We spend 3x more on R&D than we do on marketing: Zoho

Zoho's decision to allocate three times more budget to research and development than marketing represents a strategic departure from industry norms, according to company executives, as the enterprise software provider seeks to maintain competitive pricing while expanding its brand presence through consumer-style advertising.

Prabal Singh, VP of marketing and customer experience at Zoho, reveals that this resource allocation model enables the company to offer affordable software solutions in a market where competitors typically invest heavily in customer acquisition.

"We spend 3x of what we spend on marketing, the price of that in R&D. And that's been a conscious choice through the years," says Singh, though specific budget figures were not disclosed.

The revelation comes as Zoho recently launched its It Takes Time campaign, a consumer-facing marketing initiative that marks a notable shift from the company's traditionally product-focused advertising approach. 

The campaign represents one of the company's largest marketing investments, employing video content that is distributed across both digital platforms and offline venues, such as major airports.

Funding strategy enables competitive pricing

Singh argues that the R&D-heavy budget allocation allows Zoho to differentiate on price whilst maintaining product development momentum. "By virtue of being able to save money on typical marketing, we're able to pass on that benefit to customers, and that makes our software affordable," he explains.

The company, which employs 18,000 people and serves over 150 million users, remains privately owned and does not disclose detailed financial information, making it difficult to draw direct comparisons with its publicly traded competitors.

The budget allocation strategy is supported by Zoho's integrated software suite approach, which spans over 55 applications across customer relationship management, human resources, accounting, and collaboration tools. Singh claims this portfolio reduces customer acquisition costs through cross-selling opportunities.

"If you start to use a Zoho software licence and tomorrow you discover other Zoho software by virtue of already engaging with us, the cost of acquisition for the second software licence is actually zero in many ways," Singh explains.

This land-and-expand strategy effectively supports reduced initial marketing investments by optimising revenue from existing customer relationships.

The approach has reportedly enabled partnerships with major organisations, including Mercedes-Benz for dealer management systems and Union Bank of India for customer experience platforms, though the company did not provide details about the scale or financial value of these engagements.

The brand campaign represents a strategic shift

The It Takes Time campaign marks a departure from Zoho's traditional product-centric marketing to institutional storytelling. The initiative uses metaphors of technological evolution, historic architecture, and cultural longevity to communicate the company's three-decade operational history and commitment to long-term value creation.

Singh describes the campaign's genesis as a response to market volatility in the technology sector.

"We've seen these cycles in the last three decades of us being around as a company. We've seen the industry and the market behave in very strange ways, be it from rapid hiring to rapid layoffs or spells of humongous amounts of funding, some of which I would say is questionable," he says.

The campaign targets entrepreneurs, startup founders, and corporate executives beyond traditional IT procurement decision-makers, reflecting broader recognition that software purchasing decisions increasingly involve multiple stakeholders.

Creative development involved a Mumbai-based agency, Bombay Local, for video production, while Zoho retained control over messaging and print materials.

Market position under competitive pressure

Despite the cost-focused strategy, Zoho faces intensifying competition across multiple product categories. The company competes against Microsoft and Google in office productivity software, while individual applications face pressure from specialist providers with deeper functional capabilities.

Singh claims India represents one of the company's fastest-growing markets, driven by digital transformation initiatives among small and medium businesses.

"The number of companies signing up to Zoho every month is at an all-time high," he says, though specific growth metrics were not provided.

The company's expansion strategy includes vertical market development in financial services, automotive, manufacturing, and retail sectors, moving beyond its traditional horizontal approach.

Recent product launches include Zoho Contracts for contract lifecycle management, continuing the pattern of expanding into adjacent business processes.

Economic pressures test pricing strategy

The current economic environment seems to reinforce Zoho's strategy of offering affordable pricing, as businesses are becoming more vigilant regarding their software expenditures. Singh observes that organisations are "looking to optimise both cost and value" and that "everything is being rationed" concerning software licence purchases.

However, maintaining low prices whilst funding continued R&D investment and product development across an expanding portfolio presents ongoing challenges. The company must balance affordability with the need to generate sufficient revenue to support development teams working across multiple product categories.

Additionally, the effectiveness of the reduced marketing spend approach may face testing as the company expands into new vertical markets and geographic regions where brand recognition remains limited. Competitors with larger marketing budgets may have advantages in building awareness and generating leads in these markets. How Zoho performs remains to be seen.