Monday, March 30, 2015

Software Sales,
Target Marketing, and Segmentation

Mass marketing is a good way for a small independent software vendor (microISV) to sell small quantities of software. But if you want to build a software development company that will last for years, you need to learn to segment the marketplace, and to target each segment with its own sales presentation and perhaps even its own software version.

With mass marketing, you create a single product or service, and a single sales message. Using a "one size fits all" marketing strategy, you try to get as many people as possible to buy your software applications. By contrast, target marketing identifies significant groups of prospects (segments), smaller groups (niches), and even smaller groups (market cells).

If you can target a specific group of individuals, it's much easier to sell them your software because you can tailor the software and the marketing message much more effectively to their needs. Marketing isn't something that you do to a software application after it's been developed. Marketing has to be baked into the software itself. Software developers need to define their target markets before software design begins, and weeks before the first line of code is written. Determine the needs and desires of people in every segment that you're targeting, and tailor the substance of your software to meet those needs. Then, design unique sales messages that make your software irresistible to each market segment.

Geographic Segmentation

For software developers, geographic segmentation means translating and localizing the software, help files, and sales presentations for prospects in every major language and country on the planet. You don't need to offer your software in multiple languages on the first day that you launch a new application. But it makes a lot of sense to design your software with all of the key software strings in the same place so that you can give it to professionals for translation and localization.

Benefit Segmentation

microISVs need to create a separate sales message - and possibly a separate version of their software - for each group of prospects that is expecting a specific benefit from the application. For example, if you're marketing a text editor, word processor, or other text-intensive program, you may want to add a legal dictionary and spell checker to make it easier to market the application to attorneys. Similarly, you can target hospital administrators and medical office managers by adding a dictionary and spell checker for health, fitness, and medical words and phrases.

It may not be necessary to create separate versions of your applications. You may simply need to customize your sales message to emphasize the benefit that would be attractive to each segment. With a little creativity, you might find a way to promote your application to, say, both bargain-hunters and to people who seek high-prestige software products or services.

Identify the groups of people who would benefit by having your application installed on their computers. Whether it's people with particular physical limitations or people who work in a specific industry, explain why your application is the right program to solve their problems.

Benefit segmentation allows you to create seemingly conflicting sales messages that appeal to different groups of prospects. For example, use one sales message to appeal to people who want to use leading-edge technology, and another sales presentation for prospects who value your software's rock-solid reputation for stability and safety.

Create a separate landing page, develop case studies, write whitepapers, design eBooks, and write a blog for each segment you need to target. Create a large library of the right type of content, and the search engines will send nicely-targeted traffic to your websites and blogs.

Demographic, Psychographic, and Lifestyle Segmentation

Identify market segments of prospects who have similar characteristics, and help them find a sales message for your software that is targeted specifically to their needs. The difficult task is determining which demographic, psychographic, and lifestyle characteristics affect prospects' eagerness to buy your software.

Men and women buy things differently. For example, the October 2013 issue of Consumer Reports magazine points out that 56 percent of men take multivitamins or supplements, while 76 percent of women take them. Does this mean that vitamin manufacturers should tailor different sales messages to nudge men and women to purchase the pills? Maybe. Or perhaps women are the major buyers of these products, and vitamin makers should craft sales presentations to encourage men to take the vitamins that their wives have already purchased.

Would a prospect's marital status affect his or her inclination to buy your application? Before you create separate messages for married versus single people, perhaps you should create a more detailed set of lifestyle alternatives. Try defining segments for individuals who have never been married, newlyweds, long-married people, recently divorced individuals, and other groups. For example, home financial planning software would have to consider these varied statuses.

Ultimately, you're probably going to find that the best market segments have combinations of attributes such as highly-educated senior citizens or teachers in affluent school systems. As with all marketing campaigns, develop a sales message, measure the results, make changes, and measure again.

Occasion Segmentation

With occasion segmentation, software developers need to examine event-based usage of their software, and target prospects based on how they use their application. For example, if you've created a kid's game, you might want to create a separate sales message for home-schooling parents. Or if you offer an education application, you might want to create a separate landing page for people involved with continuing education.

