Gentlemen's set in the field of marketing and sales of a custom software company
In the first article, we talked about our first experience in marketing and sales. In this article, we will explain why you need to do marketing and sales yourself, even if you have studied mathematics and programming all your life, and not rely on the “gurus” from the market, and what minimal actions in the field of marketing and sales should be made by a custom software company Nowadays, to be a profitable company and to be able to develop steadily. This article will not touch on the topic of promotion and sale of products, mobile applications, games, and much more, since the experience of Maxilect is mainly related to custom development, and only at the end of 2017 we began to do our R&D development and work with startups according to the model Revenue Sharing.
My partner's storyKirill Antonov , who wrote the first part of the article, stopped around late 2016 - early 2017. At that time, we had already managed to break a lot of firewood, stepped on more than one rake, achieved first success, and remained in some euphoria from the fact that it finally began to turn out, we grew, profit increased, and it was time to think about dynamic development in the right direction.
The idea of inviting an experienced seller with an understanding of the Russian B2B market seemed extremely logical, which we did by finding a Muscovite (business there) and inviting him to the final communication in St. Petersburg. We were not ready to offer a salary of 200,000+ rubles (and a small% in excess of this), therefore we offered about 100,000 salary and 30% of the profit from the sales that he will make to us. A lot, to be honest. But I was always interested in my share in absolute terms, and not in percentage terms. We talked well, went home and pretty quickly built an action plan that included comprehensive work in a number of areas. But already in February 2017, it became clear to my partner and me that our new partner was not ready to work in the same rhythm as we did. After a short conversation, it was decided to stop cooperation.
We have lost several months in the dynamics of development, only supporting current projects and sales. A radical fracture did not occur. People tend to want a miracle so that everyone does it for them. We fell into this trap almost immediately for the second time. We shook hands with a former colleague of a partner, but this cooperation did not last long.
Subsequently, I analyzed these stories. The harsh and logical conclusion is as follows:
1. There are no normal sellers of custom software development services on the labor market, because they earn enough on the current one (from 200,000 r per month with bonuses, which can give 500,000 rubles or more “on the circle”), and it is difficult to get them out of the zone comfort. Why should they withdraw from a place where they already have large sales and a good% from deals? For the sake of a startup, where there will not be such volumes in the coming year to economically justify attracting such a seller (who will probably ask to create a team for him, which will further increase costs). All these volumes must also be multiplied by the probability, which in the previous place was close to 100% (this is exactly what seems most often to those who have never been fired).
2. Such sellers are not needed at the development stage, when you have only 20-40 technical specialists and there is no need for a stream of large (from $ 1 million) orders.
3. Regardless of the tasks to be solved, it is easier to delegate what you yourself figured out. In this case, you understand what tasks need to be solved and you can build a portrait of a successful deputy.
4. You need to be a very risky person to entrust marketing or sales to a hired specialist from the market, because this essentially means transferring responsibility for the future of the company to someone who does not understand your company’s business. In some ways, it looks like a “Russian roulette”, where they shoot at a business.
For myself, I decided that there was no alternative to reinforcing knowledge about the company with knowledge in the field of marketing and sales, where I already had a theoretical base from a business school (2010).
What will be listed below, was checked by me during 2016-2017, can quickly become outdated and bring little benefit (or even harm). I’m sure that some points will be relevant in 5 years. I wrote about this because we once tried to work the same way as another company did and achieved success .... 5 years ago. The result was logical, we did not achieve 5% of what we expected.
I have gained a lot of practical experience in recent years, and on this subject, if I had the time, I could organize at least a blog. In the same article, I confine myself to listing what seems to me the most important and useful for those who have already created their own company for custom software development or on the way to this.
