401-423-2400 Kristin@Zhivago.com

Software CEOs are missing massive revenue opportunity

RevenueJournalSoftwareCEOsMissingOpportunity[1]In interview after interview, buyers of B2B software are all telling me the same thing about how they bought, where they are now, and what they wish software vendors would do for them.

This was their buying process: After careful analysis, weighing all the tradeoffs and putting several vendors through their paces, they decided who “won.” They got that big expenditure approved. They contacted the vendor, purchased the software, and got it installed, usually with help from tech support. They are now using it.

But now, they need more help. A different kind of help. Help that the vendor could – and should provide. Help that they are willing to pay for.

They already know the program well enough to perform basic tasks, but they have also realized that they could be using it more effectively. They want to get full use of the program’s functions. They want to meet important business goals, and take it to the next level.

What they need is for someone to sit down with them, talk about what they want to accomplish – from a business perspective – and then help them do it. A consulting gig.

They have gone back to the software vendor, asking for help. They have literally begged, in some cases. But they haven’t gotten anywhere.

Revenue Coach Tip #1: If someone is trying to give you money, don’t blow them off.

Invite them in. Thank them. Take the money. Then make darn sure they will be happy they gave it to you. Find a way to build something that will work for them, and work for you.

Right now you’re selling and supporting a product; that’s how your business is structured, that’s how you think about your business, and the types of people you have hired are the kinds of people who can support those activities.

This new, project- and service-oriented source of revenue will require that you set up a separate “division” that is structured differently, operates differently, and uses a different type of person to provide services to the client.

Revenue Coach Tip #2: If you want to sell something that people would be happy to pay for, start by asking them what they want.

If you want to take advantage of this burning need among your own customer base, start by interviewing customers who have bought your software, on the phone. Ask them open-ended questions. Have a conversation. Listen.

Ask questions such as: “One of our customers has asked us to provide ‘optimization’ services – helping them get the most out of the software. Would you also be interested in this? What form would you like the service to take? How many people would be involved, on your side? What would you consider a fair price for this? What would you like to be doing better? If you were us, how would you structure this business? Are there any examples you know of, where someone is doing this kind of thing well?”

You’d get fantastic answers to these questions, answers that would tell you exactly what to do: How to structure it, how to price it, what types of customers would be most interested, what they want to take to a new level, and so on. If I were conducting these kinds of interviews for a client, I’d only have to interview five to ten customers. Actionable, bankable patterns will be obvious by the seventh interview. If you conduct the interviews yourself, you may have to interview a few more to get the whole story, since they will withhold some comments from you out of consideration for your feelings.

Once you know what to do, you can start to build the business, serving one eager customer at a time until you had the process working smoothly. Then you could ramp it up.

Whoever ended up doing these consulting gigs for you would have to know the product inside and out, know how others are optimizing it, and be able to help customers meet their business objectives using the program. This will only work if you hire intelligent, helpful people, make sure they are trained well, and make sure that they truly do accomplish what the customer needs them to accomplish.

You’ll end up with a happier customer, one who will tell others how successful he has been. If there were opportunities to sell more seats to other divisions of the same company, your customer would be happy to usher you into those new opportunities. You will end up selling more seats.

Revenue Coach Tip #3: Enjoy your success as your competitors continue to ignore the revenue opportunities you are optimizing.

CEOs and marketing execs at software companies are not even noticing that they have a problem – and an incredible opportunity . Even those who sell marketing automation software – who should know better – are closing the door in the faces of those requesting this kind of help.

Their salespeople and tech support people are telling customers, “Well, we’re not really set up for this, sorry.” The salespeople have moved on to the next customer. The tech support people are only trained to install the software, and help with specific problems.

None of these folks are thinking about the bigger business problem that the customer is trying to solve. And they haven’t mentioned this to management, because it doesn’t really concern them; it’s just customers trying to buy something that they can’t provide. Better to not tell the boss something he doesn’t want to hear.

This is precisely what happens when top execs delegate customer relationships to their underlings. What they should be doing is hiring someone capable to interview their customers every six months (even in the fastest-moving markets, that’s sufficient), and coming back with this kind of information. Or picking up the phone and calling customers themselves.

