The Long View

Marketing Custom Software - Conclusion

I recently (ok, so it wasn't so recently - my apologies) started a discussion about how I would market my services as a custom software developer if I had a chance to do it all over again. In my first post I discussed the need for a value proposition, and explained that simply describing custom business software as my business doesn't begin to explain what that proposition is.

In my second post, I discussed some characteristics of a potential target market segment - business owners who fit Geoffrey Moore's category of "visionaries". To me, this market segment is attractive on several counts. First is that they see technology as a way of gaining a competitive advantage. This makes them more focused on the results rather than how they get there. Thus I will have greater opportunities to a) break new ground in development rather than working with or on a legacy system, b) employ the tools wth which I feel most competent and c) price my services based more on value. In addition, (and possibly most importantly for me professionally) because their vision is probably incompletely formed and rapidly changing, my reliance on "best practices" in software engineering will pay off handsomely, as I can keep up with the ever-evolving moving target that a project for such a client represents.

I also made a post the other day on the value of networking, and some pointers on how it's done. Another advantage of business visionaries is that they frequently cross company and industry boundaries seeking others of their ilk. The way in which this is usually accomplished is through local business organizations, which also frequently host networking events, or events at which networking is a major component.

So let me put this all together into a rough outline of a marketing plan.

First I would develop a brief "pitch" that describes what my company does that would catch the interest of a visionary business owner or manager. This pitch must be something that conveys the message in 30 seconds or less. There is a template for this proposition that goes something like this:

• For (Target Customers)
• Who are (describe pain experienced)
• We (describe nature of service)
• That results in (describe outcome)
• Unlike (describe alternative service providers or products)

So in my case, the pitch may read something like this:

For aggressive, technology-aware businesses who are continually developing strategies to achieve and maintain a significant competitive advantage, we deliver custom information systems that allow the business to implement those strategies and change the game on their competition. Unlike vendors with common, off-the-shelf software packages, we work with our clients to understand and help them develop their unique vision and work cooperatively with them to ensure that the technology solution fully supports that vision.

Now I have a value proposition. I'm giving someone enough information to begin to complete the "Oh, then I'd call you when..." sentence. I'm also identifying my target market. Most business people are simply seeking incremental improvements. Visionaries are looking for quantum improvements, and I'm trying to let someone listening know that my services aren't right for the safe, plodding style of business management that is looking for another "me-too" solution. If that's what they need, they're going to be more comforable with NetSuite, Navision, SalesForce.com or other, less expensive off-the-shelf solutions.

The next thing I need to do is to NETWORK MY ASS OFF and listen, listen, listen and probe, probe, probe to identify people that are in this target market segment. If you think back to my post on networking, you'll recall that if properly done, networking is 90% listening. I'll show great interest in everyone I meet and find out everything I can about them. What are they doing? How are they doing it? What is their competition is doing? How arethey meeting that competition? What forces are at work in their industry that are making things difficult (and presenting opportunites)? I'll make a few notes or "keywords" on the back of the business card they give to me.

When asked about what I do, I will give them my "elevator pitch" above, then turn the conversation back to them. If I'm lucky, they will have a chance to hear the pitch multiple times as people may come into our circle of conversation. What is absolutely golden is when someone comes into the conversation, and someone else in the group introduces me, repeating a version of my pitch. Then I'll know that my pitch is working. If people (when given the opportunity) have difficulty explaining what I do, then I know that the pitch needs refinement. I'll even ask others to describe to a new arrival what I do. There's no better way to ensure that my message is getting processed.

Because I've become involved as an active member in the organizations that provide these networking opportunities - they might be a venture capital club, a CEO roundtable, a leadership council, the Chamber of Commerce - I'll have an opportunity to see many of these people repeatedly over the course of several months, gathering more information about them and their businesses. During this time, I'll continue to read (online through my handy feed aggregator) industry and business publications, and I'll make this a part of my daily routine. Whenever I run across something that is likely of interest to one of these contacts (whether or not they seem to be a prospect), I'll be sure to send them an email with a link to the online article. This can often develop into a fruitful email or telephone conversation.

