Sorry. We Messed Up. (Zendesk responds to pricing criticism)

http://www.zendesk.com/2010/05/sorry-we-messed-up.html

by mattmaroon • 16 years ago

104 52 16 years ago

mattmaroon• 16 years ago

Reasonably well-handled. I didn't go through the effort of switching our business away from this because I thought something might happen.

I do have the sneaking suspicion that if we grow a bit the business case for either switching or rolling an in-house solution ourselves will become much more compelling though, especially if I'm forced to upgrade from my current plan to a new one.

dangrossman2• 16 years ago

This is how a startup should handle pricing changes, so long as the old pricing scheme was viable.

This is the opposite of what Recurly did a month or two ago when they dramatically raised prices and the same revolt occurred. Their response was a big "F You", and their latest e-mails finally announcing even more pricing changes show they lost enough users in the process that it threatened their viability.

sachinag• 16 years ago

I have to defend the Recurly folks here. They made a bet on flat-rate pricing over per-use pricing. Turns out that a flat-rate plan hurts you on the low end (people who won't use you at all, and where the uproar was) and on the high end (you're leaving money on the table from your potentially most profitable customers).

Flat-rate pricing works for the vast, vast majority of internet companies since the day AOL won over CompuServe because they went to the $20 per month unlimited plan back in 1996.

The lesson I've learned from Recurly is that developers find per-use to be less risky than flat fees, which is the opposite of normals.

fjabre• 16 years ago

Wait so are you saying that flat rate is usually better than per-use from a biz perspective or vice-versa?

EDIT: I guess it depends. Flat rate seems like an attempt to get more cash upfront to cover costs initially. The problem is you are leaving money on the table with large customers and you're potentially leaving a lot of money on the table at that. Flat rate makes sense up to a point but is anything really truly unlimited?

jacquesm2• 16 years ago

It may just as well have been that they misjudged the demographic of their prospective customer base to be mostly the larger accounts, but instead they found themselves with prospects a lot smaller than the ones they hoped to target.

Barnabas• 16 years ago

I was curious about the Recurly blog post you mentioned, so I looked it up. Here's the URL for anyone else: http://blog.recurly.com/2010/03/new-pricing/

joevandyk• 16 years ago

For what it's worth, Zendesk is definitely worth it for the five customer support people we have. The amount of flexibility they give you and the api hooks are fantastic.

rjurney• 16 years ago

This is how you do a public apology. Nicely played.

DenisM2• 16 years ago

Joel's school of apology: apologize unreservedly, it buys a lot of goodwill.

My theory is that when there is an unfortunate outcome the righteous sub-person in us thinks that blame must be assigned before progress can be made. This is might be true in some cases and not in other cases, but overcoming the mental habit might be harder than playing into it.

kpanghmc• 16 years ago

And yet, when Joel made the decision to shaft the Stack Exchange 1.0 testers, they didn't get anything close to an apology. What they got instead was a pitch about why they should be happy to give up their business model.

ahoyhere• 16 years ago

Their customers & readers aren't going to forget the chortling, self-satisfied tone of their earlier communications.

jimboyoungblood5• 16 years ago

When we decided to make a change to the Zendesk pricing structure for our existing customers, we tried to be as thoughtful, transparent, and straightforward as possible.

Transparent? Maybe you should've given your customers a warning first..?

While the letter is certainly worded very nicely (and carefully), it reeks more of damage control than sincerity. The picture with the puppy dog face puts it way over the top.

mcantor2• 16 years ago

How do you get more sincere than, "We failed. We let you down. And we apologize."?

I'm asking this in all honesty; I don't really understand where you see this as being insincere. Just curious.

epochwolf3• 16 years ago

> How do you get more sincere than, "We failed. We let you down. And we apologize."?

I've noticed with hacker news there is always a few people (different people, not the same ones) that are not satisfied with the apology of the day.

I'm not sure why this is. My initial theory is that the apology didn't address a highly specific issue in the exact manner that person wanted. Apologies like this are (necessarily) non-specific because they address everyone.

Then again, if I want to be cynical, it's possible that that person (not specific to jimboyoungblood) just won't except any apology as adequate.

jimboyoungblood5• 16 years ago

For the lack of a better answer, it sets off my spidey sense. Everything is too nicely worded- there is nothing spontaneous or "real" about it. Imagine if you were hearing those words spoken in person. I don't think they'd ring true.

The photo really is the kicker. Nobody has a photo like that just sitting around on their computer. Obviously a lot of effort, from a number of people, went into producing and editing this blog post. Do you believe the same, obviously skilled, team that produced this finely crafted apology could have unintentionally introduced a pricing structure that jacked up the bill for many of their customers?

I'm honestly surprised that so many people fell for it.

parfe2• 16 years ago

Well for one thing pissing off your customers is not "letting them down."