Your vision will determine what the company will be.At the initial stage (and preferably before the start), determine for yourself why you are creating a company, why you need it. If the answer is just money, then the risk is great that you quit it sooner or later, finding something more profitable and interesting. Your vision should be built around your personality, your experience, principles and values. This should not be shy. In my case, it turned out like this: equal opportunities for IT professionals regardless of their place of residence.I am in favor of not making the false choice - to work for low pay in the regions or to move to megacities or to go abroad. There are alternatives, including freelance and remote work. The second key factor was that I love freedom and am ready to bear responsibility for this. Remote work will be appreciated by those who value their time, organized, want to be free and understand the responsibility behind this. About why the Maxilect company was created, I’ll write separately in two languages (we’ll publish it not on the Habré), as this has a positive effect on sales.
Marketing determines what your company will develop in 1 year, for whom and for what price.If you don’t want to be there in a year where I don’t know myself, today do market analysis, identify your niches and segments (we did this after we “worked on the area”), describe the Ideal Customer Profile and create a Value Proposition for each of them. This will give you at the entrance of high-quality leads (potential customers who have a need that you can address) with the correct construction of the sales process.
Model the entire sale process from lead generation to the conclusion of the transaction.There should be no weak points. Otherwise, all costs in the initial stages will be useless if, for example, in negotiations with an English-speaking customer, your pronunciation will resemble the well-known phrase of our sports official “I Speak From My Heart”. Forget about scaling until you have at least one deal on your sales system - why scale errors and losses? Here I limited myself to the stage of concluding a deal, since it is obvious that your expertise should correspond to the complexity of the project and there must be specialists to work on this project.
A sales system is necessary for each pair (a niche is a service).It makes sense to immediately describe it in large strokes, and as you get feedback from the market, constantly improve it. Only after you have made several sales on this system can it be used for scaling. With us, this description takes 1-1.5 pages in Confluence.
InBound marketing is becoming increasingly important these days. This is when the client finds you himself, and before making an application, he will work out his fears and risks by reading your expert articles, watching videos, tapes on social networks, and customer reviews. OutBound also continues to work, and in the short term it can give a sale faster, but here, to “warm up” the lead, you need the right content published in the right way in the right places. Briefly about both approaches can be viewed on this page.. You need to define a balanced approach using both InBound and OutBound. Sooner or later, you will come to the conclusion that you need at least a coordinator who will monitor the implementation of the marketing plan regarding the publication of reviews, articles, etc.
Two-level sales system (Lead gen, Sales).After the process of scaling and delegation has begun, you will need a lead generator - i.e. the one who will create the flow of calls for the seller. You can do this in different ways, there are many tools to automate the process. Leads start up in CRM (we spent 2 years on Google Sheet, now we use Hubspot), and then the seller works on them. If the deal is large, then at some stage the participation of the CEO will be required. I must say right away that combining these roles of a lead generator and a seller in one person is difficult, because the tasks are very different. A good seller will be uninterested in lead generation, and from a business point of view, this is wrong. Lead generation can be put on stream by creating a clear instruction (script) and use cheap resources for this at the part-time scheme.
Three-level sales system (Lead gen, Sales, Account). It is suitable for a more mature company, where there is already a regular flow of InBound calls and there are clients (Accounts) with whom it is necessary to increase the volume of cooperation. It differs from the two-level one in that there are 2 sellers. One works with leads, and his task is to make the first contract from a new client (which is unlikely to be large). The second seller is Account Manager, and volumes and more profitable transactions should be expected from him. In cases of serious leads, he can take them to work for the whole cycle.
Motivation systems for Lead gen, Sales and Account may be different.It is important to understand that the main KPIs of the Lead gen are relevant leads in the required volume for a certain period of time. They will not appear immediately, it may take a month. Sales may not have large contracts; its task is to expand the customer base. Therefore, here you can measure the conversion from leads to customers and the number of contracts for the period. Account makes volumes, and there should be a link to income or profit. We have chosen the second.
Advertising on the Internet can give you fast traffic to the site.But traffic is not a synonym for sales. We know an example of 0 conversion to leads from an advertising budget of 200,000 rubles. I decided that although this is a quick channel to attract, in order to use it, we need to build up a critical mass of publications to begin with. I heard that in the western market B2B advertising works better on Facebook than on LinkedIn.