This process will yield a "short list" of companies or business people that are clearly of the innovative, visionary sort that I want as my customers. Now is the time to offer to meet these folks informally for coffee or for lunch, and again, talk about their business. If I've cultivated a reputation of being sincerely interested in other people's businesses and their issues, and a person that is a can-do type and quick to volunteer to help get things done, people will very naturally ask for thoughts and advice, and sooner or later an opportunity to offer to do some paying work will arise.

Now, is this a lot of work? Yes. Is it a fool-proof method of generating business? No. Would doing this have saved my business? I don't know.

However, I do know this - this is much better than the marketing plan that I actually employed, which was none at all. Equally as important, I can't make refinements and adjust a marketing plan that isn't formulated and implemented, because I have no empirical information on which to evaluate its effectiveness.

Networking

I recently chatted with a former colleague and friend about some of the things I've learned about networking. This friend, after a few minutes, became pretty critical of the idea of generating business through networking. He'd had some experience with attending networking events put on by his local Chamber of Commerce, and wasn't convinced that it was worth the time that he put into it.

I have never been that dismissive about networking as a valuable activity. Nevertheless, I have only figured out how to do it myself in the last couple of years. What I came to recognize is that how you view the process is all-important not only to its effectiveness, but to how you feel about doing it. The important things to remember are:

1. Don't worry about selling yourself. You're there to meet others and learn all about them. If you meet a half-dozen new people, and don't tell anyone about yourself other than handing them your business card, you've accomplished your task.
2. This is a long-term effort that will NOT yield results quickly unless you get lucky. You need to make your face one that people see over and over again, and you need to have a "what can I do for you?" attitude. This includes (if it's a membership organization) serving on committees and volunteering frequently for tasks. My philosophy is that I should be serving on a committe or actively working on something on behalf of each organization of which I'm a member.

That first item was a big revelation to me. There's a lot less pressure when you don't have to pitch yourself or your company. Understanding this allowed me to be much more relaxed about networking opportunities and to look forward to, and enjoy them. I love listening to other people talk about what they're doing, and learning about their business, so this comes naturally to me.

I can't over-stress the importance of my second point above. One of the things that you gain by becoming involved with the local Chamber of Commerce, IT Professionals Council, CEO Roundtable or other business group is to become a familiar face. You will also, over time, become associated with a particular company and service or product. You will become recognized eventually as someone who is in it for the long haul, and someone who can be relied upon to get something done. It then becomes a short leap to ask you to do something professionally. However, this kind of reputation doesn't come just by joining; you need to attend regularly, participate and volunteer. If you devote four or five hours a month to this kind of activity, you could go a year or more before generating any tangible business. Thus you can't decide after six months that it isn't working and abandon the process. You might just be getting to the point where people are getting to know you, so it's not the time to give it up.

I'll pass along two good resources for learning more about networking. You can get a quick and dirty explanation of the key elements of how it's done on an outstanding post by Guy Kawasaki. Another, more comprehensive exploration can be found in the book Rain Making by Ford Harding. Harding's book goes into areas of interest to the person trying to market themselves and their company, but includes a lot of information on networking and building and nurturing business relationships.

GoDaddy and Consumer Marketing

Anyone who knows me professionally can probably tell you of my aversion to any business dealing with consumer goods or services. I've never been comfortable with retail marketing. I don't understand the nuances of retailing, and often don't have the patience to deal with the irrational aspects of the consumer products marketing art (not that B2B marketing is always coldly rational!!).

Still, I have a great deal of appreciation and admiration for anyone working in that space. I enjoy getting my hands on a copy of Advertising Age occasionally, and will read it almost from cover-to-cover (if it had covers, anyway...).

Anyone who knows me can also tell you that I'm not a sports fan. Living in Detroit I'm long-since through with all of the wall-to-wall coverage of Super Bowl XL activities in the local papers. However, I've long wished I could reverse-TiVO the adds on th Super Bowl - they're the best part as far as I'm concerned.

You've likely seen in the news stories about the attempts by GoDaddy (my hosting company by the way...) to get an ad approved for this year's super bowl after having been a little too over-the-top in their offering last year. Apparently they had to present 14 different ads to the ABC network weenies before they finally got approval for one of them to run.

Fortunately, they've archived all of their attempts and have posted them (including the "winner") for our viewing pleasure (only some of them made it into production - the rest are storyboards) and you can find them here.

