Pricing Page Teardown - Is Front pushing too hard?
In this episode, we're talking about Front, who's taking aim at a service long dominated by Google, and they're doing it with a premium price tag. Find out what they're doing right—and wrong—when it comes to their pricing strategy.
This episode might reference ProfitWell and ProfitWell Recur. Some information may be out of date.
Front
Email is essential to our personal and professional lives. However, business email has not seen much innovation in the last 15 years. Mathilde Collin and Larent Perrin founded Front in 2013 to revolutionize corporate communication. Their product pulls together conversations from different channels, such as Outlook, Slack, Twitter, and SMS, and presents them in a shared view. The ultimate goal is to reinvent work by improving team fulfillment through reducing miscommunication and stress, and increasing productivity. Front has raised over $100 million from Sequoia and other software elites, has over 200 team members, six thousand customers, and an $800 million valuation.
Front has received criticism for fighting battles on multiple fronts. It is difficult to pinpoint where Front fits in the wider messaging and communication category. Additionally, there is high fragmentation amongst their customer base with many different types of businesses using their products. While this is a champagne problem, it can complicate product and marketing decisions.
The question becomes: How can Front train the market when there are many, many alternatives and incumbent players that maybe don’t do what Front does, but do some or a lot of it? Also, how does Front get their monetization in the right place to make sure they’re not alienating their different customer constituencies? Front has a lot of work ahead of them, so we’re going to answer these questions by collecting data from 10, 542 current and prospective Front customers. Keep reading for all the data and answers to these questions.
Email, email, email
What's the most annoying thing about email? For me, it's searching for emails I've seen but can't keep track of. Email search and lost context are major issues. Front solves this by allowing notes and responses in the same inbox. It's like a help desk on top of email. Front is pushing for a new kind of workplace communication by integrating different channels like live chat, Twitter, and Facebook. Their design-focused approach sets them apart from other aggregators. Email is still the primary means of business communication, but Front handles everything else efficiently. Their website could be clearer, but they have valuable SMB and growing company propositions. We'll examine their pricing and customer data to see what they're doing well and what they could improve.
Front's pricing page
Great pricing page overall! Here are two small tweaks I would suggest:
- Instead of using names like Starter, Plus, Prime, and Enterprise, use more descriptive names that convey the value proposition and persona/segment identity for each plan.
- Instead of including function-based call-outs like "Customize your workflow with rules and integrations" and "More channels and data to transform your teamwork," focus on highlighting the unique value proposition of each plan.
By implementing these changes, visitors to the pricing page will be able to quickly and easily understand which plan is right for them.
It's difficult to determine what we need because I'm not sure if I should customize my workflow with rules and integrations, or if I need more channels. The decision process should be easier for the user. The "compare all features" drop-down is a great feature that highlights the important information in a condensed manner. The sections are also well-organized and easy to navigate. However, it is still important to provide enough information for those who want to explore in-depth. The "show all features" option can help users make a more informed decision. Let's explore the data further…
Data and analysis
Push Pricing
Front needs to be careful with push pricing. This is when users are pushed to a higher pricing tier regardless of their usage or needs. Pull pricing is when users' usage or feature needs pull them up to a higher tier, and they're willing to pay more. Salesforce is an example of push pricing, where upgrading to access one feature requires getting all the other features, even if you don't need them. While Front isn't doing this to the extent of Salesforce, they should still be cautious.
On Front's pricing page, SMS channels are only available in the Prime plan which costs $50 per user per month. This forces users who only need email, messenger, and maybe SMS to pay for unnecessary features and advanced rules, sometimes up to five times more than what they need. It would be better if Front offered SMS channels as an option in their main tier instead of only in the Prime plan.
Some features, like private inbox analytics, could be made into an add-on, but are currently in the premium tier. Integrations are also tiered, with CRM integration requiring the top-tier Prime plan, and even a Zapier integration costing extra. The Prime plan also removes branding from the Front Chat Widget, which may not be worth it for small to medium-sized businesses.
Value Matrix
You're about to see something called a value matrix. We collected data from the group comparing feature preferences and plotted those on the horizontal axis, more valued features on the right, less valued on the left. We then collected willingness to pay for the overall product and plotted that based on their number-one feature preference on the y-axis. Analyzing data in this manner allows us to determine which features are differentiable add-ons, core, or commoditized for each segment.
Annual billing and consumer products
There is higher willingness to pay for some features, but it's still very low. Features like Audit Trail, Automation Integration with Zapier, Twitter access, and Remove Front branding have a plus or minus 10% impact on willingness to pay. These should just be included, or moved to lower tiers to avoid pushing customers up. Analytics and SSO roles and permissions could be add-ons, but it's okay to have them in premium tiers. Front needs to reconsider their pricing and packaging to avoid being punitive.
Their Twitter access seems to be a premium feature, but it should be part of the standard offering. It's unclear why they made this decision, as it doesn't seem necessary given their current user base. They should focus on making all channels more accessible to increase customer usage.
As you build your product, adjust your pricing to fit. Some features that seemed important at first might not be. For Front, focus on communication and include as many monetizable and retention-focused features as possible. Consider offering all channels in the next pricing tier, but not necessarily in the lowest tier. Pricing should be based on the number of channels attached.
Understand how value shifts based on use case
We've analyzed willingness to pay based on primary channels besides email. The results are intuitive. Social media, especially Facebook, has a wide range. Interestingly, SMS commands a premium, which may lead to false positives. Although people are willing to pay a high price for it, the product's main focus is workplace communication or a manager platform.
To increase revenue through Twilio charges, Front can include them early on. Once people are using SMS through Front, charge them. Front can get a discount from Twilio, but not pass it onto its users. For instance, if Twilio charges two cents per text, but Front has a discount of one cent per text due to volume, Front can still charge two cents per text and collect the float. Shopify does this with payments. Social media has high variance, but Front can pass those costs onto its users and provide easy access to SMS. This will improve retention and upgrades can be offered based on usage.
Integrations need to be a big consideration for retention
Integrations are more important for retention than willingness to pay. Companies often underestimate the evolution of integrations in the last decade. In the past, a Salesforce integration could be sold along with a product for an additional $1,000 per month. That was the world we lived in. However, with the rise of Zapier and other integrations that are demanded by users, the willingness to pay for integrations has decreased. Nevertheless, users who have integrations with your product and other products tend to stay with your product for a longer period of time.
The lower end line represents customers with no integrations. We tracked net revenue retention for about 1500 different subscription companies. Those with zero integrations had almost 20% lower retention than those with one to three integrations or more than three integrations. If products are integrated and share data, the experience is better.
The direction didn't really matter, which is fascinating. We live in a multi-asset world, and the argument that people are using too many apps is a BS argument. People don't mind using multiple apps, but they prefer integrations that allow them to use and connect all their systems. As a business, you should have an integration strategy and be careful with separating integrations from monetization.
They can introduce CRM integration in a higher tier to attract customers at entry level price. Once they start using Front with other integrations, they might want to upgrade for additional features. Avoid charging extra for integrations.
In conclusion, Front is a communication platform that aims to revolutionize corporate communication by integrating different channels and providing a shared view of conversations. Despite receiving criticism for fighting battles on multiple fronts and having a fragmented customer base, Front has raised over $100 million and has a high valuation. However, data analysis suggests that Front needs to be more cautious with push pricing and reconsider their pricing and packaging to avoid being punitive. Additionally, Front should have an integration strategy and consider offering all channels in the next pricing tier to increase customer usage and improve retention.
Need help with your pricing?
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