AnswerDash is a venture capital-backed startup that has developed a new technology for providing online customer support based on academic research. The solution has been shown to create significant value for those customers that have signed on. However, by Spring 2014, the company has been unable to achieve widespread adoption since it launched in late 2012. Founders Dr. Jacob O. Wobbrock and Dr. Andrew J. Ko are formulating a new strategy that seeks to address the various go-to-market challenges they have encountered to date. At the forefront of this decision is who to target, both in terms of company type and who within the organization to approach, and how to set pricing. These decisions, in turn, can influence messaging, product development, and sales efforts.
Following your review of this case and the Harvard core reading “Pricing Strategy,” prepare responses to the following case questions:
1. Assess Answer Dash’s current go-to-market approach, including customer selection, pricing, communication, and sales efforts. Which aspects to you like? Which ones don’t you like?
2. Based on the current pricing model, what is the lifetime value of a customer to AnswerDash (make reasonable assumptions as needed).
3. Calculate the economic value that the AnswerDash product delivers for an e-commerce vs. a Software as a Service customer. Separate between cost savings and revenue lift benefits. (As a starting point, you can consider an organization 100,000 monthly web visitors and $1,000,000 in monthly revenues.)
4. What is your view on the three primary options AnswerDash is contemplating going forward? Which would you recommend the company pursue?
5. For the strategic option you support, identify which companies to target, how to position the value proposition, how to sell to an organization, and what pricing model/format to follow.
6. What would you consider success of your recommendations three years down the road? How many customers do you expect AnswerDash to have and what annual revenues/profits do you anticipate?