Many Software Products evolve from Services companies building tools to meet the challenges of their customers’ environments. It is a obvious step to use these developments and sunk costs to enable a strategy of growing Software Sales from a Services business. This is especially true in the current Analytics market where skills in ML/AI are in short supply and new opportunities are boundless.
This model is typically a win/win with the foundation customer, but the evolution of the Software Product to drives future sales growth, will dictate a different Message, Product and, probably, People.
Is it a Product, or, is it a Services Toolkit. Many factors that need to be considered on this journey. Here are some experiences from living, many times, through this process.
1. What is the Messaging and Value of your Product?
What is the Important problem your product is solving?
The team delivering your services engagements will always find a way to solve your customers’ problems.
Your software product will have, fundamentally, only one way of solving the “problem”, so be clear on what the problem is before your build the sales model (and, indeed, before you productionize the Product).
It is often easy to be distracted by another current and urgent problem. Focus on the big and important problem, seek clear distinction. Be ruthless with yourselves. If the problem you have solved is not really important, pause or stop development.
Simplicity versus Complexity
Services engagements are typically about solving complex problems or skill shortages. This may be rewarding and reflects the value and skills of your people.
A Product engagement on the other hand, needs to be simple to describe. Its purpose and value must be immediately understood and clear to those looking at it, for a briefest visit, online.
Make it very simple, the diametric opposite to the de facto Services engagement, can you make that transition and believe in it?
New Ideas or Operational Excellence?
Many great software products evolve from services engagements. Many more products are developed but always remain a “Services Toolkit”, and that may be no bad thing.
The difference? The probable long term successes are ideas that exist as standalone software products.
Growing Software Sales from a Services business via Products developed through customer projects and activity, are usually developed to make the services engagement run more smoothly. They can be enabling rather than differentiating. These Products/Tools consequently bring value to operations and BAU activities, but they do not, by themselves, leverage a step-change in any business or organisation.
They can be good ideas, but not necessarily great, new ideas. Do they drive revenue or reduce cost? Generally, great new products are sourced from customer needs, but need to be developed and created as a product, not assumed to evolve from a services toolkit.
Does it matter? When it comes to selling it to a new customer, who does not use your service and people now … absolutely it does.
“Build it, and they will come!”
Actually, they will not. Why would they? The assumption is that you can create a product and website and things will happen. A website is just a website, your sales strategy and development activity need to be planned, structured, energetic and pro-active
The supporting infrastructure – value versus pain
A services team can be parachuted into an assignment and immediately deliver value. They are addressing a pain point with value the customer defines.
A new product sale brings product value, but it also brings the pain of change. To drive a sale, the software value must overwhelm its change pain by an order of magnitude.
Stating the obvious: Maximise the perceived value and minimise the perceived pain – this takes effort, materials, and references of the complete product. Very few organisations focus on minimising pain.
Your website is your digital sales team
What is the first thing you do when learning of a new product? You “google” it and check out the website. Your prospects are no different; they will access your website and if they don’t learn enough … will never come back!
Your website must reflect everything that is needed to sell your product – nothing else is relevant.
Too often, the product becomes an afterthought on the website of a services led company – don’t let it.
The myth of the "rainmaker"
We have all heard about the genius salespeople who create business and bring rain to the desert. Unfortunately, nobody has ever met one. Salespeople can only ever be as good as the systems and products supporting them.
There is undoubtedly a spectrum of sales ability and results, but the baseline is always determined by the Products and packages they have available to sell. Just as customer will not come if you just build a product, the product will not sell if you just recruit a sales team … whatever magical capabilities may be claimed, logic soon overwhelms hope. Numerous examples available.
The Systematic Product Value Proposition
The Whole Product is everything the customer needs to solve his/her problem. This is your Product plus a varying combination of services, support, third party product, additional software packages, additional developments, algorithms, cloud platforms, payment methods, future directions, user groups, training, migration plans, archiving solutions etc … it is so much more than just your new Software Product.
The factors affecting your Systematic Product Model should be measured and targeted before you got to market, and then regularly reviewed to assess the progress and development of your proposition and how close it is to its potential.
2. What is the Product?
Growing Software Sales from Services - The Core Product
Your Core product needs to be:
What: What is it? Is it obvious?
Unique: Is the product unique, can the problem be solved another way?
Important: Is it important – does it drive budget or revenue?
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Simple: Can it be rapidly explained (1 sentence)?
Paradigm Shifting: Does it enable change to the organisation using it?
Emotional: Does anyone really, really care about its success?
Compelling: Is there a simple and indisputable business case
Sizeable: Is the ARR for each transaction significant? Is it worth doing?
Analyse your product, how does it score now, how good can it be?
An Internally developed product now sold to external entities
A software product which is developed “internally” with a knowledgeable and committed team, but now needs to be marketed externally. A different audience with a more discriminating view. Growing Software Sales from Services requires a different mindset.