The truth is, your software isn’t really sold successfully, in a way that will lead to positive referrals and satisfying market momentum, unless your customers are getting full use out of it. And they often can’t figure out how to do that without some help.

Don’t slam the door in their face. Take their money. Then give them what they want.


  1. Kristin, While I don’t disagree with what you’re saying, let me play devil’s advocate and put forward the case for why software vendors may appear to be reluctant to pursue consulting gigs…

    Professional services is an important revenue stream for many software companies. It is an excellent way to ensure:

    your customers are successful
    you keep engaged with your customers
    you learn from real-life implementations and feedback for product development
    and you get paid to do this.
    But there are many practical / structural challenges facing software vendors that customers may not fully appreciate

    Pricepoint. Consulting rates may seem too expensive for customers buying cheap software that is sold to a mass market
    Geography. Smaller software companies would not have enough business to hire consultants in every territory, apart from the cost/logistical barriers of flying consultants internationally there are language/cultural/visa barriers to face.
    Channels. Channel partners are a very effective way to provide local consulting resources. But everywhere you have direct and indirect sales working there is potential for channel conflict. Professional services firms are often a software vendor’s business partner – bringing deals to the table. So often software vendors will return the favor and bring them consulting gogs.
    Sales priorities. In my experience the easiest way to spot the best sales people is by how much time they spend working with their existing customers. Too many only work on their immediate pipeline – sign the deal and move on. Many sales people think the hassle of consulting work is not worthwhile. They don’t want to spend time sorting out project management issues e.g. changes in requirements and see new sales as being a more profitable use of their time.
    The challenge for the software CEO is to prioritize limited time and resources

    Bringing in cash in the short-term
    Keeping customers happy
    Developing the product
    Reaching new markets
    For most software companies they need volume to be profitable. Margins are infinitely higher selling software license than consulting. So while it may seem to customers, that vendors are leaving money on the table and not keeping them happy – there are valid reasons.

  2. Thanks, Giles.

    I appreciate the opportunity to address all of the issues you bring up. I could have in the article, but it would have gotten too long.

    The first point is, if people are buying your software, but they aren’t really getting full use out of it, or are barely using it, you haven’t really made a sale. You’ve created an opportunity for a competitor. Even though the customer has spent money, and is trying to make the software work, the customer will keep looking around for a better solution. Some percentage of software buyers I’m interviewing will tell me that they’re looking around. They also tell me they haven’t told the software vendor that they’re looking around; it wasn’t until an “impartial third party” was hired to interview them – properly – that they confessed that they were unhappy, and, as one buyer told me recently, “The minute I get the budget, I’m going to buy [the big competitor].”

    So ignoring customer needs created by your own software program – needs that you are uniquely qualified to fill – is just a way of literally eroding your own market share. Customers pay more attention than ever to the experiences of real users before they buy. If the user says, “I bought it, but I never could get it to work right, and the vendor just wasn’t interested in helping me,” there goes the new sale. Who needs competitors, when you can hurt yourself so effectively?

    Second, the points you made as devil’s advocate assume that the CEO has to do something unprofitable in order to meet the need. That is not what I am suggesting. If the CEO had someone interview customers, and find out where most of them were getting “stuck” (I can almost guarantee there will be a pattern – a number of customers will have the same problems), then the company could set up a webinar series (note I am not saying “send people out in person”) that addressed those issues. One person could give those classes, and the company could charge for those classes. They could be held one-on-one, or several customers could share the cost, if they were willing to be in a virtual room with several other non-competing customers.

    As for channel conflict, the same person hired by the software vendor to give webinars for direct customers could also give webinars for channel partners, under their brand.

    With the numerous screen-sharing technologies – even Skype makes it ridiculously easy – remote customers can get custom help from a consultant. And, if the customer(s) agreed, that help could even be turned into a video that other customers could call up when they had a similar problem.

