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Top 10 Marketing Mistakes Software Companies Make

by Alyssa Dver

Marketing should be about telling targeted buyers what you have to offer them and why they should buy it; the only real mistake in marketing is the one we don’t learn from

Love it or dread it; right brain or left; waste of money or revenue generator: marketing is always in question.
Should we do it? Why isn’t it working? How much should we spend? Can we even afford it? Why do others do it so much better?
The answers are actually quite simple. Unfortunately, too many people get easily confused over the real objective of marketing.
Marketing should only be about telling specifically targeted buyers what you have to offer them and why they should spend their money to buy it. What makes this tough is that people get creative. That’s right, creative. They try to use cool design or complex descriptions to “wow” their customers – when all those customers want is to answer a simple question: Why should I buy this? Pretty for the sake of art isn’t marketing.
We compound this problem when the marketing is driven by the engineers or someone “technical” (i.e., lacking in professional communication skills) or – the worst scenario of all – when marketing is driven by the company founder (“How can you not want one of my beautiful puppies?”).
Marketing can be so much more successful if you can only avoid the following classic marketing mistakes. I’ve learned about these over decades of accruing my own marketing scars.

Mistake #1: Assuming you are your target customer.
Let’s be clear: “Customer” can mean the buyer (the person who signs the check for the purchase), the user (the person or persons who actually use the product), or the influencers (the people who have a say in whether the company buys it or not). Whether your product is business-to-business (B-to-B) or business-to-consumer (B-to-C), there are almost always multiple customers in each sale, and knowing them is paramount.
“Knowing” includes nailing down their demographics, buying cycles, budget requirements, price sensitivities, and experience with similar products. You can only know these things by asking, and no amount of Web research or analysts’ reports will help with that. You need to do primary research – even if it is on a small scale and done informally with target customers.
I am often asked to do this on behalf of clients who are too busy, too intimidated, or too fearful of what they may hear from prospective clients. Indeed, using an outside person (e.g., a consultant) can be a good move. An outsider can ask naïve and “politically incorrect” questions, and in turn the respondents can feel a little less worried about giving honest answers. But whether you use an outside interviewer or not, you must talk to your customers. If you really want information, talk to the people who decided not to purchase your software – that’s where the real insights lie.
It’s best to do such research early and often. Worst case, you’ll find that you are off the selling track, but with any luck you’ll be able to make changes (yes, changes are potentially costly, but they are much more costly when they’re made later in the cycle). The best case is that you will make new fans or renew the ones you already have (everyone loves their opinion to matter). It won’t hurt the sales cycle, either, when the person you interviewed is presented with the product he or she actually asked for.

Mistake #2: Asking what users want, not why.
If you’ve been trained in the art of product requirements gathering, you’ve learned that use cases and personas are great tools to ensure that requirements are put into perspective. A typical use case might say something like, “The user shall be able to change the background colors.” This may seem like a nice feature to offer the users, but in fact it could make your product look horrible if they select poor combinations.
Therefore, the question is, “What value does it really have to the user?” If your concern is that color-blind individuals may need a different palette in order to use the software, be specific. You can either specify that the colors must be visible to someone who is color-blind or offer predesigned palettes that you know will maintain the integrity of your user interface. If you don’t stop to ask why a feature is required, you won’t understand what you need to build and how to market it.

Mistake #3: Accepting that not every requirement needs a justification.
Not all requirements have a clear return on investment (ROI). How do you quantify usability or better code base development? Consider the long-term cost savings: How much support or other company resources will be saved over time with this particular product enhancement? Remember that happier, more successful customers mean better customer retention, and that is quantifiable.
Better competitive positioning is also a good thing, but only if it helps to sell more of your software, which is often hard to prove. In addition, there is personnel retention. No kidding – there may be features or at least development projects that are done for the sake of keeping critical internal team members motivated and innovative. It’s not a great way to justify projects from an ROI perspective, but nonetheless, it’s a way to think through whether that use of company resources is justified.

