ChannelAdvisor CEO David Spitz says the ecommerce service provider’s new strategy of focusing on “larger customers” while upping prices and tightening “deal qualification” for smaller firms that “tend to go out of business with more frequency” as part of a “really filter out” strategy is paying off. 

The Morrisville-based firm, which has struggled recently and named Spitz as CEO in place of co-founder Scot Wingo (now chairman) in May, reported growth in revenues and in its customer base on Tuesday. The quarterly earnings report was upstaged by ChannelAdvisor’s (NYSE: ECOM) naming of a new chief financial officer.

But in a conference call with analysts, Spitz hailed ChannelAdvisor’s shift in business focus, noting that trend with a big point: Amazon is now the top producer of gross market value, or GMV, for the firm. Not eBay.

Spitz also acknowledged that ChannelAdvisor had cut the size of its sales force as part of its new strategy.

So what about pricing changes – which went up for smaller firms and not larger clients – and the change in emphasis?

“The pricing changes we’ve made were really focused on the lower end, and really this is a reaction to our view of the lifetime value of smaller versus larger customers. Smaller customers, they’re just more volatile. They tend to go out of business with more frequency,” Spitz said.

“When you look at the customer acquisition cost ratio of that to lifetime value, larger customers regardless of the take rate they have on their GMV tend to have significantly larger lifetime values to us …

“That’s why we focused the pricing changes on the lower end to really filter out customers that we felt would not have that financial capacity to invest in growing their business, or have the quality of data that is necessary to effectively use our platform…

“That’s a long way of saying that the pricing changes and the deal qualification changes are really focused on lower end of our market segment, and the pricing – we really didn’t make changes on the pricing schedules that we have for larger customers. …”

Spitz stressed in his prepared comments that the company’s financial outlook is improving although it has yet to turn a profit since going public in May of 2013.

“I feel like the trends we’re seeing on the enterprise segment are healthy. It’s the segment that I think is the right long-term bet for us, and I’m generally pleased with how things are going there even though the aggregate take rate on enterprise customers is lower than what you would see on small customers,” he said.

You can read the full transcript at financial news website SeekingAlpha:

http://seekingalpha.com/article/3399475-channeladvisors-ecom-ceo-david-spitz-on-q2-2015-results-earnings-call-transcript?part=single