Find a way to turn your software into a gift that people will want to present to friends, business colleagues, and loved ones. You may find that there is a substantial market for people buying your program as a graduation present, a Mother's Day or Father's Day gift, or a Valentine's Day surprise.

Usage Level Segmentation

Behavioral segmentation or usage level segmentation means targeting prospects based on how intensely they might use your software. For example, if you market a file management utility, you could target several user segments. If your application handles basic functions extremely well, you could appeal to newbies by emphasizing the short learning curve. For power users such as network administrators, database managers, and computer consultants, describe the program's many features and power.

In addition, there may be a segment of prospects who need a combination of these two sets of benefits. Explain how your program is ideal for people who need a feature-rich product but only use the software a few times each year.

The Bottom Line

It's a lot more work to create a different sales message and perhaps even a different software product targeted at each market segment. But you can sell a lot more software with targeted marketing.

Saturday, March 28, 2015

Persuading Software Buyers

"People are far more persuaded by the depths of your beliefs and emotions than by any amount of logic or knowledge you possess."

... quotation by Michael LeBoeuf from his book "How to Win Customers and Win Them for Life"

To learn more about persuasion, or to learn more about LeBoeuf's book, visit my Software Marketing Glossary.

Thursday, March 26, 2015

Software Brands Are Everything

"A business focused on its brand is, very simply, a business primed for success," David D'Alessandro tells us. David D'Alessandro is the author of the book "Brand Warfare - 10 Rules for Building the Killer Brand."

The author believes that everything we do affects our brand. A lot of people in the software development industry think that their brand is only about their logo, website, and software applications. Truth is, your brand is bigger than just your advertising and marketing efforts.

Your brand includes -

  • How you answer the telephone.
  • How quickly you respond to support requests and pre-sale questions.
  • How you deal with your eCommerce provider and other stakeholders.

Sure, you think about your brand when you're writing ad copy, PAD files, and news releases.

Small independent software vendors (microISVs) have to be brand-aware with every design decision, every interaction with prospects, everything.

Tuesday, March 24, 2015

Cybercrime and Software Marketing

Business owners and managers aren't sure what to do about cybercrime. So says a study by Software Advice (as reported in a recent issue of Processor Magazine.)

Some of the interesting numbers for software developers are:

  • 66% of businesses are worried that their companies might be hit by cybercrime.
  • 21% were not comfortable that their sensitive data is secure.
  • 31% said that they did not fully understand their companies' liabilities.
  • 36% of respondents said that their firms had insurance policies in place to cover losses related to cybercrime.
  • 27% weren't sure if their company had a plan to deal with cybercrime.
  • 17% responded that they didn't think that it was necessary for their company to have a plan.

Software developers need to include descriptions of their security regimens when describing their applications' features and benefits. Whether you're offering programs for desktops and laptops, apps for tablets and smartphones, or software that runs in the cloud, talk about the things that are built into your software to protect it from hacking, identity theft, and all of the other security threats that have business owners and managers worried.

It's good software marketing.

Friday, March 20, 2015

Competing with the Software Giants

"Since you're not going to beat Nike at its own game, why not cede that 40 percent market share to them - and start taking market share away from all the smaller brands behind you."

... quotation from Phil Dusenberry from his book "Then We Set His Hair on Fire."

To learn more about competition, or to learn more about Dusenberry's book, visit my Software Marketing Glossary.

Wednesday, March 18, 2015

Empathy and Software Sales

You'll sell more software if your prospects think that you can empathize with them. And one way to achieve empathy with software buyers is to let your target audience know that you're "one of them".

I naturally empathize with my customers, 99 percent of whom are software developers. I try to remind my prospects that I'd spent 15+ years doing application development work before starting my press release and marketing business in the mid 1980s.

Reveal your empathy with your software prospects -

  • Many educational software developers could tell prospects that they developed their software for their own children. Tell prospects if you have teaching experience. Make them feel that you understand how important it is to educate youngsters.
  • If you're marketing music software, talk about your experience as a musician or as a music lover.
  • Marketers of business software can mention that they originally developed their application to use in their own company. 

