How Will You Sell Your Software?
Do you want to develop and sell software? We suggest you think about how you’ll market and sell your application before you start to write any code. Don’t fall into the “build it and they’ll come” trap and don’t underestimate how difficult it is to take your product to market.
Here are some things to think about:
- What are you selling? Are you shipping binaries - software that’s installed by your users - or are you building an online solution to sell software as a service (SaaS)? There’s been a big shift in recent years to the SaaS model in enterprise software and part of that has been a move away from software licensing to subscription. Even enterprise hosting is now done as an online service - think Amazon Web Services. People still ship binaries though - most are mobile apps downloaded from the Apple and Android app stores.
- Don’t write any code until you can answer this question: how are potential customers going to find out about your new software? That is the number one challenge you face. Word of mouth, paid advertising, content marketing for higher ranking results in Google searches, salesman knocking on doors? You can spend a significant amount of money on marketing - you could spend more on marketing in year 1 than it will cost to develop the software.
- How innovative is your new software? Innovation is good but trying to sell something that’s never been done before is going to be difficult unless you’ve got a big marketing budget or you’re in small niche. We’ve seen truly innovative software products in quite small industry niches fail, not because the software was a bad idea, but because the market for that kind of software simply didn’t exist. Sometimes it’s better to go into an established market and set out to build a better product than the competition.
- Are you doing traditional enterprise sales or self-service? Enterprise sales means someone visiting a potential client, demonstrating the software and hopefully winning the deal. The cost of acquiring a customer is high. It can take more than one visit to get a sale. You might need to take at least two people to make the visit look credible. Good salespeople are expensive and no, they don’t work on a commission only basis. Self-service is an alternative. A new customer finds your website and signs up with a credit card. There’s no visit involved, no expensive sales person, travelling expenses or overnight stay in a hotel. There are two things to remember though. Firstly, you might only get one online sale for every 20 sign-ups (assuming you offer some kind of free trial). Secondly, you’re now in the world of subscriptions; no big upfront license fee, instead smaller monthly subscriptions from customers who can quit at a month notice.
- How does pricing work? What does your competition charge? In the SaaS world this can be a shock - monthly subscriptions for enterprise level software can be surprisingly low. They work on high volumes (driven by big marketing budgets). Work up a simple model in a spreadsheet that shows predicted revenue based on different pricing models and likely sales. Try out different scenarios. Predict the cost of acquiring each customer and then work out how long it will take before you make a profit.
- Are you selling a minimum viable product? Build the simplest software that you think people will buy - that is actually viable - and then try to sell it. Put the focus on sales and marketing as soon as you can and begin to understand the challenges you’ll face in your chosen market. This may seem crazy but you’re almost turning the problem on its head - your primary job is to market and sell, not build software. Can you develop the engine that generates sales leads before you develop the software?
- Look for a market niche where your customers will sell for you. Are there professional bodies in the sector where people from different organisations get together? Universities are a great example - academics and senior administrators regularly meet with colleagues from other institutions. Recommendations and referrals are gold dust. Even better if your SaaS solution can circumvent the traditional IT procurement function in the organisation. Salesforce is a great example of enterprise software that gets a foot in the door in an organisation because an employee decided to sign up for a free trial.
The good news is that there are always opportunities for smart new software solutions to solve real problems. And the shift to cloud software as a service solutions has still got happen in some niches. There are plenty of mature enterprise software products that are still to be migrated to SaaS and the “cloud” - that could be where the opportunities lie.