Working on the brand for a new product is an interesting and rewording part of the development cycle. I like to wait until after the product is in an alpha state to start the branding process as it takes a while to understand the feel and personality of the application. The first and most important part of the brand is the logo. Nowadays, it is easy and cheap to get a logo done. I’d recommend looking at one of the following:
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Adapting > Predicting
Adapting is a more important skill than predicting when it comes to building companies. Too often entrepreneurs and leaders think they have to decide every little detail in advance and follow the plan. Wrong. It is much more important to adapt and be perceptive of the market around you than it is to stay the course.
In a similar vein, you have to make decisions with imperfect information. Markets, products, and conditions change too quickly to spend months coming up with a plan. Getting something down on paper and communicating that things are going to change as the plan is executed is the best path to take. There’s a famous quote that summarizes it well:A good plan, violently executed now, is better than a perfect plan next week.
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Rapid Improvement with SaaS = Reference Customers
Another SaaS benefit that isn’t readily apparent before going live is the relationship between quick product enhancements and reference customers. Because you can update and enhance the product so fast, customers that make small requests can see the changes within a matter of days or weeks (assuming you accept the tweak and it fits in your opinionated vision!). This goes a long way towards having them become a reference account that you can use for future prospects. With installed software, it is difficult and time consuming to keep making little patches so customers often have to wait several months for the release cycle to happen before they can actually appreciate that your team has been working hard on their request.
Near instant gratification with product change requests is something many clients have never experienced. Please make sure and temper expectations that it won’t always happen but that you’ll always be there to hear them out and be understanding.
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New Product Pricing
Pricing for a new product is really just a shot in the dark. What features go into what editions? What are the up-sell hooks? In my experience it is much easier to lower prices than to raise them. I’d recommend starting out with a price that is twice what you feel is right. Why? It is very easy to give “preferred customer discounts” and come down on the pricing, making the new client feel special. Throw in membership to your “product advisory council” and you’re golden.
Another huge consideration: credit card price range or CFO price range. This is a big deal. Having a buyer be able to put the product or monthly fee on their credit card is a much easier sale than one that requires a purchase order and needs sign-off from the CFO. Wait, aren’t there plenty of deals between the $1,000 (credit card) and $50,000 (CFO sign-off) range? Yes, those are available but you don’t want to play in that space. The amount of time to complete a $20,000 deal is the same effort as a $50,000 deal. If you have to do a full-service, long sales cycle process, make sure your package is at least $50,000.
My final thoughts: don’t spend much time on pricing, go to market quickly, and listen to your prospects.
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Atlanta CEO Council Breakfast with the CEO of Red Hat
The Atlanta CEO Council put on a great event yesterday morning. As part of their guest speaker series, they brought in Jim Whitehurst, the CEO of Red Hat, to share his vision as well as lessons learned being the COO of Delta Airlines. After hanging out with Lance Weatherby of the ATDC and Andy Monin of VendorMate, the presentation began. Here were Jim’s key recommendations for CEOs:
- Focus, focus, focus – he mentioned three things they focus on for a year and work hard to say no to suggestions that don’t fall in those categories
- Build repoire in person with all lines of company employees – he talked about meeting with 12,000 flight attendents over a six week period (350 at a time) as a way to help with customer service at Delta
It was a great event.
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Use Your GPA to Know When to Expand
As a software entrepreneur it can be difficult to know when to expand staff, marketing, etc. One simple method I developed over the years is called GPA (Growth Plan Assets). The method is really simple in that you add together cash in the bank and current accounts receivable and then divide by last month’s “normal” costs. This, in a rough fashion, gives you the number of months you can operate without any new sales.
You know you’re ready to expand when your GPA is greater than a standard college GPA (scale 0 – 4). So, like a college GPA, most of the time you’re in the two or three month range. When you go above that, you have a sufficient GPA to expand. When you are below a two, you’ll have some tough decisions to make. What’s your GPA?
Note: The higher the percentage of revenue that is recurring, the lower the desired GPA.
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Thoughts on Domain Names
What’s in a domain name? We’ve spent a fair amount of time lately debating the name of our new product as well as the importance of a domain name to go along with it. Here are the domain name thoughts so far:
- Keep it short
- Include the product name in the domain name
- Use real words (e.g. prospectinsight.com) unless there is one that is short and memorable (e.g. pardot.com)
- Get a .com and don’t settle for another extension
- Look at the domain name auctions and after market
It is extremely hard to find a good domain name these days. Good luck!
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Complex Sale or Order Taking Sales Organization
Do you have a direct sales team that works hard selling or do you have an order taking call center and website? That’s an important distinction when building a business. With a direct sales team, you have the following characteristics:
- Bigger deal sizes
- Longer sales cycles
- Complex sales cycle and pricing model
- More expensive personnel
When sales come from an order taking call center and website, you see these characteristics:
- Larger marketing budget as a percentage of revenue
- Smaller deals
- Shorter sales cycles
- Free trials as well as “free” editions
It is important to consider both of these options when thinking through the possibilities of a new business application.
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Products Roadmaps
Does your company make product roadmaps available? I’ve always tried to avoid providing product roadmaps for prospects and customers for several reasons:
- Agile products need to adapt on a monthly or quarterly basis
- Similarily, the market changes too fast to know what will be important in 12 months
- If they see something they want and it doesn’t get done they won’t be as satisfied (better to under promise and over deliver)
Instead of providing a roadmap, find out what is important to your prospect or customer and make sure it meets their needs now. Sure, it won’t be 100% of what they want but it is better to provide real value now than to hope it will be ready in the future. Hope is not a strategy.
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Always People, Process, and Technology
Whenever an issue is brought up to me, I always like to think of it in terms of people, process, and technology. In the two markets that I’m intimately involved with, web content management and web marketing automation, we try to stress that it isn’t just the software or technology that will result in a successful client.
- People – are the right people involved?
- Process – how are things currently being done?
- Technology – what tools and applications are involved?
This simple framework goes a long ways.
David Cummings on Startups 