Make your prospects know that you understand the problems that they face. It's good software marketing.

Monday, March 16, 2015

Maximizing Marketing Impact

Marketing is an investment, and not an expense. So says Jay Conrad Levinson in his book "Guerrilla Marketing Excellence - The 50 Golden Rules for Small-Business Success."

We shouldn't try to market economically. It's not about saving money. It's about generating significantly more in profits than we spend on marketing, Levinson reminds us.

With this in mind, Levinson has suggestions for saving money - suggestions that can help software developers deal with the difficult economy worldwide, and its effect on the software development industry -

Size Doesn't Matter

Try small advertisements, Levinson suggests, instead of larger ones. Try advertising on smaller, lower-volume websites, and in lower-circulation trade publications. You may find that the highest returns don't come from your investments in the huge consumer publications or on the largest download sites. Smaller magazines and online sites that do a better job of targeting your audience might be more cost-effective places to increase your microISV income.

Economize on Research

Levinson suggests that we not spend a fortune doing market research. Instead, rely on industry publications and trade association forums to find the information that you need about your marketplace. Be wary of industry surveys. Many times, the organization that commissioned the survey has an agenda, and the survey is designed to confirm the conclusion that the organization had at the outset.

Extend your Current Ads

Be persistent in your marketing campaigns, Levinson urges. Stop creating new, expensive ad campaigns every month or two. Most advertisers pull their ad campaigns long before they should. Worrying that the campaigns may have become stale, business owners invest in new writing, new artwork, and new ways to reach prospects. It's usually better - and much more economical - to keep your existing sales campaigns in place for additional weeks or months. Be patient.

Create Timeless Ads

Levinson wants us to write ads and brochures that don't go out of date. I agree with him. I've learned over the years that you can create sales brochures and flyers that don't get out of date quickly. You have to give your write-ups a careful reading, and try to anticipate - and eliminate - the things that might change in the future.

Write Multi-Use Ads

Find multiple uses for a single advertising vehicle. Levinson wants us to make brochures and flyers do double-duty. Reduce your printing costs by using the flyers that you postal-mail to prospects as handouts at trade shows. Reduce your copywriting costs by using parts of your press release write-ups in your online sales presentations. Turn your newsletters into whitepapers and eBooks, and then turn them into podcasts and webcasts.

It's okay to find ways to save money on your marketing and advertising activities. But don't cut back more than a little. Marketing is an investment. Do it right, and it will pay for itself many times over.

Saturday, March 14, 2015

Ideas and Commodities

"Ideas are a commodity. Execution of them is not."

... quotation by Michael Dell of Dell Computer

To learn more about tech commodities, visit my Software Marketing Glossary.

Thursday, March 12, 2015

Software Buyers'
First Impressions

Paco Underhill studied consumers' buying habits in brick-and-mortar stores. In his book "Why We Buy - The Science of Shopping," Underhill writes about the merchandise that stores place directly in front of the entrance to their store. These are the items that prospects see immediately when they walk in from the parking lot. And these items, Underhill learned, don't sell particularly well.

Move this merchandise back 10 or 12 feet, so customers can get oriented to being in your store before they observe the merchandise, and sales go up. In fact, sales go up quite a bit.

What does this information mean to microISVs who are selling software from their web sites? For years, I've been saying that software developers shouldn't start their home pages with "Welcome to the Widget web site." Do you have to let your prospects get comfortable before you talk to them about the benefits of your software? Or perhaps Google is your website's "parking lot," and when your home page starts loading, your prospects are getting oriented to being on your site.

It's hard to determine what Underhill's findings mean to your software website. You have to measure the results of your current sales presentation, change things, and measure again. It's the only way to know for sure.

Filene's Basement, Underhill tells us, puts a bin of deeply-discounted merchandise in front of you when you enter their store. And it's one of the most popular places in the store, contradicting Underhill's findings about other retail stores. Again, software developers need to measure, change, and measure again.

