I’ve been lucky enough in my career to have been exposed to selling all three fundamental products in computer technology. Namely hardware as in OEM graphics and imaging components, software as in major complex applications and information as in tracking on line corporate software buyer requirements , trend reports and detecting new technology acquisition projects (Demand Generation).
Here are a few fundamental observations from this experience:
- By far the easiest to sell and manage delivery is hardware. Even though the product content may be complicated, either the hardware supports the customer requirements or not. It either works or it does not. It is very much a binary sale relative to software and information.
- To me, software applications are the hardest to sell and to manage deliveries, especially in the early adoption phases. The problem is that given enough time and money, almost any functionality can be included in a scope of work. Most companies fall into the unlimited scope sales trap and others are very good at avoiding it. I’ve gotten myself in this trap several times and with the best intentions.
- Selling information is the most interesting to me for one reason. The Value Proposition. “One man’s trash is another man’s treasure”. Managing delivery is no problem. The issue is what is the info worth? In the domain of Demand Generation, a single opportunity contact can be worth millions to the right recipient and a thousand contacts could be worth nothing to the next. The cost of acquisition for the supplier can be very low or very high but is not really related to the marketable value.
This post is turning out much heavier than I originally planned so I guess I will turn this into an independent category so that we can dig deeper into these sales observations.
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I agree with this comment. Selling software and application solutions required a structured selling process. Since I worked in marketing, my perspective is based on market segmentation needs. What are the main differences in selling turnkey solutions versus solutions with little customization?
I agree that “One man’s trash is another man’s treasure” but it seems to me that managing the delivery is not an easy task. Finding trash in a web based environment is quite easy but that trash is often free and easily accessible to anyone using a search engine. So, in order to succeed as an information broker, you still need to find rare or at least quite difficult to find information. That “rare” trash you’ve found will then have to be reprocessed and repackaged to fit the needs of someone looking for a treasure. You must add value into your “Value proposition”, there lies your own share of the profit in the transaction.
PS: There is a big flaw in my previous paragraph. Basically, the described process is “find good trash”, “reprocess it”, “find someone in need of it”. Bad strategy. It should have been “first find someone looking for a treasure” and then, after, see if you can manage to fulfill his needs. Even there, delivery management doesn’t seem easier …
I agree 100%
In fact here’s really how I would have written it.
Selling information is the most interesting to me for one reason. What is the info worth? A single opportunity contact can be worth millions to the right recipient…and this is a fact.
In my previous life I ran a practice of setting up ten face to face high-level business appointments for two separate B2B software firms each a month. Their respective ticket selling price was rather high as were the executive meetings I had to arrange.
Our original arrangement called for a very respectful monthly retainer.
It was a win-win proposition that gave me great income(I live in Canada and at the time and our dollars was way down) and lots of golf time. Then one day I found out that each of the firms I represented closed over 3 million dollars in sales from my efforts, my information, my talents, my set up and all I got was what I asked for …how unfair.
Josée,
To address your question, I think it boils down to how many lines of code can be resold. In other words if you can leverage a line of code to multiple customers or markets you can make big profits. However if each line of code is customized or rewritten on each project, you have a profit problem.
SAP, one of the largest software companies in the world is very disciplined at leveraging code and as a result is a dominant and profitable player.
I worked for a phenomenal software company that failed at leveraging code and ended up being acquired even though they had the best product—on paper.
Bric,
It seems to me you have two thoughts running through your comment. The first is the delivery concern with custom applications. The second is about packaging a web based information product.
On your first thought, I have witnessed firsthand, the demolition of a leading edge software company because of failing to manage deliveries. The management team intentionally ignored the short term investment in application design to create a common application foundation in favor of charging forward independently on each delivery. The result was low or no profit on every project and a software product maintenance nightmare.
On your second thought, “trash or treasure”, you have a chicken and egg problem. To sell information you need some sort of package or description. You can’t just charge off and ask prospects what they need. First you need to build credibility before they will engage your services. The package doesn’t have to fit the new prospects needs but it has to demonstrate that you can.
“One persons trash is another’s treasure”….well this really depends on the nature of the business.
My brother-in law was in the semi precious scrap metal business (talk about being industry specific) and I was relating a story about ten minutes ago to a client about how he once had 6 containers full of Inconille & old X-Rays and 9 containers full of old dusty & dirty catalytic converters….all goods he got paid to cart away and in some cases he purchased for pennies a LB.
Well the Xrays were old hospital storage they wanted to be rid off as it occupied valuable real estate and the catalytic converters were scrap he purchased from garages and other parts scrap yards. He would pay next to nothing for the scrap catalytic converters from parts dealers as they had no idea of the platinum content so he paid part prices.
It all melted down to silver and Platinum –he died a multi millionaire.
others they saw trash to be carted away.
There are two major problem in selling bespoke software. The first is customer expectation and the second is developer exuberance. The keys to selling bespoke software are discipline and a valid change-order process that is adhered to.
If that company with the phenomenal product, to which you referred, had implemented these, it would have done much better.
Well Bruce if this Bespoke software is the same one that sells VSys One – Volunteer Management System I would say the major problem in selling this software would be to sell to the right organization rather than getting caught up in the customer reaction or developer exuberance. Again that is if this is the same Bespoke software that is capable of being customized to the customers real need(s). To me if this is the same group then the real challenge is in fishing where the fish are biting…lord knows there are no shortages of volunteer groups who would appreciate a more efficient way to manage volunteers.…focus on the Scouts, or Big brothers, 4H Clubs, maybe Kiwanis, Shriners, Optimists , etc. The keys to selling bespoke software is targeting the right groups….again I may be out of place if this isn’t the same Bespoke software. If it is the same software , Then the key is introducing it to the right groups at the right level pushing the right “buttons”…..I know bespoke Software made their bones with Para Olympic sports.
I have no idea what VSys One is. B. Seidel will know to what I refer.
If your problem is that your marketing is focused on the wrong market, then you have a more serious problem that needs to be solved. Maybe you should invest in a few more professional marketers who are experienced in matching product with market.
A valid solution addressing an identified need – will sell itself.
bespoke software is a software firm that specializes in a software for managing volunteers for non profit organizations. Their product is known as VSys One….that is why I asked you if your usage of the word bespoken software related to that firm. I have no problem marketing anything..its my specialty. The error I made was think that your reference “two major problem in selling bespoke software;” referred to their software. I now understand it was just your English.
“Bespoke” is a commonly used term for a custom designed product. My use of it with respect to custom software is in common use in many parts of the world.
Guys,
I have been out of pocket for a month hunting down and finally got to my blog this morning. Nice to see you still kicking Bruce R! In my opinion “Bespoke” or custom software of any kind does suffer the fates of over exuberant developers and customers that don’t really understand the limitations of what they are buying. I am tying Serge’s comment in with the bespoke thread. For a new software application product, it is up to sales to clearly define the scope boundaries. The problem with this idea is that the sales person is conflicted between saying “yes it can do that” to close the business or “this is a lot of effort” and will delay the close. There are few sales people choosing option 2.
Serge, I have always dreamed of a product good enough to sell itself but I don’t believe it.
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