My personal favorite is the first one - the "Car Wash" commercial. It had me in stitches.

Marketing Custom Software II - a Target Market?

I posted recently about my failures as a marketer when I was running my own software company. I'm no longer in the software development business, but I've had a couple of insights that would greatly affect the way I would do things if I were still trying to market those services.

I mentioned in that earlier post how I failed to identify our product in a value proposition, making the formulation of a marketing strategy impossible. The other missing piece was a manageable target market. I explained that part of the problem here was the usual "will write code for food" mentality we had, and that many software developers share. Thinking about specializing felt too much like limiting our opportunities.

Our company was targeting small- to medium-sized companies, those who were too small to have much of an IT department which is the usual entry point for marketers at the large IT service companies. I've realized that this actually suggests a possibly productive strategy, thanks to the thinking of technology marketing guru Geoffrey Moore.

I read Moore's Crossing the Chasm many years ago before I'd gotten into the software business. At the time I was a marketing manager for a small manufacturing company, producing a non-technical and highly commoditized product. As a result, I viewed Moore's work as a fascinating treatise - but as an outsider, not a practitioner. Having recently re-read the latest (2002) edition of this landmark work, I was impressed anew by his analysis and description of the two customer groups central to his thesis. In particular, I recognized that many of the clients that I found most productive to work with over the years fell into the customer category that Moore calls the visionaries (traditionally referred to as "early adopters"), rather than those that Moore refers to as Pagmatists (the classic "early majority").

Visionaries (as Moore accurately describes them) can make the connection "between the technology and strategic opportunity". This means that we have a framework in which to characterize and understand the "customer pain" that this type of customer is experiencing - a key requirement to formulating a value proposition.

There are a couple of other attributes of visionaries that make them attractive as customers. Visionaries, because they are (again in Moore's words) “Seeking a strategic leap forward, with an order-of-magnitude return on investment, they are convinced that any immediate costs are insignificant when compared with the end result”. What Moore is referring to here is what has been talked about in the software development community for many years - value-based pricing.

I believe that visionaries can lead in the long run to what my former partners and I described as a "sugar-daddy" client. The dictum that "software is never done" is never more true than when working with a visionary entrepreneur. If you can become the technology partner of this kind of business person, helping them to realize their vision, gain and maintain their competitive advantage, you'll have a much more renewable revenue stream than with a customer who engages you for a single, incremental, one-off project. The combination of the iterative nature of software development that is breaking new ground in business processes and methods pluse the likelihood of follow-on ideas that require a technology implementation can allow a very mutually productive long-term relationship to develop.

In addition, you are much more likely to be rewarded for investing in your own skills and staying abreast of cutting-edge technologies, as these are the technologies that the visionary is most likely to be interested in employing. Another "me too" technology implementation just won't do it for these people. Pragmatists on the other hand are the ones that always wait for the 3.0 release of any technology to allow it into their enterprise.

Another important (from a marketing standpoint) attribute of visionaries is that visionaries tend to communicate across industry boundaries, seeking, as Moor puts it, “kindred spirits”. This puts them into more accessible multi-disciplinary networking venues in which they can learn about us and our product offerings.

Taken together, the qualities of the visionary suggests first a way of articulating our product offering in terms that are meaningful to this type of buyer. Second, we have a way of segmenting the market, not by industry or geography but by the personality and behavior of the owner, CEO or other decision-maker. Lastly, some of the behaviors of this market "segment" lend themselves to reaching the decision-makers on a direct face-to-face basis, setting up an opportunity for a marketing strategy that even the most sales- and marketing-averse among us could handle.

In the next few days I'll talk about how I'd put all of this together.

Marketing Custom Software

Until a little more than a year ago, I was a partner in a firm that wrote custom business software. Despite my academic background in marketing, and my experience as a marketing manager (in other industries), the task of figuring out how to market our services had me flummoxed. My partners and I as well as many of our colleagues around the country used to lament how difficult it was to identify good prospects. Our closing rate was excellent once we got in front of a company that was serious about making an investment in a custom application. However, we failed to keep the pipeline of work filled because we so seldom got into that position.

With the benefit of distance from that business lending perspective, and a renewed study of the marketing art, I have come to an understanding of the mistakes I made, and some idea of how I would do things differently.