Mistake #4: Believing that SEO and social media are critical.
Because software companies understand search engine optimization (SEO) and social media, they assume those tools must be an important competitive advantage. Perhaps they are in some cases, but in many others, they are actually a waste of time and money (yes, I am a marketing person and I am saying that!).
If your target buyers search for information related to your products on the Internet, then of course you should make it easy to find your company and content, especially if your keywords are highly competitive or mixed with other unrelated products.
However, in the B-to-B software business, I often hear about the need to “get into the C-suite.” Think for a moment: Are those C-level managers spending time surfing the Internet and reading Facebook pages and blogs? Most likely not – or at least not when they are looking for software. Rather than spend precious resources blogging or tweeting, consider how to reach your target individuals in the channels they use to gather information. If you don’t know what those channels are, ask some C-level managers.
Properly done, SEO and social media are voracious marketing tactics requiring constant feeding and monitoring. If they are an excellent way for your business to reach prospective and existing customers, use them and commit yourself fully to the task. If they aren’t, don’t waste your time.

Mistake #5: Assuming that marketing is expensive.
One of the reasons so many people assume that social media and SEO are great marketing tools is because they are free. So is email, for that matter. While the channel may be free to use, there is always a cost. Someone needs to make the time to create the content – but consider also the time it takes to monitor and refine its impact. Could those same resources be put to better use doing more effective marketing, even if that appears to cost more?
Take, for example, one of my clients – a company that sells global trade management software. Its customers are companies that import or export products from one country to another, and the trade managers in those companies use the Internet to search for information about trade management and related topics. As such, my client wanted to optimize its site and create some social media venues to help reach out to its targets. My concern was the amount of time and content knowledge it would take to do this well, given that the client was a rather small startup.
I recommended that since the VP of products already put together weekly summaries and links to important industry articles for her own management team, we could repurpose that content onto a blog and offer it as a service to the external target audience. In 10 minutes, we taught a junior associate how to post to one of the free blog sites. We created the “sponsored” blog simply by adding the company logo to one of the blog templates that complemented (but didn’t replicate) the company’s look and feel.
In a few weeks, the site became quite popular, and it now provides a valuable news service to target buyers. With all the rich keywords created from the newsworthy articles it lists, the blog has terrific SEO and generates traffic to the company’s website, for free.
Indeed, there are many other free tools that can help significantly with marketing. Do you use Google Alerts as your own, free clipping service that reports all the news about your competition, product, industry, or whatever it is you decide to track? What about TwitterHawk, if your product is something talked about in the Twittersphere? And don’t forget that talking to your customers is also a “free” activity – one that yields the most precious marketing intelligence and builds sales relationships.
In reality, what costs a lot is misguided marketing – spending money recklessly to promote your company without clear knowledge of what your targets need and want from you and how they want it delivered.

Mistake #6: Believing that word of mouth happens on its own.
If you build it, they may not come&seriously. Even if some targets said your idea was a good one, are they willing to pay for it? Many entrepreneurs go to friends and family for funding as well as confidence that the proposed software is needed. But your friends and family (or even your investors) are probably not your buyers.
Don’t get happy ears and believe that their being nice to you means they will open their wallets when you come back with the product ready for sale. Friends and family won’t tell you that your baby is ugly either, so make sure you have a good representation of your real target buyers before, during, and after you build the software. Better yet, go to people who bought from your competition or are accomplishing the same tasks using a totally different method. Ask them why they didn’t come to you.
Word of mouth and viral marketing don’t come from nowhere. They happen when the market accrues enough information to share among colleagues. For software, we use additional tricks, such as “powered by” and “read only” ways (PowerPoint’s free viewer, for example), to get non-licensed individuals to be impressed enough upon receipt of the “runtime software” to want them to seek us out for the rights to be a real part of the club. It can’t hurt to do that, but it isn’t going to make most of us rich. What will make us rich is building software that really does solve the problem of a particular target group, and letting that target group know explicitly that we have a solution.

