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How One SaaS Company Eliminated “The Paradox of Choice” with Smart Pricing and Packaging

Fritz Cambier-Unruh
Staff Writer, Subscribed

In the fashion industry as elsewhere brands that offer too much choice don’t do well.

That’s why AIMS360 uses smart pricing and packaging. They bundle offers to streamline and simplify the sales process, ensuring that customers get what they need, when they need it, and have a path to maturity as a fashion brand, with the support of AIMS360 solutions. AIMS360 is the leading ERP software company for fashion brands. Most of their more than 500 customers are small- to- medium-sized operations led by entrepreneurs. Their software handles everything from customer management to inventory management, to order processing to accounts receivable. AIMS360 platform processed over one billion dollars in orders last year. AIMS360 provides its software on a software-as-a-service (SaaS) basis as a monthly subscription. Their services can assist fashion businesses with a diverse range of functions, including inventory, sales, orders, styles, customer management, shipping, materials, production, e-commerce, and accounts receivable. Their customers are diverse, too, ranging from one-person operations just starting out in the fashion business, to mid-sized operators, all the way up to enterprise.

With so many services to offer and so many needs to meet, AIMS360 initially attempted a tailored approach for each customer.

In other words, each customer could mix and match among all the services that the company offered, in addition to variable terms and amounts of services based on the size of the given operation. The company figured that if they gave customers exactly what they wanted, they’d be more satisfied and loyal. Unfortunately, this strategy didn’t pan out. “For one reason, the sales process was very, very difficult. It confused the customers,” explains Shahin Kohan, President of AIMS360. “We were giving them essentially 40 options.” This phenomenon, called “the paradox of choice,” (originally coined by author Barry Schwartz) has become well-established in business.

Brands that offer a lot of options don't do really well because people have a hard time making a decision.

And the chances are high that, even if they make a decision, they will be less satisfied, because they didn’t understand the choice they were making and/or feel like they aren’t getting the best option (i.e. most perceived value).

AIMS360 decided to try another approach. The company started by segmenting their customers based on needs, driven in large part by the size of their business. They realized they had roughly four different sizes of customer: Visionary, Emerging, Designer, and Luxury. “We’re in the fashion industry, so we gave them interesting names,” explains Kohan. “Visionary is for people who are just getting started, they have a vision, but not much business yet. You can enter your styles, you can do some invoicing, you are starting on the right foot.” “Emerging is for companies that are doing well enough that they are basically outgrowing Excel and QuickBooks and ready to kind of rock and roll.” “Then we move on to Designer, which is for people who are up and running, but they’re not yet a big brand. Maybe they’re doing a million dollars of volume, maybe they’re doing $2 million, they’re doing Instagram, they’re doing Shopify, they’re selling to some boutiques, maybe one or two department stores.” “And finally, Luxury is for enterprise clients who haven’t developed their own in-house corporate system.” Based on these categories, AIMS360 began pre-packaging their services in bundles that would be appropriate for each size — and create a natural upsell path for companies as they grow with higher tiers having higher pricing to capture the additional services provided. For example, when making an offer to a customer, AIMS360 will ask how many Shopify connections the company has. “There might be a company that has 20 different stores on Shopify, 20 different domains because they have different stuff that they sell on the different brand names in Shopify and they’re all different stores,” says Kohan. “We limit how many stores you can have on a Designer plan; if you have too many, we bump you up to Luxury.” And these plans and the prices aren’t set in stone. The company continually tweaks the packages to adjust to the marketplace and their customers’ needs. What about customers who bought during the old, bespoke days? Some are grandfathered in, while others are converted. “People who are on the old plans, we leave them on the old plans. Fortunately this is handled perfectly by Zuora, our subscription management platform,” says Kohan. If someone on an old plan wants to change or upgrade, they have to choose one of the new plans. As customers grow, the idea is that most, if not all, will end up on the new plans that will best suit their needs.

Streamlining their packages has made it easier for the AIMS360 sales force, and more satisfying for customers.

This, in turn, has reduced churn.

Customers feel they are buying the right product for their business, without feeling like they have to understand everything about the nuts and bolts of the fashion business. Which is the whole point: AIMS360 empowers fashion brands to focus on their core business and leave the business software to the experts.

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