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All churned up

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27th Jul 2006
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I churned this week. Makes it sound like I had a dodgy kebab, but I was quite proud of myself. I woke up, found that my mobile phone wasn't working, contacted 3's call centre in India, was treated to the usual indifference and finally snapped. Hey presto, I churned!

It was remarkably painless. The only thing to comment on I guess was the total lack of concern on the part of 3 that I'd quit its lousy service seemed reflective of the utter indifference upon which their entire customer service operation appears to be built.

But it got me thinking about churn - thoughts fuelled by a press release which came in from NetSuite claiming a series of customer steals from Salesforce.com. There's a long list of names on this press release - some of which I seem to recognise from previous occasions - and it's another example of the 'up the ante' marketing that I've wanted to see from NetSuite for a long time.

But there are several things about the churn aspect of on demand that need paying closer attention to. One of the things about traditional enterprise software deployments was that once you'd made your choice, you were pretty much stuck with it, unless you were ready for a period of significant upheaval. You put in an SAP system, you were not about to rip it out and swap to Oracle unless you were really, really pushed to the brink.

That's not the case with on demand. One of the big selling points of the model is the ability to switch off and start again. You're paying month by month. You're not happy? Cancel your subscription and switch to someone else - like you would if you were hacked off with your mobile phone.

So churn is an inevitable part of the on demand model. And that's good. It shows the market is alive and vibrant. It's also significant that the churn being claimed here is from one on demand provider to another. So it's not a case that the on demand model has let customers down and they're racing back to on premises. They're shopping around, possibly for a variety of reasons, but they're sticking with the on demand approach.

Ultimately, if on demand providers are going to play the churn card as part of their marketing and sales push, then they're going to have to risk total transparency. I'll buy churn as a marketing/PR tool when everyone involved exposes their own churn rates to public scrutiny. NetSuite is quite right to point out notable wins and if they've taken them from the competition, then that's a good point to make. But no doubt Salesforce.com could produce a fair few subscribers that once were with NetSuite. Or RightNow. Or Sage. Or whoever!

I'm choosing to read NetSuite's release this week not as 'scoring points off Salesforce.com' but as validation that the on demand market is maturing into one in which switching and churning are an inevitable element. And that seems to me to be a good thing.

Stuart Lauchlan
News & Analysis Editor
[email protected]

Replies (4)

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By Reidac
27th Jul 2006 15:04

"Switch off & start again". A phrase that you're not likely to hear the IT department say.

The lower switching cost pose an interesting organisational dilema for organisations that have implemented or are considering implementing an on demand CRM app. For example, If the sales & marketing folks don't like Salesforce.com and decide that Netsuite is the way to go and they want to change now not in 12 months time when IT say so then this makes life very interesting. After all you don't need an IT person to cancel you're monthly subscriptions to SF.com and you don't need an IT person to purchase subscriptions to Netsuite.

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By AnonymousUser
31st Jul 2006 08:29

CRM is not exactly a commodity item and it's not quite the same thing to change your on-demand CRM service as change your phone. Like migrating a 10,000 client customer database, retraining users, switchover and rollout planning whilst keeping active sales projects on the go. What world do you live in?

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By Stuart Lauchlan
03rd Aug 2006 11:29

Well, for starters, a world in which I wouldn't be so ill mannered as to post a truculent comment like that just because I didn't agree with an opinion that someone else made in a community forum.

The basic theory - and one of the major selling points - of the on demand model is that you can switch provider very easily. And I've spoken to a number of end users who have done just that, the majority of them on a 'big bang' overnight basis with several thousand strong client databases.

Come and visit our world - it's kinda cool!

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By Anonymous
27th Jul 2006 17:02

I've just received an email from NetSuite's marketing folks offering me a 20% discount to switch from salesforce.com.

Perhaps NetSuite's really difficult to use, but I would have thought that their marketing folks could tell that I've been NetSuite customer for the last 9 months?

Alas, not for much longer. NetSuite is software-as-a-service that's heavy on the software (wow, pretty AJAX floating bits), but light on the service (support not included).

NetSuite's idea of support for UK customers is to charge them extra for support, force them to call a US support number that is not listed anywhere on the NetSuite website or in the application, get them to wait for 10 minutes on hold before creating a support ticket, and then completely ignore the ticket.

So we're switching. In fact, we switched already. It took us an afternoon. Users are delighted because now their Outlook contacts, appointments and tasks are all synced with our CRM system for the first time since we started using NetSuite. Unfortunately, it wasn't all entirely painless because we can't get our data out of NetSuite. Why? Well, we've had a support case open since 14 June about the bug in the data export function...

Perhaps there is a gap in the market for a software-as-a-service company that their customers' loyalty is almost all about the service and only a little to do with the software...?

Neil

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