Mistake #7: Thinking “if mine is best, they will buy it despite their budget.”
Just because your target customer doesn’t have one of your products and may need one doesn’t mean that buying one is a priority. If you sell to small businesses, for example, email marketing tools may be very important – but so are the computers that create them, which may be competing for the same scant available dollars. “Only $15 per month” can buy either email auto-response to online inquiries or printer cartridges to deliver decent brochures.
As we have been reminded in the past two years, money isn’t recyclable, and thus fighting to be included in the limited budget of your target customers doesn’t always imply a choice between your product and the competition’s product. It means proving that your customers will gain more by buying your product than they will by spending their money on anything else.
Being the best solution for the problem at hand is key, but it’s also critical to make sure that the value you offer is greater than the value offered by other purchases. Don’t forget that just because your customers budgeted for your product doesn’t mean they’ll buy it when the time comes. All of the good intentions of your “hot leads” may fizzle in the face of new competitive factors, organizational changes, adjusted budgets, and so on. That’s why it’s so important to nurture those leads until the sale is completed. And even afterward, marketing has a role in retaining existing customers and landing more customers.

Mistake #8: Believing that marketing is a science.
The fact that we’ve become obsessed with measuring marketing doesn’t make it a science. Sure, we can count page views and click-throughs, but it’s tough to compute a customer’s ROI from using our software. Unfortunately, no one has ever figured out a way to measure reputation.
By the same token, when we spend marketing dollars on, say, direct mail, and that initiative fails, it’s crazy not to try to find out why. When you’re executing a marketing program, economic, competitive, social, and even environmental factors (e.g., Hurricane Katrina) are all potential wild cards.
However, when things do fail, software companies often blame it on marketing as an unreliable concept, when in reality the culprit may be the product itself, the people involved, or the pricing of the offer – things that the marketers may not control. As such, you owe it to yourself to debrief on every marketing program that fails. That said, don’t get misled that lots of views and clicks mean lots of sales. Marketing success isn’t about open links and eyeballs; it’s about wallets opened. I can stand outside on the street corner and get lots of people to hear me yelling a message. Getting the target buyer to pay for my software is the only metric that really matters.

Mistake #9: Thinking that more information is better.
If you can’t convey what you do for whom and why it’s important in two sentences or less, something is wrong. I am not suggesting that you explain your entire offering or competitive value in two sentences, but you need to have a good positioning, one that separates your target customers from the others quickly.
It’s only human to be fearful that we may offend or reject potential friends – but in marketing, filtering the market is actually good. If I can separate wheat from chaff, targets from uninterested buyers, I won’t waste sales time and marketing resources. Once you have the target person intrigued, you do need to provide more information about your product. This should be done in incremental steps; a 20-page data sheet may be too much for the buyer to digest early on.
Offering a manageable amount of information will encourage customers to seek more. This applies to your website as well. If it isn’t well organized, you may be telling your customer more about your company (and possibly your product) than you ever intended.

Mistake #10: Believing that your mother doesn’t need to understand.
Don’t assume that your product makes sense to writers, analysts, or other “thought leaders” – let alone your target customers. Even those of us in the industry have our own unique perspectives, which may or may not help us know what your software does. Throwing in acronyms doesn’t impress us; in fact, it often confuses us, but we won’t tell you that because our egos won’t let us.
To know if your positioning and sales message works, try it on Mom, the neighbors, or even your kids. If they can understand it well enough to paraphrase it back to you, you’ve succeeded. Don’t assume that it’s too complex for them, because if it is, most likely it’s not the product but your words that are too complex.
In fact, your mom may turn out to be your best evangelist. When I was working on customer relationship management (CRM) software and writing articles and white papers for my own company years ago, I explained the topic very generally to my mother, who had sold promotional products during her career.
She understood enough about what I did to connect me with a friend who was in a bind trying to produce a regular CRM section in BusinessWeek. Guess who got the gig – yours truly. If you can make the effort to get your marketing to speak for you in a way that anyone can easily understand, you may find that help comes to you from unexpected sources – even mom

Alyssa Dver is CEO of Mint Green Marketing (www.mintgreenmktg.com), which offers marketing consulting and classes (live and online). Her books, No Time Marketing and Software Product Management Essentials, continue to be best-sellers, and she is a frequent speaker at conferences and corporate events. Contact Alyssa at alyssadver@mintgreenmktg.com.

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