It's pissing them off. Side stepping the fact in the "apology" is like a little kid apologizing for something because he knows it is a required action. Not because he's sorry.

This company is sorry that the customers got angry and forced the pricing change. They are not sorry for "letting them down"

hyperbovine• 16 years ago

Because they are apologizing for the wrong thing. "We have also been reaching out to our customers to truly understand the heart of why you are upset" suggests that it never even occurred to them that people would be mad about this. I mean, really? They knew very well what they were up to; businesses don't do this sort of thing on a whim. I'd bet you anything this guy has a spreadsheet showing revenue shooting through the roof as a result of the new pricing.

This is an apology for carelessness, but the real issue is greed. That is why it strikes me as insincere.

jodrellblank• 16 years ago

How do you spend two and a half years "putting your customers first" and not realise that a 300% price increase would annoy them?

for those customers who took action this week to convert to an extended billing cycle, please contact us if you would like to revert back to the billing cycle that you held as of Monday isn't putting customers first, it's putting employee convenience first. Find the customers who converted to an extended billing cycle, contact them and offer to revert them even if it's inconvenient. That's putting them first. Which they claim to be doing but aren't.

WiseWeasel• 16 years ago

That was the warning. The pricing change doesn't go into effect until July 1st, I believe.

nickpleis2• 16 years ago

That's not a lot of warning for folks who are using a product like ZenDesk. The whole point is that a tool like this is embedded into your companies work flows. To leave ZenDesk means that you have to find a new product. Figure out how to move all of your data into that new product. Figure out how to handle tickets that are still in process on July 1. Train your staff. Change any customer facing UI or other automated bits that utilize ZenDesk.

The product is the type of product that inherently has a lot of lock-in. Giving me a month and a half to change all of that is more or less equivalent to making the changes effective tomorrow.

bradgessler2• 16 years ago

Did Zendesk bother to grandfather the pricing on their existing customers and instead charge more for new customers?

mikeryan• 16 years ago

no originally existing customers would only be grandfathered in for a year and they had to pay up front.

bradgessler2• 16 years ago

Wow, yeah, that's a huge mistake. We always grandfather our customers anytime we change our prices; however, in our ToS we do reserve the right to change our prices for existing customers as long as we notify them first.

For other web startups out there who want to change prices, I highly recommend that you grandfather existing customers so you don't piss them off and because you don't have to communicate anything about pricing changes to them.

Mark_B2• 16 years ago

Interesting to see the "too little too late" comments on their comments. Proof that 1) no matter how hard you try to apologize and make things right, you can't please everybody and 2) unfortunately, these people are the most vocal.

gizmo• 16 years ago

Well, they didn't try very hard to make things right. Users revolted, so they caved. That's all there is to it. The "unfortunately these people are most vocal" misses the mark completely -- had they been NOT vocal they would've faced enormous bills or they would have to spend 50 hours trying to migrate to a new system. That's if the data can be exported and imported freely, which is rarely the case.

So the customers spent hours comparing the offers of the competition, all the time being frustrated because this jumped on them from nowhere. And then, 2 days later, they hear "Whoops, my bad!". That just doesn't fix the damage, now does it?

If a thousand customers each spend 3 hours worrying about what to do, and these numbers are conservative, then you've created 3000 hours of unnecessary frustration. So the damage will exceed $300.000. Just with one ill considered move!

Whoops, sorry!

Mark_B2• 16 years ago

Before, back when they complained in the first place - that was completely awesome. But to gripe about having wasted time evaluating other solutions? This is something everybody should do. No matter how happy you are using any product, be it software, hardware, utilities, daily transportation, you consider evaluating costs/benefits of a "Plan B".

bcardarella• 16 years ago

Glad to see they changed course. I was a developer at ZD for a few months when they were in Boston and I can tell you that they're a great group of people. Listening to their customers and changing course is evidence of that. Most other companies would just barrel ahead despite the outcries.

danielnicollet• 16 years ago

I get a sort of "spin doctor: feel from this move, with the big glaring eyes looking at me as I make my way to the message on the zendesk blog post... Maybe not so well handled since one could think Zendesk is trying to turn a difficult situation into a PR blitz: why are you posting here, rather than just emailing your customers?

dangrossman2• 16 years ago

The same thing was e-mailed to customers before it was posted on the blog.

verdant• 16 years ago

They got some bad press for the pricing move. I don't blame them for trying to generate some good press out of it.

bosch• 16 years ago

"It’s always easier to apologize for something you’ve already done than to get approval for it in advance." - Grace Murray Hopper, quoted in Computerworld, September 10, 1984.

jacquesm2• 16 years ago

The damage is done though, and zendesks competitors are the ones that gained the most from this, even those that didn't switch are now more than aware of who they are and what their offering is.

The last thing you want to do when you have a good thing going is to get your customers to invest a bunch of time in to researching your competition.

Sorry. We Messed Up. (Zendesk responds to pricing criticism)

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