    In other words, one of the ways to make money consulting is to turn consulting into “content” that can be repurposed and leveraged. Even the less-expensive programs could use this kind of technique. A series of short videos showing common tasks – and super-user tasks – would go a long way to solving the problem, for not much money. The tasks should be based on the whole real-life business-need task, by the way, not just from the standpoint of a specific program function.

    As for “sales priorities,” you make a good point: salespeople selling a product are NOT the same people who should be selling consulting. This is yet another reason why I said that the business had to be structured differently. The best salesperson for consulting gigs is a “nurturer,” not a “hunter.” I helped one of my software clients hire a nurturer a couple of years ago, for this very purpose, and that person is now outselling other reps in the firm.

    Software is not user-friendly until the users can use it. I think of programs such as SproutSocial, which sets a new standard for easy-to-use. By the way, interesting that the CEO of the company, Justyn Howard, responded to my article about the program. There is a connection between the fact that he is that close to the market/customer and his software is so easy to use.

    Thanks for your comment.


    P.S. You mentioned smaller software companies. I should have said that this article is not directed at them as much as it is the companies that sell something more than a single-utility program. As soon as you’re paying $500 or more for a program, or an annual subscription, you’re getting into the multi-purpose, fairly complex programs. Those are the ones that are hardly ever used to their full potential.

  3. Fantastic! I am a manufacturers’ rep for hard goods in the motorcycle, marine, and bicycle industry selling to retailers. It constantly amazes me that retailers do not get a basic premise: Customers walk through their door, or click on their website trying to spend money. Frequently I tell my retailers, “When someone is trying to hand me money, I’m going to figure out a way to say ‘yes’.” It’s embarrassing how many sales are run off by retailers bad attitudes: We can’t; we won’t; it’s policy; I don’t know; you’re wrong, etc.

    On the topic of B2B websites, and as a manufacturers’ rep I deal with several, most look like they were written by an IT specialist rather than a sales rep or retail buyer who actually use the sites.

    Software developers forget two basic facts:

    1) If we wanted to be in IT we would be… but we don’t and we’re not. Don’t make it so darn complicated; can you say intuitive?

    2) Most buyers and reps deal with many vendors, if it’s not easy to use to use, we won’t. We’ll pick up the phone and conduct business as we did 10 years ago or we’ll click on a competitor’s B2B site.

    Thanks for the great articles,

    Best regards,
    Dale Sargent
    RP Active Sports
    Bolivar, MO

  4. Just a small example from a customer’s perspective, just to show how right you are.
    Visited Best Buy a few days ago, willing to buy an iPad. On entering the store, about 5 sales staff members watched me entering – I mean, there was literally eye contact. I wandered through the store, looking for the iPads. Apparently, that division of the store counted no more than 1 sales person, who was already engaged with another customer. So I waited patiently. The sales person made sure to let me know he noticed me: an irritated look and grumble he’d be right with me. No action whatsoever to call a collegue, nor help from any of the watching collegues. So after about 10 minutes I decided to walk out again. The sales persons I passed greated friendly as if they were happy not having to attend. And out the money went.

    Now, I was raised in the hotel business. One of THE rules I’ve learned, is to always attend to an entering guest within half a minute. Give him your immediate and undevided attention. Make him feel welcome, and don’t ever let the money turn around and walk away.

    To me, that should be rule of thumb in every business when the money just walks in. If you see a customer entering, ask him immediately what he might be interested in. Show him the right path, avoid a waiting line in the purchasing phase, and make him feel appreciated for visiting (sales or not) – not for leaving.

    The next day I was shopping at Target and happened to notice they run iPads too. As I mentioned this to my wife, a sales person overheared this and came up to me. If I was interested in looking at one or had any questions about it? To make a long story short – he made the sale, accessories and all the works.

  5. How beautifully you made my point. I love your story. This is exactly what I’m talking about. The CEO of Best Buy should know this – but doesn’t. In the case of Best Buy, you were literally waving your money around, and everyone saw it. Not interested!

    In the case of Target, you made an offhand comment and the person came up to you – and I note that you were NOT offended; you felt he was going to help you. Help you spend your money. And, not surprisingly, you DID.

    Fantastic. Thanks so much for this!



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