Use your advantage - consider, compare and optimize. Many do not like numbers, but not us mathematicians. And this is our advantage, which must be used in sales. Identify metrics that are important to you, collect data and analyze. Here are a few of them: the cost of one lead, the cost of one sale, the client’s share in profit (the higher the higher the risk of dependence on him, do not make more than 40%, and ideally not more than 25%).
Communicate with colleagues in the shop - other entrepreneurs from Russia, Ukraine, Belarus. This is the fastest and cheapest way to learn about something new. Share your experience if you already have something to tell. Forget that you are competitors. Even the Russian market is large, not to mention the western one. There is enough room for everyone, and such an exchange of experience will increase the chances of everyone to survive in the competition in the Western market. If you have your own company with a similar profile and you share my point of view, then let's get acquainted and communicate.
I did not write about the cold mass mailing of letters and calls, because we did not do this. Newsletters can have a negative effect on the brand and permanently block the possibility of working with some customers (everyone is tired of spam), and in a number of segments our market is limited to several hundred companies.
There is nothing in marketing and sales that a graduate of a math or physics department cannot work out with, who worked as a developer or tester at the start of a career. The only question is how much time will be required for training and how many millions rubles of lost profits will it cost. If there are at least 10 people among readers who have recently started a similar business or just matured for this solution, and their level of knowledge in marketing and sales is equivalent to the baggage that I had 3 years ago, then the value of my article in 2-3 years will be 20-50 million rubles.
I almost forgot to say the main thing. The business of custom software development is complex, and statistics on survivors after 1-2 years are depressing. Many drop out due to fatigue, a waste of energy on knocking out receivables, dealing with cash gaps and losing faith. I have not created a single successful product service (although I tried, as you can read about in our first articleat the hub), but it seems to me that this lesson is more interesting and less nervous. Therefore, if you have a margin of safety (at least several million rubles) or you believe that your project will be of interest to a business angel (I checked it in 2009, so I decided to create a financial and technological base myself), you have a strong team that covers not only technical issues, but also in marketing and sales, then try to create your own product service. It will turn out - you can share experience with others. In any case, it will be one of the brightest and most saturated periods of your life. Do not give up on it, it's worth it.
Article author: Maxim Korotkov, General Director, Maxilect
PS We publish our articles on several sites of runet. Subscribe to our pages on VK , FB or Telegram-channel to learn about all our publications and other Maxilect news.
My partner's storyKirill Antonov , who wrote the first part of the article, stopped around late 2016 - early 2017. At that time, we had already managed to break a lot of firewood, stepped on more than one rake, achieved first success, and remained in some euphoria from the fact that it finally began to turn out, we grew, profit increased, and it was time to think about dynamic development in the right direction.
One-stop marketing and sales decision for yourself
The idea of inviting an experienced seller with an understanding of the Russian B2B market seemed extremely logical, which we did by finding a Muscovite (business there) and inviting him to the final communication in St. Petersburg. We were not ready to offer a salary of 200,000+ rubles (and a small% in excess of this), therefore we offered about 100,000 salary and 30% of the profit from the sales that he will make to us. A lot, to be honest. But I was always interested in my share in absolute terms, and not in percentage terms. We talked well, went home and pretty quickly built an action plan that included comprehensive work in a number of areas. But already in February 2017, it became clear to my partner and me that our new partner was not ready to work in the same rhythm as we did. After a short conversation, it was decided to stop cooperation.
We have lost several months in the dynamics of development, only supporting current projects and sales. A radical fracture did not occur. People tend to want a miracle so that everyone does it for them. We fell into this trap almost immediately for the second time. We shook hands with a former colleague of a partner, but this cooperation did not last long.
Subsequently, I analyzed these stories. The harsh and logical conclusion is as follows:
1. There are no normal sellers of custom software development services on the labor market, because they earn enough on the current one (from 200,000 r per month with bonuses, which can give 500,000 rubles or more “on the circle”), and it is difficult to get them out of the zone comfort. Why should they withdraw from a place where they already have large sales and a good% from deals? For the sake of a startup, where there will not be such volumes in the coming year to economically justify attracting such a seller (who will probably ask to create a team for him, which will further increase costs). All these volumes must also be multiplied by the probability, which in the previous place was close to 100% (this is exactly what seems most often to those who have never been fired).
