A few days ago I was talking with a very big, top player, database software company. Sure you can guess their name, but allow me to not providing any clue. We were talking about licenses of their flagship DB product for a project we are driving, and I was very disappointed for the behaviour of the account manager I was talking to. Basically the dialogue was something like this:
- I need the most basic license for a very small project for the customer XXX. This project almost does not use the database, so after evaluating it, we need the smaller, cheaper, DB server license.
- Uhm... sure you evaluated it? does this project use an application designed to work with our server?
- Yes, we evaluated it in depth. And yes, their application uses some function that makes it to work only with your DB, although they have a project to switch to another product, open source and cheaper, in a year from now. But right now their application works only with your product.
- OK. Understood. Then you should not choose the cheaper version, but the most expensive instead, under any circumstance, because the customer has no other option than going with us right now.
- Uuuh?! What?! I know a word for that: extortion. That's not fair, so please, license me the cheaper, smaller version. Thanks.
Ethics apart, I'm wondering about the economics of this behaviour. Probably, squeezing customers that are locked-in with your products or services can increase the bottom line of your P&L statement in the short-term, but I doubt about how can it affect the P&L in the long run, even if you are the number one in the market with no second player that compares to you.
Would talented people like to work in a company with this attitude? How will this company compete when an alternative appears (if not existing already) and the technical / product differences get thinner? Will the market be willing to continue with this kind of provider?
I don't know the answers, but I know that I would not like to work in a place like that, neither buy their products or services.
As the society becomes more and more smart (people are more qualified, more talented, more capable), society is more worried about the responsibility and the behaviour of the companies that brings products and services to them: we move to an
Ethical consumerism. We have seen several consumer Boycott in the last decades, and according to an study performed in 5 countries by
GfK NOP in 2007, about a third of consumers would pay a 5 to 10 % premium price for ethical products.
So probably, there's a higher return in the long-term for those companies that are socially conscious, and a negative impact for those who are morally dubious in their behaviour.
I have not enough data to build a scientific opinion about it, but I'm pretty confident that as consumers have more knowledge about products, companies and about how companies behave, more consumers will practice "moral shopping", and I'm talking about B2B too, not just B2C.
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