The Internal product is understood, its limitations accepted, its bells and whistles not necessary.
The External product needs to be complete and compelling.
Does it have emotional hooks not just logical outcomes?
Services engagements and services delivery is inherently rational.
Sales engagements need a mixture of rational justification, but, initially more critically is emotional pull. Someone in your buying community needs to really care about your new Product; it has to be critical to them personally, they need to be emotionally engaged.
Many products, and indeed markets, have succeeded on their emotional pull e.g. recently, everyone had to have a Hadoop Data Lake, now Data Lakehouse, even if their data didn’t dictate that need.
Services business are inherently rational and dictate a compelling business case to succeed; when applied to their software product, a compelling business case alone, is just not enough; there are thousands of products people can look at it every IT market; emotional pull is essential.
Fortunately, the messaging and packaging developed by a Systematic model can be simply and quickly built to engage and deliver Emotional Hooks.
Does it have new Language – or at least a new dialogue?
Any new customer software product sale is a different conversation to extending a dialogue on a consultancy engagement. The language changes and the climate is less forgiving; trying to engage a new conversation as the world has moved online and the buyer cycle has condensed is ever more challenging; the room for error and understanding of a technical-to-technical dialogue will not exist in the product presentation.
Has the discussion been rehearsed? Are all the objections pre-handled? Has every visible customer concern been handled by the website?
How good is your Product? How good is it really? Who is the assessor?
This is a great question to ask as a qualifier. We all have confirmation bias when marking our own homework. Be blunt, be honest, how good is it really?
3. Will the People change?
Creating and Selling a Product changes your operational world.
A new software company and product is, naturally, exciting and aspirational; but it involves much “heavy lifting” too.
Growing Software Sales from Services - One common goal, not several/many in parallel
The focus of developing a product whilst running a services business is taxing. Whilst the Services run-rate revenue may fund the development (as it often must), attention is diverted and focus diluted.
Product Sales needs laser focus without diversion, indeed the only time sales effort is optimised is when it is pro-active. The challenges of a services delivery business are frequently reactive and the noisy urgent demand, too often, overwhelms the most important activities.
Product Sales needs to have all the urgent and important attention.
Everyone in the same rowing boat
A Rowing “8” if often seen as the most complete team event in sport. Everyone is working to the same goal and any weakness, in any athlete, affects the whole team and the resulting output. synergy or failure.
Services businesses at any scale, are, by their very nature, are comprised of several/many independent units. They have their own “rowing boats” supporting independent teams. When transitioning to sell a product, everyone needs to get into one boat and deliver one thing.
Not everyone wants, or can, exist in a company that moves to a single focus; but anyone who isn’t working on the same script is a risk to the team’s success.
The software product is the peak of a pyramid to which every member of the team needs to contribute.
Operating without Trust
A popular term in the sales world is the “Trusted Advisor”. While frequently claimed by Salesmen (you will see it in people’s linkedin profiles) or organisations, self-evidently a “Trusted Advisor” is determined by the customer not the supplier.
When you are delivering Services you are inherently trusted, you are on the inside. When selling a product, you are not initially trusted. You have to build and earn that trust; very quickly.
Measurement Mindset – The First deal not leveraged by our people
One win at a time.
You may have sold your product to the customers’ of your services. Indeed, this is typically the case. It sounds obvious, but it’s often lost in the detail of daily activity that the first sale led by the product alone is the most critical – you haven’t sold it at all until you’ve sold it standalone i.e. without it being led by an established services engagement.
Why is this important? Because it validates the product, it proves the product’s worth as more than an add-on and it is the very first brick of the foundations of any growth strategy.
The first product only sale, the first sale to a new customer, the first sale to a new market, the first sale to a new country – all critical steps requiring a focused mindset.
Your comfort zones
Sales is hard, but you have to think “sales” to sell a Product. Under pressure, we all revert to our comfort zones. If you’re a services organisation you may revert to services models and discussions; unless you plan for a product model and focus on it to the exclusion of all others.
Don’t just follow a standard model– analyse what you need and build it
Your business is unique. Your Product is unique. So why do you follow a standard go-to-market model? Your business opportunity will be different to every other Product and market.
Why and how will a customer buy your Product? This will determine the Go-To-Market Model and the messaging, materials, resources and organisation you need to build. Don’t follow a “template” rigidly, by definition templates don’t account for exceptions and every business is an exception. Whilst you may have revenue from existing customers; new customers always take some time – build a sales organisation that reflects what you have and where you know can reach – e.g. new regions are notoriously hard to initiate.
Conclusions
There are many positive reasons for pivoting to a software product strategy and services developments are the source of many great technologies. But there are many reasons to be cautious too. Build a Systematic Model, assess your Current and Potential Product Value and build all the elements you will need – be systematic not opportunistic and you will give yourself the best chance of success, or avoiding failure.