Tuesday, June 30, 2015

Demographic Shifts
Affect Software Marketing

"Sixty is the new forty."

... quotation by Kenneth W. Gronbach from his book "The Age Curve"

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

Wednesday, June 24, 2015

Measuring Software Marketing
Campaign Costs

Only 27 percent of marketers measure the cost of each of their marketing campaigns. So says Beagle Research, as reported in Direct Marketing News some months ago.

Absent a lot more detailed information about the survey, it's difficult to understand a statistic such as this. Does it means that nobody took the time to measure the cost of this month's AdWords campaign? That seems highly unlikely.

Does it mean that nobody performed the complex calculation of factoring in the work by full-time staffers on an online advertising campaign? For example, nobody bothered to factor in the salary, benefits, taxes, and overhead costs for the copywriter who wrote the new sales presentation, or for the graphic artist who illustrated it?

If your micro independent software vendor (microISV) firm is competing with larger software development companies, and if these larger firms are doing a sloppy job of bean-counting when it comes to their advertising budget, then that gives you a distinct competitive advantage. By keeping track of marketing and advertising expenses, you can do a better job of knowing which ads and press releases are working and which are not pulling their weight. And by tracking these simple metrics, you can direct your limited ad and marketing budgets to the things that are truly working.

Take advantage of your ability to easily track your expenses, and use it to compete effectively with larger competitors who cannot track costs as effectively.

Monday, June 22, 2015

microISV Profit and Growth

"Anyone can build market share and, if you set your prices low enough, you can get the whole damn market."

So says David Packard, the co-founder of HP, and the author of the book "The HP Way - How Bill Hewlett and I Built Our Company."

Profits, Packard explains, are a part of every successful business. HP manages employees, time, money, supplies, and raw materials. The company creates products and services. Packard describes HP's profit - the difference between what the company pays for these factors of manufacturing and the price that customers pay for the end-products - as the value that HP adds to the process. Profits are good things, Packard explains.

Encourage Sales, not Downloads

If Packard were advising software developers about how to turn a profit, I believe that he would encourage them to sell their software, and to put less emphasis on coaxing users to download their trial versions.

Every year, I talk with software developers who feel guilty charging customers "so much money" for their software. Since the software took them only a couple of months to create, these developers explain, it seems unfair to charge the going rate for their programs. And I think that it's this guilt about charging what might be seen as a lot of money that makes some microISVs cling to the try-before-you-buy method of selling software.

In my opinion, the purpose of most software developers' websites should be to sell software. Describe it honestly and accurately, and encourage prospects to buy it and not to try it first. Sure, there are some programs where it makes sense for your website visitors to try before they buy. But your prospects don't care how long it took you to develop your application. They only care how your software can help them solve their problem.

Plan B for most software developers should be to encourage prospects to download, install, and try the software. History has shown that only one or two percent of the people who download an application will buy it after they've given it a workout. That's why "buy now" should be your major marketing thrust, and "try now" should be your backup plan.

Informed Prospects are Ready to Buy

Running a successful press release campaign for your software is one way to drive home the benefits of encouraging the sale (versus encouraging the download). When a prospect finds your software website in a Google search, she visits your website with the notion that she might want to download the trial version of your application to see if it solves her problem. Unless your product page does a convincing job of encouraging her to buy your program without trying it first, it's likely that you're going to get a lot more downloads than immediate sales.

The prospect's mindset is very different when she visits your website after reading a magazine or newspaper article about your application. When she reads the editor's description of your software in a computer magazine's "What's New" column, she sees the publication's write-up as an endorsement for your program. An expert has recommended your application. This expert has put the reputation of his or her publication on that recommendation. So when your prospect arrives on your product page, she is already leaning heavily towards purchasing your software.

Sure, you could distract somebody who has read a press release about your program and who visits your website, credit card in hand and eager to buy. You might be able to convince them to take the time to install and try the trial version of your application before deciding whether to buy it. But doing this is a bad marketing decision. You would be walking away from a sale that would be easy to close.

