As enterprise software vendors try to be everything to everyone is where some vendors are missing the mark. Our research has shown that 69% of the top 20 solutions in each industry and/or vertical has the same or equivalent functionality. Therefore 31% are the differentiators that separate vendors from each other. This 31% is what will determine if a customer goes with your software or not. That 31% may also be something less tangible such as business agility, usability, industry expertise, vendor viability, strategic fit, customer service, efficiency or any combination of what the organization deems valuable.
To that end a lesson learned today on the show Shark Tank, a show where entrepreneurs present their ideas to rich investors who invest their own money based on the moneymaking potential of the business idea and /or model. The entrepreneur usually offers a percentage of equity for a capital investment in their business. Usually success depends on existing sales volume, percentage of profit margins etc. On today’s episode a entrepreneur came in with an idea of a super-sized powerful pogo stick. The pogo stick was definitely a premium brand and the company had existing sales that made this appealing due to the high margins that the pogo sticks were retailed for. This was an extreme sport as the pogo sticks were very much more powerful than the usual toy pogo stick. Their presentation consisted of a video and several tricks and stunts that the company’s founder and employees performed. A compelling case, existing sales looked like it was great candidate for an offer from the investors.
The mistake that the owner made with his presentation was this was clearly a premium brand and his intention was to mass market and distribute this product through retail, manufacturing and distribution channels. Some of the investors were willing to invest but interestingly all of the investors thought that his business model was the wrong business direction. The internal and external advice that this entrepreneur received was that mass marketing, manufacturing and distribution was the best way to realize the most profit out of this product. The entire panel of investors agreed that the marketing was flawed. They all recommended that this remain a premium specialty product and increase the retail price four times from the original selling price. Their reasoning was that it would take a lot of marketing dollars to build the brand quickly. When the entrepreneur exited the show without an offer of investment he thought about what the investment panel had said and realized that it can be a premium extreme sporting goods product. With existing sales he concluded that this was a better approach and he missed the mark. His perception of line of business was flawed and he decided that this would be the new direction of the company – premium extreme sport product with very high margins.
The lesson learned here is to carefully examine where you take your business advice from as sometimes a consensus may not be the best approach. For enterprise software vendors – know your market, the focus of your product and don’t try to solve all problems of all customers. It is said that “If you try to please everyone you end up pleasing no one”. Usually, for entrepreneurs that impacts your bottom line if there are no sales. Doing too many things can quickly dilute your effectiveness as a business. The end result is you are spinning your wheels with no end in sight. Do not mistake activity for revenue generating tasks. It is this focus that enterprise software vendors are increasingly paying more attention to. These vendors spend more time understanding customer requirements and aligning if their product satisfies the customer needs. We have engaged several high profile vendors through software evaluations where they have walked away from potential customers because their software did not properly fit customer requirements; kudos to them for their honesty. All software vendors would like their customer to be reference sites so if the customer is not satisfied it can be detrimental to the company reputation and perceived public perception of that software company which may do more harm than good. The recent number of increased lawsuits for customers suing software companies and consulting firms for botched implementations may be one symptom of not knowing your product and how well it fits customer requirements – selling for selling’s sake.
Eval-Source is an Analyst/Consulting consulting firm that offers enterprise software evaluation, cloud computing consulting, business process optimization and technology planning for organizations. Our innovative professional services make your life easier whether it is to acquire enterprise software or provide you with fact – based information to match your business with IT. Eval-Source provides critical decision support to validate your technology investments using the Tru-Eval system. Follow our blog at www.eval-source.com/blog or on twitter @eval_source or our site http://www.eval-source.com