Underhill found that it's not always best to let the customers' first impressions be about the item that you most want to sell. So, on your web site, should you start with the item that you want to sell the most of? Probably.

There are major differences between a brick and mortar store and a software developer's website. microISVs' websites have a stronger focus, and much better targeting. Since your site offers fewer distractions than are found in a typical physical store, it probably makes sense to present your prospects immediately with the software application that you most want them to buy.

But it wouldn't hurt to measure, change, and measure again.

Tuesday, March 10, 2015

Selling Software to Enterprises

There's a new marketing trend that will make it easier for small independent software vendors (microISVs) to sell their software to corporations, nonprofits, and other enterprises. Or perhaps it will make it more difficult to close the sale. It's too early to tell.

The new trend is the enterprise app store. And according to Gartner (as reported in a recent issue of Processor Magazine), by 2017, 25 percent of all large enterprises will have enterprise app stores for their employees.

With an enterprise app store, the IT department would select a wide (or not so wide) variety of software applications that employees could use on their PCs and mobile devices. Employees could visit the app store electronically and choose from applications that have been pre-approved by the corporate IT department. The cost of selected and installed software would be charged back to each employee's business unit.

Benefits to the Enterprise

An enterprise app store benefits the organization by helping to ensure that only approved programs will be installed and used by employees. The bring your own device (BYOD) movement that is growing in most companies is weakening the ability of CIOs to ensure that employees won't install all sorts of programs on their laptops and mobile devices. But the enterprise app store is a step in the right direction for enforcing a standard set of applications across the company.

In addition to controlling which applications are stored on which PCs, tablets, and smartphones, an app store lets the enterprise's CIO manage software licenses more accurately and efficiently. And employees benefit by knowing that the software that is available can be supported by the corporation's help desk staff.

Problems with Site Licenses

Software developers may find some disadvantages to dealing with enterprise app stores. If the app stores truly allow each employee to select the software that he or she will be using to solve their business problems, then it might become much more difficult for microISVs to sell multi-user and site licenses. That's because individuals and not business unit managers will be making the buying decisions for the software that they'll be using.

microISVs need to find a way to make multi-user and site licenses very appealing to large enterprises. Perhaps find a way to contact the app stores' managers and let them know that your app offers features and benefits that your competitors' can't match. Convince them that your app should be the only app that their company or nonprofit allows its workers to use in its software category.

Another approach would be to make the multi-user licensing pricing so attractive that enterprises will feel motivated to select your solution for their companies' problems. Competing on price alone, however, is dangerous. Price competition weakens differentiation, and leads to commoditizing of software. And that results in lower prices for software developers.

Selling to the App Store Managers

microISVs will need to craft sales presentations that appeal to a wide range of stakeholders in each enterprise.

The app store managers will be looking for software in every major business category. Make it easy for them to understand exactly what your program does, how it should be categorized, and how much time and money it will save the enterprises' employees.

Selling multi-platform applications will give you a serious advantage over your competitors. If you have a web-based application, for example, then talk about how it can be used by employees with every major type of PC, tablet, and smartphone.

Selling your App to the Accounting Staff

To get on the "approved software list" of an enterprise app store, it may be necessary to cater to the needs of the accounting people. They may reject the idea of paying for your software by credit card, and require you to use a purchase order system instead. You need to be flexible and create a process that allows large institutions to purchase your apps effortlessly.

When it's time for employees at an enterprise to pay for an upgrade to your software, find a way to send their accounting department a single invoice for all of their workers. Don't make them deal with multiple invoices or multiple purchase orders.

Keeping Tech Support Happy

The enterprise's tech support people may have standards that they require you to meet before approving your applications for the company's app store. High on that list of standards will be the requirement that they won't have to perform hardware validation on every installation in the enterprise.

Most large enterprises upgrade their hardware every three or four years. If your software's copy protection regimen requires users to go online and validate the license on each device, you're not going to be popular with the tech support people. Find a way to make it easy for your customer to validate software when it's re-installed on multiple machines. And find a way for users to upgrade to a new version of your software without involving the enterprise's tech support staff.