I believe that you should treat all of your website visitors as if they have come to your site at the recommendation of an expert who has endorsed your software. Deliver an honest, upbeat description of the features - and more importantly, the benefits - of your application. And make all of your prospective customers comfortable about making the software purchase immediately.

Grow from Profits, not Loans

HP decided many years ago to pay for expansion out of current profits, David Packard explains, and not to borrow a lot of money. Although HP's first full year of business was 1939, the company didn't issue stock until 1957. One reason for going public was to be able to reward employees with shares of HP. Another reason was to acquire other companies by offering their owners HP stock in exchange for ownership of the other firm.

Packard laments Wall Street's focus on short-term profits. It's easy, Packard tells us, to show high short-term profits by cutting back on the essentials, such as new product design and research and development (R&D). Packard refused to play these games. He maintained R&D budgets at the eight to ten percent level.

Low Prices Don't Work

Packard advises us against offering products at a price that is too low to contribute significantly to our companies' profits. Often companies do this, with the intention of raising prices later. This strategy rarely works out, Packard tells us.

The author also advises us against offering prices that are too low, with the intention of getting a high market share. Market share is important, but maintaining profits is much more critical. To repeat Packard's warning, "If you set your prices low enough, you can get the whole damn market."

Set a target price that pays you a comfortable salary. Be sure that your price structure covers your medical insurance, pension plan, office rent, and utilities. And then create a marketing plan that lets you grow your company to meet these sales and profit goals.

Friday, June 19, 2015

Writing for Software Buyers

"Write as though you were addressing someone whose opinion you value."

... quotation by Patricia T. O'Conner from her book "Words Fail Me"

To learn more about writing for customers, or to learn more about O'Conner's book, visit my Software Marketing Glossary.

Wednesday, June 17, 2015

Solve Software Customers'
Problems Quickly

Listen to your customers' problems and requests, James H. Donnelly, Jr. says, and answer them quickly. Donnelly is the author of the book "Close to the Customer - 25 Management Tips from the Other Side of the Counter."

Don't pass the responsibility to solve a customer's problem to another employee, the author tells us, or you'll risk the ball being dropped.

The typical one-person independent software vendor (microISV) doesn't have another employee to pass the problem to. I think Donnelly would advise us to take care of the problem ourselves, quickly, so it doesn't get dropped. That's why the author named the chapter that discusses this topic "Hand-Offs Only Work in Football."

Donnelly also quotes Lau Tzu on a related topic: "If you ever live in a country run by a committee, be on the committee."

Monday, June 15, 2015

Software Customer Expectations

"Consumers want you to make big, bold promises," Robert M. McMath and Thom Forbes tell us in their book "What Were They Thinking?".

Customers' expectation levels can have an enormous impact on the success of your sales.

If you make expectations low, the authors explain, you avoid disappointment. But you won't sell much product.

Promise something spectacular. And then deliver on your promise.

That's good marketing advice for software developers.

Friday, June 12, 2015

Think about your
Software Customer

"If you are not thinking customer, you are not thinking."

    ... quotation by Philip Kotler in his book "Kotler on Marketing"

To learn more about the customer's perspective, or to learn more about Kotler's book, visit my Software Marketing Glossary.

Wednesday, June 10, 2015

Finding New
Software Development Opportunities

Lack of fresh ideas reflects a problem with the business owner's imagination, Philip Kotler tells us, and not a problem with the marketplace.

Kotler is author of the book "Ten Deadly Marketing Sins - Signs and Solutions."

By observing market environments, Kotler says, we can find ideas for new products and services. He defines the five market environments as
  • political
  • economic
  • social
  • technological
  • environmental
Kotler believes that we need to create a formal system to identify and pursue new product development ideas. We need to tap all of the people in our company, and all of our stakeholders.

