Are B2B SaaS companies engaged in their own version of shrinkflation?

SaaS companies have slashed marketing budgets, effectively cutting off communications with customers; and now some are imposing harsh terms to protect margins at the expense of trust 

There’s an old saying, it’s not the circumstances that matter as much as your response to them. To that end, it’s no secret times have been tough in the technology space recently, and how software businesses have responded is telling.

A recent piece by Jay Mandel in Martech – Marketers must adapt to a changing world – gets after this a bit:

“Inflation fundamentally reshaped the relationship between companies and consumers.

Companies, faced with rising costs, responded with price hikes, product shrinkage and similar tactics, eroding consumer trust.”

He’s right of course.

Even worse, some CPG companies are hitting their customers twice – both raising the price per unit and shrinkflation. The lengths companies are going to be sneaky about it are unreal – for example, changing the shape of the package so that it’s harder to notice.

I read the article and didn’t think much of it until Martech editor Mike Pastore shared it on LinkedIn. That’s when it dawned on me, that, yeah, B2B tech companies might be guilty of this as well.

Some of the behavior I’ve observed or experienced from the B2B tech sector includes the following:

• Re-pricing that removes access to features at a given price level;
• Flat out imposing staggering price hikes;
• Charging credit card renewals without prior notification;
• Sending customers messages from “no-reply” emails; and
• Contract haggling gets harder.

Is that the reward loyal B2B customers deserve for sticking with their vendors in tough economic times?

It shows up in other sources of data:

• Customer retention is a higher priority than customer satisfaction;
• Forrester Research says customer experience is at all-time low; and
• 72% of businesses say CX has improved, but just 27% of customers agree.

Think about what this means for B2B marketing in the larger business context: Businesses have slashed marketing budgets, which in practice means they’ve dramatically reduced or even stopped their communication with customers and prospects. Next, they slap existing customers with harsh new terms in an effort to protect margins.

Indeed, they might protect margins in the short term, but what is the long-term impact on that customer relationship? As the saying goes, people may not remember what you say, they might not even remember what you did, but they will definitely remember how a company made them feel.

Regaining momentum is one challenge we know marketing will face when things start to turn around. And for companies that modify pricing structures without thinking through the circumstances and ramifications, we can add to that list, rebuilding trust.

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