineer's mindset. Great for building products; terrible for selling them.

A businessperson's mindset is "if they don't understand their value proposition well enough to explain it to me, their product likely isn't any better than the competition and they know it." Better still, by explaining your value proposition in terms of a prospective client's problems, you are showing them that 1) you understand their problems 2) your product addresses their problems and 3) that you are committed to a long-term, mutually beneficial business relationship, not just a sale.

OP's link is a great example of good business communication. It's obvious that many of the flaws are due to the anonymization; I've written these e-mails before and the main goal is building a business relationship based on trust. If you have built a relationship with your customer, you get a little bit of leeway to badmouth the competition if it's relevant.

One can only hope the flaws are due to anonymisation. The bigger flaw in the email (as is) is that it includes only one short paragraph about HelloSign's explicit benefit sandwiched right in the middle of some very generic comparison between the brands.

And when if does come to referencing the competition and they're not universally-derided, you get a lot more props for commending the competition's relative strengths in areas you know the customer doesn't care about before highlighting the relevance of your strengths than you do from badmouthing them and treating the customer like an idiot for raising them. Unless it's a really transparent negotiation gambit in which case you may as well call them on it.

> A businessperson's mindset is "if they don't understand their value proposition well enough to explain it to me, their product likely isn't any better than the competition and they know it."

You'd think a consequentialist businessman would be more interested in buying good things that go unrecognized/undervalued/un-understood by those who have them for sale. He can use the information asymmetry to make a profit, after all.

Maybe if you're buying widgets, but not services. Just like you may be ok with buying a car from a person who doesn't understand the value of his product, but would be more leery of hiring an accountant who didn't understand the value of his services. SaaS solutions are truly a service in this regard.

I guess I'm thinking of things like "Internet companies who don't realize that they're providing SLA-ed synchronous links with their IP video-conferencing service." They're selling you one thing, but you're getting most of the benefit from a part of it they don't even realize is worth anything.

Nothing of what you said is wrong, but your example has no compelling narrative.

There's no example of proof of value, and there's no story behind it, relating it to something your prospective customer cares about as part of their own business.

Your one-sentence condensation is factually correct, but it's all about you, not your customer.

> "Sorry, but we can't offer our services any cheaper. Our prices are indeed higher, but the services are better than competitors and we actually provide more value per price unit. Please, take this into consideration."

Ok, but why can't you offer your services any cheaper? How, specifically, is your service better than your competitors?

These are the answers that the letter attempts to provide.

But it doesn't provide them. The way it attempts to do so is:

Why can't you offer your services any cheaper? Because our competition sucks and we're different.

How, specifically, is your service better than your competitors? Because we say it is, and since the problem you're trying to solve is a high money multiplier, if you believe that we're even a tiny little bit better than the competitor, the gains you'll get by chosing us will greatly outweight the marginal cost you have to pay us over our competitors.

I strongly agree. That one-liner of yours is almost perfect. Just let me describe you my exact business needs and tell me how your product can fulfill them, being honest when the competition actually covers something better than you, and I'm yours.'

What happened to honest, straight-forward business?

I've worked in enterprise SASS, salesman know not a lot about their own product, ROIs are plucked from asses and often it's all fibs.

Bear in mind I thought our sales guys were great, our product pretty good vs the field.

But basing your purchase on an email like this?

You're a complete sucker. All that happened was that a salesman just called their bluff. And they were impressed by it!

A good salesman will get you to take a bad or mediocre deal while at the same time convincing you you've gotten a great deal. Always question "facts" thrown out by someone trying to sell you something.

"instead of doing a price cut, it may be worth explaining why your product is worth more." This is news?

You've boiled it down pretty well. As many others have noted, this is a typical angle to take when trying to change the topic from price to value, and this CEO writes this exact email many times per week. I'm surprised the owner of HelloSign doesn't already know this tactic.

Terrible grammar aside, I don't get it. Perhaps due to the lack of context and purposeful obfuscation for the blog post.

If you've already evaluated both offerings and found Acme's to be significantly better independently then this sort of works as a justification for the higher price, but I don't see the part where it shows it is any better than FooCorp's thing. Yeah, sure, a bad transaction will cost you money... how do I know FooCorp's thing is more or less likely to generate a bad transaction?

Out of context it reads like "if brand X fails you'll be in deep shit, and we're not brand X, so buy our thing which costs more than brand X's thing".

Who says brand X fails more often than brand Y? Maybe it does, maybe it doesn't, but the logic train bumped off the rails a bit in the middle for me.

A common technique when challenged with lower quote. If OP humors us with the actual context, then it might get more interesting.

Great mail, but the line "...is one of the most leveraged investments you can make" makes my skin itch.

Well that is what everyone says. The thing is that more money does not equal more value.

In "IT" I find that it is actually more common for the best product to be the ones that are in the mid price ranges. Not counting open source stuff ofc.

yes, but sometimes things cost money.

for a technical example think of a CDN.

sure you can go with Fast.ly and get a pretty ok CDN which is mostly automated and pretty cheap, or cloudflare which is similar. but they leverage systems controlled by other people a little too much, as such they can't be held accountable for networking fuck ups.

usually costs are human time related, good customer service means paying your helpdesk staff a living wage and retaining charismatic and talented communicators, rather than running them through a sweatshop and having a high turnover.