Make your Software Help Desk Friendly

Each enterprise's help desk manager is going to give input to decisions about adding specific software to the app store's list of approved programs. The help desk people are looking for software that is easy to understand, and easy to explain to their in-house customers. microISVs need to describe their software simply and clearly on their websites so the help desk people will realize that the programs are simple to use.

Software developers also need to weave the concept of "rock solid software" into their sales presentations. Talk about how many years your software has been in the marketplace. Emphasize the rigorous beta testing regimen that you put each new software release through. Include testimonials on your web site that vouch for the stability of your applications. Help desk people don't want end-users who ask easy questions. Help desk people want end-users who don't have any tech problems or questions.

Dealing with HRM

Larger enterprises' human resource management (HRM) people may only accept software that is easy to use by people with disabilities. And no doubt, there are other standards in the HRM community that will influence the way the HRM people will view your applications. Multi-language support, for example, might seem like a low priority feature that you'll add to your applications some day in the future. But if you're trying to sell software in Canada, you'll find that support for both the French and English languages is not optional.

The Bottom Line

Getting onto the app stores' approved software lists might be a way to sell large quantities of your programs to universities, libraries, government agencies, and Fortune 500 companies. In the coming years, microISVs should monitor this new marketplace trend, and find ways to turn it into a source of income.

Friday, March 6, 2015

Software Brand Loyalty

Harry Beckwith, author of the book "The Invisible Touch - The Four Keys to Modern Marketing," believes that there is brand habit, brand affinity, brand preference, but not brand loyalty.

Branding is important, Beckwith believes. In fact, brand is the second of the four keys to modern marketing that he writes about. But unlike many marketing experts, he believes that brand loyalty is getting harder and harder to find.

Build a brand, Beckwith advises. Or buy one. Or align yourself with a brand. It will increase your sales.

Your brand is everything that prospects and customers think about you in the marketplace. Try to build loyalty with your customers. But don't set your expectations too high.

Wednesday, March 4, 2015

Software Price
and Software Value

"Determine your product's economic value to the customer and price the product to that value, not to the manufacturing cost."

This advice comes from Jeffrey J. Fox, the author of "How to Become a Marketing Superstar - Unexpected Rules that Ring the Cash Register."

Fox believes that it's a mistake to place a price on your product or service that is tied to the cost and effort to build it.

In the software development industry, your customer doesn't know or care how much effort it took you to design or code your program. They're not going to pay you more money because the development life cycle took longer than expected.

And if you price your software too low because you created it in one weekend, your prospects won't be grateful that they're getting a bargain. They'll think that your low price reflects your application's low quality.

Prospects and customers only care how your software will benefit them. Price it accordingly.

Monday, March 2, 2015

Finding Good Software Customers
and Firing Bad Customers

New software developers try to get as many customers as possible. Over time, they realize that customer quality is more important than quantity. Here are some insights on how microISVs can find good software customers, and fire bad ones.

Selecting Good Customers

The late advertising giant David Ogilvy developed an aggressive plan to acquire customers for his advertising firm. Ogilvy wrote a chapter in his book "Ogilvy on Advertising" about how his advertising firm selected its clients. And much of Ogilvy's advice translates nicely into the software development industry.

In his own advertising agency, Ogilvy started by making a list of the clients that he wished to get. The list included such giants as General Foods, Lever Brothers, Bristol Myers, Campbell Soup Company, and Shell. Twenty-four years ago, when he wrote his book, Ogilvy's company had more than three billion US dollars in annual billings from these particular companies.

Does it make sense for software developers to create a list of target companies? Yes and no.

If you're selling a $25 Windows utility, then it makes no sense to target particular individuals or companies as potential customers. But if you're selling highly vertical or industry-specific software, or high-priced software, then selecting customers might be an effective strategy.

For example, if you're selling forensic software, include the US Department of Defense and the FBI on your list of potential clients. Similarly, if you're selling educational software, it might be a good idea to target specific large school systems and universities.

Creating a list of high-end customers will also focus your thinking more on selling multi-user and site licenses. And that's a good thing for  most independent software developers.

