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By Jennifer Beever, CMC
New Incite Marketing Analysis and Design

When the economy boomed in the late nineties, many software companies strayed from their business focus as they chased opportunities to bring in additional revenue. Companies were expanding rapidly into new markets with new products, and many rushed to create alliances with other technology companies. When the economy took a downturn, these companies had to pare down and eliminate their less profitable markets and product lines. In doing so, they have had to re-evaluate and refocus their business strategy in order to survive in the down market. The good news is that reevaluation and refocusing is critical to successful marketing. This article describes six key aspects of a successful marketing program for software companies.

1. Research and Validate the Strategic Direction
Great marketing is based on a solid vision, mission, and goals. For marketing to succeed, software companies must first do their homework, re-focus, and establish or confirm their vision, mission, and goals. They do so by reviewing their industry, opportunities, strengths and weaknesses, and, if necessary, by conducting market research to validate known opportunities and to unearth new opportunities.

Understanding the target markets a software company currently serves and can serve is essential to planning successful marketing programs. Where necessary, software companies should research their target market demographics and psychographics. Demographics include information about age, gender, income, etc. of customers. Psychographics take a look at the needs and psyche of target customers. This research should include surveying and interviewing current as well as potential customers.

When conducting marketing research, many companies leave their salespeople out of the process. This is a critical error, as salespeople are usually very in tune with their prospect base and know what they need and what messages work to communicate their solution and product or service. When conducting a review of markets, demographics, and psychographics, software companies should conduct an interview or information gathering session with their salespeople to glean this important data.

2. Plan for Marketing Success
Successful marketing should be planned in advance to take advantage of several important factors. It must be targeted to those markets that were proven in the research stage to hold the most opportunity. A "shotgun approach" to marketing doesn't work in any industry, let alone software. It must be integrated, resulting in response compression, an effect where, after repeated contact with a prospect, that individual will remember the software company's brand over others. For example, the target prospect may receive a direct mail piece, shortly after read an article by or about the software company, see the ad that is being run in a trade journal a few days later, look at the company's web site, and then decide to call for more information.

Perhaps most importantly, successful marketing in the software industry utilizes referral or testimonial marketing. According to Geoffery Moore, author of the landmark analysis of successful high tech marketing, Crossing the Chasm, the greatest influence on high tech buy decisions is the testimonial or recommendation of a peer. Marketing activities that convey success stories or testimonials include testimonial ads, direct mail, PR that leads to articles about a case study or success story, and video taped testimonials of customers. What this means for software marketers is that a good deal of the marketing effort should be allocated to listening to customers, getting their testimonies, and publishing them. Note that when a testimonial appears in print, the software company should have a signed release from the customer and their company that gives them permission to print the customer's words.

This means that start-up software companies must get their product in the hands of customers quickly in order to generate testimonials. This can be accomplished through special pricing or special services provided in return for the customer using the software in a timely manner and providing testimonial statements. Some software companies have carefully screened their first potential customer companies, to help assure that there is a high probability of success with the installation and resulting case study.

The marketing plan must tie back to business objectives, and describe what activities are required to achieve those objectives, as well as when, how and who will implement each activity. Marketing activities that are typically successful for software companies that serve either broad (horizontal) or targeted (vertical) markets are effective web sites and PR. Marketing activities that best apply to vertical markets include advertising, direct mail, and trade shows. These activities (ads, mailers, and trade shows) will be more successful if a company can advertise in a targeted trade-specific journal, mail to a targeted list, and attend a vertical industry trade show.

3. Communicate the Marketing Message to the Whole Company
Great marketing today is customer-driven, and the most progressive companies make marketing a company-wide function. It's not only the salespeople in a software company that must convey the right marketing message to customers, but also customer service, accounting, consulting, and administrative personnel. Software companies need to identify the "touch points" for customers and share the vision, mission, goals, marketing programs and messages with all personnel to ensure a consistent customer experience.

4. Execute with Excellence
Execution or implementation of the marketing plan is the most important step to ensuring marketing success. Implementation of the plan requires certain variables, including obtaining the resources that fit your business, ensuring that vendors are cost-effective, and creating response compression. Resources available to execute the marketing plan include ad agencies, hiring internal staff, or outsourcing marketing to consultants or other experts.

Ad agencies sometimes work on a fee basis, but are often compensated by advertising commissions. Because advertising is one of the marketing activities that should be conducted judiciously in the software industry, software company executives must be aware of this potential conflict of interest.

Hiring employees has certain advantages if you can afford the full-time staff or executive position. Many companies don't need full-time marketing personnel on site and can work with outsource marketing firms who typically provide senior-level personnel at a lower cost without the overhead. With any resource, software companies should make sure that the service-provider has hands-on experience in the software industry and that they understand the specific company's needs.

5. Analyze Results for Better Decision Making
With increasingly limited marketing budgets, the ability to compare results of different marketing activities is important. Understanding the cost per lead and the return on investment helps software companies choose those activities that generate more revenue and get more bang for their marketing buck.

Once a marketing plan is being executed and the leads are coming in, software companies must measure results by capturing and analyzing data about the leads that are generated. They should be able to report cost per lead, lead conversion rate, and return on investment for each marketing activity. Merely tracking number of leads is not enough. For example, a software company may get thousands of leads from an advertisement but fail to convert those leads to sales. This is valuable information, because if the lead conversion rate is low, it could be that there is a problem in sales performance or that the leads were unqualified.

6. Assess and Coach Sales Staff to Improve Performance
A great marketing plan will not get results if salespeople are under performing. It's important to ensure that a software company's sales personnel are performing to the best of their ability and understand and support the marketing initiatives that are being implemented. Getting the sales people involved in the planning process can help ensure their understanding and support. Software companies need to communicate marketing messages with their sales staff and audit each individual's performance. If necessary, the company should invest in coaching or training to help improve individual sales performance.

Summary
Following the above six steps for marketing success doesn't have to be expensive, but it does require time and effort on the part of software company executives. The benefits are many. Armed with new information from market research, software companies can refocus and perhaps find untapped opportunities. With a written marketing plan, software companies move into a more systematic and results-oriented way of marketing. Timely and expert execution of the marketing plan will get better results and, in some cases, will help the company save money on certain marketing activities. Results must be measured and analyzed for better marketing decision-making. Finally, the sales staff should be trained with the new marketing materials and programs, and their performance audited to ensure increased revenues.

Jennifer Beever is a Certified Management Consultant and MBA with 19 years experience in sales and marketing. Jennifer spent 14 years in the ERP software industry with such companies as Marcam (Needham, MA) and System Software Associates of Chicago. She was Director of Marketing for JB Systems in Woodland Hills, California, a maintenance management software company, prior to founding her consulting practice in 1997. For more information contact Jennifer at 818-347-4248 or jenb@newincite.com.