Diane is a consultant with Niehaus Ryan Haller Public Relations in South San Francisco, California. In addition to a BA from University of California at Berkeley, Ms. McGary is currently pursuing a degree in computer science at University of California at Santa Cruz. The information presented here was adapted from a Software Entrepreneurs' Forum seminar held earlier this year.
Ten years ago this month, the Software Entrepreneurs' Forum (SEF) was founded to help programmers succeed in the business of developing, publishing, and marketing software. The non-profit SEF continues to provide programs and services, including monthly technology and business SIGs, dinner meetings featuring industry speakers, and all-day seminars on business practices and new technologies. In honor of this decade of service to the software community, we're sharing with you, in this, and upcoming issues, some of the invaluable information SEF members have been privy to for years. We hope it helps you on the road to success, just as it has for hundreds of your fellow programmers.
--editors
Launching a product is not unlike developing software. Good analysis and design generally yield worthy products. It's the same with product launching. If you identify requirements and carefully design the launch, then sales, reseller deals, and even outside funding may soon materialize.
So you have a fantastic idea for a product and the development skills necessary to bring it into being. What's next? Start with the marketplace itself. Clearly you need to know if someone else has already developed your breakthrough. Also critical is building technology to fit the market need. No matter how tied you are to character interfaces, for example, if the people in your niche use Windows, your product won't be well-received in the marketplace. How can you find out what you need to know without draining your 401K?
Kris Olson of Olson & Company, a market research firm, recommends some creative strategies for getting market statistics "on the cheap." Her avenues include everything from combing publications such as Computer Reseller News and the PC World to accessing corporate libraries and market research through friends at big companies. Other sources include Computer Select, a CD-ROM information source, hardware vendors, trade show presentations and magazine media kits. Olson reminds researchers to know their users. "We all tend to get into the product and what it's doing, rather than what people are doing," she says. Olson also recommends phone, mail and on-line surveys, in-person interviews, do-it-yourself focus groups, and hiring inexpensive student interns.
Once you look at the market and decide on the type of product you want to build, it's time to "position" your product. Even if you developed your product first, and then looked at the market, that's okay too. Just don't forget the basic principle: tuning the product to the potential user.
Positioning is a process of defining the market for your product and positioning your product within that market. This means looking at potential competitors and developing verbal and even visual messages that will convey to consumers what your product does. Girand Software Strategies' Laurie Girand, an Apple Computer veteran with successful launches of 32-bit QuickDraw and System 7 under her belt, says a good launch creates awareness about your product and educates and excites customers.
Girand's first rule is to establish clear positioning. "Position the technology, product, competitors, company, and industry," she said. "You can do this at little cost through white papers, press releases, data sheets, and review guides. The cheapest, most effective marketing tactic, however, is word-of-mouth, through beta programs, product giveaways, e-mail, bulletin boards, and key influencers."
Marketing guru Steve Koschmann of Aldus Inc. cautions, "While positioning identifies a product's end benefit by explaining what the product does, that only gets you to marketing 101. Most folks stop there." Koschmann advocates taking positioning to the next step by identifying what he calls the end end benefit, "That something that emotionally connects with a customer and makes him want to buy your product." Nyquil cold medicine provides one of marketing's most classic examples of ingenious positioning. Explains Koschmann, "It's the nighttime cold medicine that relieves all your cold symptoms so you can rest. That's the benefit. The end benefit is that it knocks you out and you wake up feeling great!"
After finding your customers, you will probably want to do some test marketing before betting the farm. Jeffrey Tarter, editor and publisher of SoftLetter, recommends something he calls "The $10,000 Launch," a test-marketing plan that scientifically pinpoints prospects, attracts orders, and creates the basis for a business plan.
Tarter says direct-mail testing will help determine who your customer is, whether your product is marketable, which features are desirable, what pricing is most effective, even what "free offers" work best. Spending $10,000 on a mailing to 10,000 prospects should bring a 1 percent sales return. For a $150 product, 1 percent amounts to $15,000, a $5,000 profit. According to Tarter, "1 percent is the worst response you'll ever get because you can keep refining targets as you accumulate more data." Tarter added that the 1 percent figure scales up. "The point is to build a statistical model needed to attract investors and resellers," he says.
Another avenue that can generate a lot of attention, for a relatively small investment, is public relations. The keys to PR are education and persistence. The good news is that, on a small scale, you can do it yourself. Look at the publications your prospective customers read, then find out which writers and editors cover products like yours. Call them.
Ed Niehaus of Niehaus Ryan Haller Public Relations offers these PR basics. "The most important thing you can do is get to know journalists as people, on a one-to-one basis." Niehaus points out there are various types of media coverage available, from product mentions to product roundups, to full-blown reviews. As for your press kit, it should be complete. A good press kit might include a cover letter, a press release with summary page, product data sheet(s), a corporate backgrounder, analyst and customer quote sheets, and artwork. Materials should highlight product benefits and explain how a product fits into the marketplace. "Timing is critical," Niehaus says, "Talk to the monthly publications first, then the weeklies, then the dailies. Although it varies from publication to publication, some have lead times of four to five months."