Even if they're not selecting specific companies in advance, microISVs need to develop a plan to focus on groups of individuals and institutions who would be likely targets of their marketing efforts. If you're selling, say, a Windows music-playing application, you should be targeting the general PC-owning universe. But you need to craft separate web pages for each of your smaller niche markets. You should have a sales page for children, a page for tweens, a page for teens, a page for young adults. You need a page for adult music lovers, and another page for seniors.

You need separate pages for each genre of music. And different pages for the different levels of technical sophistication in your target audiences. Teens might find a discussion of MP3 and WAV essential, while seniors might find such a discussion intimidating. These separate pages will help you get the search engine traffic that you need.

It's important to keep track of the important metrics for each of your target markets. You might find, for example, that seniors account for a small percentage of your sales, but a large percentage of your support emails and phone calls. With that information, you can find a way to reduce the support burden from seniors by simplifying your software's GUI, or by including easy-to-understand instructions for your software.

Firing bad customers

In addition to knowing which customers to hire, you also need to develop a plan for firing customers who are hurting your business. In his book "How to Become a Marketing Superstar - Unexpected Rules that Ring the Cash Register," Jeffrey J. Fox urges us to segment our target audience and learn the metrics that are important to making each segment profitable. That includes the size of each market, its rate of growth, the demographics of the people in each segment, the target customers' needs, customers' fundamental attitudes toward buying software like yours, and your competitors' positioning of their software in each segment.

Fox wants us to create four categories of customers, based on sophisticated/unsophisticated and okay/not-okay. Translated into the software development industry, Fox would tell us that

  • Sophisticated/okay software customers know what they want. They might be quite familiar with your competitors' products. While you might enjoy a high level of sales with these prospects, your sales margins will be low because competition will be intense.
  • Unsophisticated/okay customers look to you for advice and guidance. Fox says that they expect to pay for support, but Fox was not particularly writing about the software industry in which many prospects expect to get free support and even free software. Margins per order might be relatively high, but don't expect to get a huge number of orders.
  • Sophisticated/not-okay customers are to be avoided. Be prepared for a continual flow of email questions and complaints, both before and after the software sale.
  • Unsophisticated/not-okay sales are a real problem. In addition to eating up a lot of your time, they present potential concerns such as lack of appreciation for your software, lack of respect for your company, and lack of loyalty.

If you develop a segment-by-segment marketing plan, it should be fairly straightforward to determine which marketing techniques are generating good customers versus less good ones. Spend more time going after larger (multi-user and site license) customers. Your software pricing should reflect the sophistication of the customer, and the amount of hand-holding needed to support them. Many multi-user and site licenses will be purchased by companies with in-house technical support.

Some software developers - especially microISVs who have recently launched their businesses - tend to put up with all sorts of abuse, in the hope that they can generate some initial sales. Established software companies, by contrast, learn to fire customers who aren't okay. These problem clients can be a monetary and emotional drain, even on a one-person software development company.

You can and should put up with a lot of problems. Fox tells us that "good customers can be tough, exacting, impatient, challenging, finicky, exasperating, demanding, needy, insistent, and a million other things." Bad customers, however, drain too much time, energy, and emotional capital. Don't deal with them.

Ogilvy also talked about when we should fire customers. He said that he walked away from accounts five times as often as he had been fired by clients. The main reason that Ogilvy cited for firing customers is that they were difficult to deal with, and he didn't care for the way they damaged his staff's morale. There's a good lesson there for software developers who have clients who are maintenance nightmares.

One last bit of advice from David Ogilvy: Don't get clients by selling at the lowest price. Ogilvy said to his prospects, "If you are going to choose your (advertising) agency on the basis of price, you are looking through the wrong end of the telescope." He told those companies which he wanted to represent that they should be thinking about the increased sales that he can deliver, and not the amount of fees that he charges.

In the software industry, we should be taking the same approach with our customers. Make it clear how our products and services can help our customers save time, save money, and do things tomorrow that they couldn't do yesterday. Find the right customers, and keep them forever. Lose the bad customers.