2. Such sellers are not needed at the development stage, when you have only 20-40 technical specialists and there is no need for a stream of large (from $ 1 million) orders.
3. Regardless of the tasks to be solved, it is easier to delegate what you yourself figured out. In this case, you understand what tasks need to be solved and you can build a portrait of a successful deputy.
4. You need to be a very risky person to entrust marketing or sales to a hired specialist from the market, because this essentially means transferring responsibility for the future of the company to someone who does not understand your company’s business. In some ways, it looks like a “Russian roulette”, where they shoot at a business.
For myself, I decided that there was no alternative to reinforcing knowledge about the company with knowledge in the field of marketing and sales, where I already had a theoretical base from a business school (2010).
Hygienic set of a business owner in marketing and sales
What will be listed below, was checked by me during 2016-2017, can quickly become outdated and bring little benefit (or even harm). I’m sure that some points will be relevant in 5 years. I wrote about this because we once tried to work the same way as another company did and achieved success .... 5 years ago. The result was logical, we did not achieve 5% of what we expected.
I have gained a lot of practical experience in recent years, and on this subject, if I had the time, I could organize at least a blog. In the same article, I confine myself to listing what seems to me the most important and useful for those who have already created their own company for custom software development or on the way to this.
Your vision will determine what the company will be.At the initial stage (and preferably before the start), determine for yourself why you are creating a company, why you need it. If the answer is just money, then the risk is great that you quit it sooner or later, finding something more profitable and interesting. Your vision should be built around your personality, your experience, principles and values. This should not be shy. In my case, it turned out like this: equal opportunities for IT professionals regardless of their place of residence.I am in favor of not making the false choice - to work for low pay in the regions or to move to megacities or to go abroad. There are alternatives, including freelance and remote work. The second key factor was that I love freedom and am ready to bear responsibility for this. Remote work will be appreciated by those who value their time, organized, want to be free and understand the responsibility behind this. About why the Maxilect company was created, I’ll write separately in two languages (we’ll publish it not on the Habré), as this has a positive effect on sales.
Marketing determines what your company will develop in 1 year, for whom and for what price.If you don’t want to be there in a year where I don’t know myself, today do market analysis, identify your niches and segments (we did this after we “worked on the area”), describe the Ideal Customer Profile and create a Value Proposition for each of them. This will give you at the entrance of high-quality leads (potential customers who have a need that you can address) with the correct construction of the sales process.
Model the entire sale process from lead generation to the conclusion of the transaction.There should be no weak points. Otherwise, all costs in the initial stages will be useless if, for example, in negotiations with an English-speaking customer, your pronunciation will resemble the well-known phrase of our sports official “I Speak From My Heart”. Forget about scaling until you have at least one deal on your sales system - why scale errors and losses? Here I limited myself to the stage of concluding a deal, since it is obvious that your expertise should correspond to the complexity of the project and there must be specialists to work on this project.
A sales system is necessary for each pair (a niche is a service).It makes sense to immediately describe it in large strokes, and as you get feedback from the market, constantly improve it. Only after you have made several sales on this system can it be used for scaling. With us, this description takes 1-1.5 pages in Confluence.
InBound marketing is becoming increasingly important these days. This is when the client finds you himself, and before making an application, he will work out his fears and risks by reading your expert articles, watching videos, tapes on social networks, and customer reviews. OutBound also continues to work, and in the short term it can give a sale faster, but here, to “warm up” the lead, you need the right content published in the right way in the right places. Briefly about both approaches can be viewed on this page.. You need to define a balanced approach using both InBound and OutBound. Sooner or later, you will come to the conclusion that you need at least a coordinator who will monitor the implementation of the marketing plan regarding the publication of reviews, articles, etc.