Another PR trick of the trade is to call publications and editors in order of importance. Don't call the editor of your most critical publication first--test drive your ideas on some publications you aren't too worried about, get your message straight, then call your "A" list.
InfoWorld networking editor Vance McCarthy has some thoughts on voice mail: "Be brief. Figure you will get 30 minutes total contact with us. That includes faxes, demos, and your long voice mail." San Jose Mercury News computing editor Laurie Flynn explains, "The biggest problem I run into is that the developer doesn't understand my audience, which is consumer and small business. I get a lot of calls for MIS products." The bottom line for all journalists is get to know them, show respect, learn their preferences for getting information, and be patient.
If you don't have experience in marketing, public relations, or running a business, it will be immensely valuable to befriend someone who does. Learning from others' expensive mistakes can save you lots of time and money. Former MacUser publisher Martin Mazner, currently with Disc Info Systems, has battle scars earned through six major product launches. He urges developers to partner up with someone keenly familiar with marketing and business. "You need someone to clarify the issues to get funding," says Mazner. He suggests less-traditional ways to get into the sales channel. "Mail order houses," Mazner says "are a growing sector of the distribution market and offer good value for your ad dollar. And catalogs often include editorial content." Mazner advocates using "Product Champions," key influential users often quoted in the major trade publications.
Local user groups and developer organizations can also help you get on track in marketing and business development. Kaye Caldwell, president of Software Entrepreneurs Forum, says "It is difficult to network with colleagues when you are working out of your house. SEF and other organizations like ours provide meetings and special interest groups that not only educate, but they let developers talk one-on-one with marketing, PR, legal and administrative experts for advice on how to build a business."
Robert Benson, a San Francisco Bay Area marketing consultant, offers his own entrepreneurial launch secrets. He suggests testing your sales presentation at trade shows by pitching 50-100 people and continually refining your message. "Show beta software, give out marketing literature and ask for orders," he says. "Many people starting out don't know how important it is to ask for the sale." As the launch date approaches, develop a library of ads, direct mail pieces, and company profiles from competitors and companies selling complimentary products. Pick the best projects and emulate them. More importantly, pay attention to what industry authors and analysts are saying. Finally, monitor profits and cash flow, "and learn the difference if you don't already know it," he adds.
Mail order and catalogs are fine, you say, but your dream is to see your product on the shelf at the local software chain store, right next to Bill and Phillipe's offerings. The world of the channel is tough, but Richard Miles of Re:Launch offers some guerrilla tips. "If you're well-prepared and you know what you're doing, you can get in, providing your product is good and there's a market for it," according to Miles. His strategy involves developing an outreach program where you contact resellers and send them a carefully designed "Approach Package." It should contain a cover letter, a one-page complete product information sheet, product reviews, ads, and an advertising schedule. Miles suggested enclosing your product in a brightly colored box to make it easily visible during your follow-up call. He also advises patience. "You'll probably have to repeat this process several times because, invariably, your package will be lost," he adds.
If you are successful in the U.S. and have a desire to sell software in other countries, Ellen Elias of Elias International has this advice: "Avoid launching overseas unless you've taken it very seriously," she explains. "If you really just want to visit Europe, go on vacation. It's cheaper." If you are serious, keep these additional challenges in mind: language barriers, cultural differences, and shipping costs.
Elias recommends repeating US successes. "If Mac Warehouse works for you here, try mail order overseas." She also advises finding distributors in each country even if you're already carried by a major reseller. "You'll get no mind share (from resellers). In Europe, distributors do create demand," Elias says. "You can consider them your marketing department." Elias also advises that distributors typically want extra points and tend to significantly mark up the product, so be prepared.
Legal issues may be the last thing you ever thought of, but they are of primary importance according to Susan Nycum of the international law firm Baker & McKenzie. She advises developers on legally protecting software. Nycum says it's critical to understand ownership rights, whether you are developing for a company or having someone develop for you. "Consultants own the copyright in any software developed by them unless rights have been signed over," Nycum says. Beware also of ownership rules when using code downloaded from BBSs.
"To protect software as a trade secret, it must be kept secret and disclosed to third parties under agreement to keep it confidential," Nycum says. "Although copyrighting only protects the expression of the algorithm, including its look-and-feel, it is a good idea to declare copyrights and register them with the U.S. Copyright Office. It costs $20.00 but entitles you to damages and attorneys' fees if someone infringes after the registration." Regarding patents, Nycum stresses the importance of signed nondisclosure agreements while a patent is pending. And once the product is ready for release, disclaimers of warranties are critical because they help limit liability.
Copyright © 1993, Dr. Dobb's Journal