Of course, what I’d neglected was some of the first principles of marketing, but didn’t realize it at the time. Most companies like ours (small shops targeting small- to medium-sized businesses without a significant IT department) describe their business just as I did above – custom business software. What I failed to recognize was that I was describing our industry or our occupations, not our product. As a result, I was denying our company half of what makes up a viable value proposition – what it is that you’re selling.

Some professions can get away with this neglect to some extent. If you’re a patent attorney, a property & casualty underwriter or a CPA, it’s easy for a potential client to say “Oh, then I’d call you when…” If you present yourself as a developer of custom business software, it is much less likely that another business person could complete that sentence.

The other half of the value proposition – to whom you are selling – was also missing. We’d sell any kind of a system to any kind of customer. Indeed, as our technical skills and customer base grew, we saw this as a competitive advantage; we could do more things for more customers using a wider variety of technical tools. This made it impossible to focus our efforts on any particular market segment or niche, which may have increased our likelihood of making contact with potential customers.

As a result, we ended up trying to figure out how to implement some kind of marketing plan without the very foundation on which a marketing plan rests – the value proposition.

Small wonder our company struggled with how to market custom software!

I’ll be posting more on this topic – stay tuned.

Customer Service and Sales Support as "Message Central"

I recently attended a business event that included a panel discussion on the topic, "Marketing & Communicating a Consistent Message". While it was an interesting event, I felt that I'd missed an opportunity to contribute a unique perspective on this topic.

In companies offering non-consumer products or services, there is a department that is usually referred to as "customer service", or in more sales-dominated industries, "inside sales". Under either name, this department is staffed by the people that field most of the operational customer calls coming into the company. Calls placing orders for products or services, inquiring as to the status of current orders, asking questions about invoices or credits, technical questions about product specifications, pricing and company policies and procedures. In many, if not most cases, these people perform the same function for the company's field sales force as well, acting as the primary "sales support" staff. In this capacity, they are able to provide sales staff with the same kind of technical information that is provided to customers, and can help the sales staff to collect pricing and other information to quickly put together quotations and proposals in a timely fashion. They can also provide sales people with information to help them anticipate and defuse situations with angry, dissatisfied customers, turning potential disasters into successful recoveries.

In short, the people that work in this department are the "go-to" people who often have a greater breadth of knowledge about the company, it's customers, products and services, its policies and procedures than any other group in the organization. As a result, as a group, they probably have more of an influence on the customers' perception of the company and the effectiveness of the sales force than most are aware. If you're operating a company offering an industrial product or service and thinking about marketing and communicating a consistent message, this department should be foremost in your mind.

First, ask yourself if your selling proposition and the message about that proposition is real, or is it just glossy posters and a mission statement? If it's just empty sloganeering, this department will be the first to see through it. The emperor can get away with a less-than-complete wardrobe almost anywhere else, but not here!

Second, is the message continually communicated to your customer service staff? It's fine to have a "culture" that everyone understands and buys into, but everyone has some turnover sooner or later, and even for the "old hands", it helps to articulate what differentiates your company and your people from the rest of the pack. It also makes it easier to make subtle refinements and changes in this message if it's formally stated.

Third, do your customer service people have the tools they need to do their jobs effectively? Information is their lifeblood, yet many struggle with information systems designed to provide management with incredibly detailed information, but do nothing to allow CS staff to quickly get an answer for a customer or a sales person. Information systems, knowledge bases, communication, training all keep customer service people on top of their game.

Finally, do your customer service people get the support they need? CS offices often get rather colorful names - "The Pit", "The Lion's Den", "The Hot Seat" - for good reason. This is a department where multiple demands from multiple directions is one of the few constants. Is this the first department cut when you have to downsize? Are there clear guidelines for deciding whether the needs of customers or sales people take priority? Are there clear guidelines for prioritizing other tasks? In other words, do you create an environment where your customer service people are unlikely to be in a frame of mind to care about the "message" as they struggle just to keep their heads above water?

Ideally you want to market and communicate a consistent message throughout the entire company, but the customer service department in a non-consumer product company is the point at which you can achieve the effect of such a consistent message most quickly, and the point from which such a message can begin to spread through the rest of the organization.