The only fly in this sales-technique ointment are the customers whom you convince, then in-turn expect the world from you because they chose "value" over "price". When customers pay a premium, their expectations are much higher, and unhappiness can set in if you don't manage these well.

This might not be something sales can control, but be careful in the claims you make during the sales process as some customers are listening and will be holding you to your promises.

I love it, pure business speak ans number from the hat, zero technical details. Use it when the buyer is boss of the buyer.

When the user pays, send screen caps and detailed explanations.

"We're designed to help improve your'e company's performance in the critical area of XYZ."

- your'e

- company's

If it is worth millions of dollars do a spellcheck.

You're right that taking the time to proofread and grammar/spell check is good, but in this particular case the performance is that of your company. Thus, "company's" is correct. :-)

The other is probably a typo, which might lend authenticity to it having been actually typed out by the CEO, rather than pasted from an archive.

I've heard that misspellings can actually improve the response rate. I'd believe that - felt more personal to me.

Authenticity. That's a great point. It could still be faked authenticity, of course :-)

Lots of companies pay a premium for receiving the 'best'.

He should put whatever in his email in his normal pitch(website, or whatever), instead of trying to compete against the bottom dwellers of the world

I suppose if the marketing was 100% effective they wouldn't have to answer pre-customer e-mails like this. That said, its always good PR to have the CEO go out and "bump" a typical customer scenario who is almost to the purchase choice.

I've never had anyone ask for discount for my SaaS (BugMuncher), nor has anyone ever complained about the pricing. Should I take this as a sign to put my prices up?

Careful there. Read about Netflix:

http://www.forbes.com/sites/theyec/2011/12/28/5-business-les...

I've just skimmed that article, but I seem to remember Netflix attempted to force the price hike on current users. I would always grandfather existing users, keeping them at their current price. Hell, I've still got people paying just $10 / month from when I first launched.

This thread is really interesting. You can see a bunch of engineering types doing their best to slice and dice this from a million logical angles. I would have done the same 20 years ago when I launched my product and went out there to sell it.

The difference? I was honest enough to recognize I was going to approach sales as an engineer. I got help in the form of experienced non-engineer sales people tutoring me by going on sales calls with me and doing review sessions after every sales call.

The first two quarters sucked. It took me about three months to truly stop thinking as an engineer and another three to optimize my style, delivery and approach. We closed the third quarter with over $600K in sales, most of which I was responsible for.

I would eventually hire sales and marketing people so I could devote more time to engineering. I felt it was important to understand the sales process by becoming a sales and marketing person myself (for about two years on and off) before staffing thise positions. I have always been glad I took that approach. We engineers are great about building products but absolutely suck at selling.

The letter that is the subject of this thread isn't fantastic. That said, it achieved several things all the engineers on HN are ignoring:

- Made a sale! Do not underestimate the importance and power of cash in the bank!

- It deprived a competitor of revenue. Every dollar you take away from your competition is a dollar that goes towards potentially taking them out of the race, particularly with low price sellers.

- It was compelling enough to take someone who was on the fence and flip him to the point of having him write a blog post about the experience

- It probably created a long term believer and evangelist for their brand, product and price model

- It confirmed that this tactic works. They can use it with new potential customers, evolve and fine tune it. They might also consider integrating aspects of this message in other marketing efforts.

- It revealed that the competitor's low price position is tenuous at best

- It started a relationship with a new customer in a very positive tone. If nurtured this could lead to more sales from word of mouth

- Because of some of the above their cost of customer aquisition is likely to reduce over time

I could probably add to this. The point is that most of the criticism here is misplaced. This letter isn't genius. It doesn't have to be. It only has to be effective. That, it is.

I don't expect everyone to get this. In typical engineer/HN fashion this will be sliced, diced and down-voted from a million of irrelevant angles. That's OK. I get it. The interesting thing is, regardless of what is said here, that letter still made a sale and accomplished all I have highlighted and more.

The best sign I have seen related to this topic is from my mechanic shop:

"If you think a good mechanic is expensive, try a bad one!"

"You're product/service seems expensive."

"As compared to what?"

Sales 101.

The cognitive dissonance here is striking, "the difference in price is peanuts" vs. "I won't lower my price."

How exactly did you find this compelling again?

"Peanuts" in terms of value to the customer, but not in terms of value to the service provider. There's more than one perspective here.

It's all about scale. Think of it this way -- if you were torn between buying two houses that are approximately the same price, and the owner of one home announced that they were taking the kitchen stove with them, would that make you choose the other home?

Most people would say no, because the $500 stove is a really marginal add-on in relation to a home. But at the same time, if you went to Home Depot, bought a new $500 stove, and found out that the free delivery doesn't apply to stoves, you'd be livid over the extra $60 fee.

One day Pablo Picasso was sketching on a park bench. A woman recognized him as the famous artist, and asked him for a portrait sketch. Picasso flipped to a blank page, looked at the woman for a moment, and with a few strokes of the pencil drew her abstract portrait.

The woman looks at the drawing and is ecstatic. As she reaches for it, she asks how much it will cost her. "Five thousand," he says. "Five thousand?! But that drawing took you less than a minute!" Picasso replies, "No, madame, it took a lifetime."

* * *

The point being: The email is worth nothing; the value is in the person writing the email, and their knowing what to say.

I think I might need to raise prices after reading this.

Reply on news.ycombinator.com