Kotler says that there are no industries that are so mature that they lack opportunities for new ideas. And while there are some products and services that are marketed as commodities, there's no reason for any company to treat their products or services that way.

Finding new software development opportunities is good software marketing.

Monday, June 8, 2015

Magazine and Newspaper
Circulation Figures

There are a lot of ways that software developers can increase their sales by forming partnerships with magazines and newspapers:

  • You might want to buy space advertising in well-targeted publications. 
  • You can enhance your credibility by writing articles and having them published. 
  • You may want to email the editors a press release. 
  • You might want to negotiate with magazine publishers to get your trial version included in their cover discs on the few publications that still offer cover discs.

Understanding circulation figures

To decide which publications to pursue, you need to know their circulation figures. That is, you have to ask, "How many paid and nonpaid copies enter the marketplace each month?" While this sounds like a simple question, there are deceptive practices that make it tricky.

Few publications lie about their circulation figures. They have found ways, however, to publish numbers that are accurate, though misleading:

  • Some consumer magazines count readers during the year-end holidays, when gift subscriptions peak. 
  • Some trade magazines and newsletters have inflated distribution figures because they print extra copies that are given away at trade shows. 
  • Some magazines have special editions (for example, swimsuit issues or annual buyers' guides) that result in spikes in their print runs. 
  • Magazines can show substantial increases in circulations by launching "subscribe now and we'll bill you later" campaigns, even if these advertising campaigns don't result in a large number of additional long-term subscriptions.

Audience numbers

The most confusing figures that magazines and newspapers release are their audience numbers. In addition to circulation numbers, they add in the estimated pass-around figures for individual magazines and newspapers. And they factor in the publications that are distributed in public places, from barber shops to doctors' office waiting rooms. Estimated audience numbers are often three or four times as large as circulation numbers.

Circulation audit bureaus

Decades ago, the publishers, advertising agencies, and advertisers decided to form circulation auditing bureaus to eliminate fraud and deception. If people believe the audited circulation numbers, then advertisers will buy space with confidence, and all three groups win.

In the US, the two largest auditing organizations are Audit Bureau of Circulations (ABC) - www.accessabc.com - and BPA Worldwide (BPA) - www.bpaww.com. Both bureaus have rigorous rules for defining circulation. They have professional auditors. And they have no sense of humor for magazines or newspapers that try to break the rules.

These bureaus audit both paid publications and the controlled circulation magazines that are free to qualified subscribers. Publishers state their six-month average circulation figures, and the auditors check the publishers' records, and issue their findings.

Individual subscription sales are fairly easy to verify. The "bill me later" subscribers that I'd mentioned earlier are not counted, unless the subscribers have actually paid.

Sponsored subscriptions

Sponsored subscriptions are also easy to monitor. Sponsored subscriptions are subscriptions of eleven or more copies of a publication that are delivered to the same address, and paid for by a single payee (for example, the hundreds of Wall Street Journal subscriptions that are delivered every morning to each of the insurance company home offices here in the greater-Hartford Connecticut area where I live).

Retail magazine sales

Auditing retail sales - the single copies that are sold through newsstands, supermarkets, airports, and convenience stores - is a lot trickier. But the audit bureaus have been doing this for a long time, and their numbers are reliable and respected in the industry.

What should software developers do?

Magazines and newspapers will continue to publish their audience numbers. They argue, correctly, that only by adding their pass-around numbers to their circulation numbers can they create a true figure that allows advertising buyers to compare their publications' reach with broadcast audiences.

But if you're looking for accurate circulation figures, you can rely upon the ABC and BPA numbers. Most publications that accept advertising use one of these bureaus. ABC and BPA figures are the safest way of knowing that the circulation figures are accurate.

Saturday, June 6, 2015

Software Marketing -
The Buck Stops Here

Creativity is "one of those magical, mystical words that marketing people throw around a lot when they want to avoid responsibility for producing results."

... quotation by Sergio Zyman from his book "The End of Marketing As We Know It"

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