Two-level sales system (Lead gen, Sales).After the process of scaling and delegation has begun, you will need a lead generator - i.e. the one who will create the flow of calls for the seller. You can do this in different ways, there are many tools to automate the process. Leads start up in CRM (we spent 2 years on Google Sheet, now we use Hubspot), and then the seller works on them. If the deal is large, then at some stage the participation of the CEO will be required. I must say right away that combining these roles of a lead generator and a seller in one person is difficult, because the tasks are very different. A good seller will be uninterested in lead generation, and from a business point of view, this is wrong. Lead generation can be put on stream by creating a clear instruction (script) and use cheap resources for this at the part-time scheme.
Three-level sales system (Lead gen, Sales, Account). It is suitable for a more mature company, where there is already a regular flow of InBound calls and there are clients (Accounts) with whom it is necessary to increase the volume of cooperation. It differs from the two-level one in that there are 2 sellers. One works with leads, and his task is to make the first contract from a new client (which is unlikely to be large). The second seller is Account Manager, and volumes and more profitable transactions should be expected from him. In cases of serious leads, he can take them to work for the whole cycle.
Motivation systems for Lead gen, Sales and Account may be different.It is important to understand that the main KPIs of the Lead gen are relevant leads in the required volume for a certain period of time. They will not appear immediately, it may take a month. Sales may not have large contracts; its task is to expand the customer base. Therefore, here you can measure the conversion from leads to customers and the number of contracts for the period. Account makes volumes, and there should be a link to income or profit. We have chosen the second.
Advertising on the Internet can give you fast traffic to the site.But traffic is not a synonym for sales. We know an example of 0 conversion to leads from an advertising budget of 200,000 rubles. I decided that although this is a quick channel to attract, in order to use it, we need to build up a critical mass of publications to begin with. I heard that in the western market B2B advertising works better on Facebook than on LinkedIn.
Use your advantage - consider, compare and optimize. Many do not like numbers, but not us mathematicians. And this is our advantage, which must be used in sales. Identify metrics that are important to you, collect data and analyze. Here are a few of them: the cost of one lead, the cost of one sale, the client’s share in profit (the higher the higher the risk of dependence on him, do not make more than 40%, and ideally not more than 25%).
Communicate with colleagues in the shop - other entrepreneurs from Russia, Ukraine, Belarus. This is the fastest and cheapest way to learn about something new. Share your experience if you already have something to tell. Forget that you are competitors. Even the Russian market is large, not to mention the western one. There is enough room for everyone, and such an exchange of experience will increase the chances of everyone to survive in the competition in the Western market. If you have your own company with a similar profile and you share my point of view, then let's get acquainted and communicate.
I did not write about the cold mass mailing of letters and calls, because we did not do this. Newsletters can have a negative effect on the brand and permanently block the possibility of working with some customers (everyone is tired of spam), and in a number of segments our market is limited to several hundred companies.
Brief summary
There is nothing in marketing and sales that a graduate of a math or physics department cannot work out with, who worked as a developer or tester at the start of a career. The only question is how much time will be required for training and how many millions rubles of lost profits will it cost. If there are at least 10 people among readers who have recently started a similar business or just matured for this solution, and their level of knowledge in marketing and sales is equivalent to the baggage that I had 3 years ago, then the value of my article in 2-3 years will be 20-50 million rubles.
I almost forgot to say the main thing. The business of custom software development is complex, and statistics on survivors after 1-2 years are depressing. Many drop out due to fatigue, a waste of energy on knocking out receivables, dealing with cash gaps and losing faith. I have not created a single successful product service (although I tried, as you can read about in our first articleat the hub), but it seems to me that this lesson is more interesting and less nervous. Therefore, if you have a margin of safety (at least several million rubles) or you believe that your project will be of interest to a business angel (I checked it in 2009, so I decided to create a financial and technological base myself), you have a strong team that covers not only technical issues, but also in marketing and sales, then try to create your own product service. It will turn out - you can share experience with others. In any case, it will be one of the brightest and most saturated periods of your life. Do not give up on it, it's worth it.
Article author: Maxim Korotkov, General Director, Maxilect
PS We publish our articles on several sites of runet. Subscribe to our pages on VK , FB or Telegram-channel to learn about all our publications and other Maxilect news.