The greater market share a product has, the lower the selling cost/revenue dollar, shorter sales cycles and greater profitability. Significant market share generates referrals and awareness by prospects who like to purchase products used by others, especially if current users are viewed as leaders in the market. At Salentica, we had 30% of the largest RIA’s in the industry using our CRM. For large RIA’s looking for a CRM, we were on their list to look at, which generated inbound inquiries. We were also selected for strategic relationship with the custodians that RIA’s relied on, partly based on our market share. The custodian relationships helped drive more awareness and inbound leads.
For a new company, it may be necessary to pursue several different product opportunities early on. However at some point, it is important to prune the products that cannot be market share leaders and focus the firm’s resources on the product that can. Jumping into unrelated markets with a product takes away from the goal to develop market leadership in the target market. With a proven product and client base, it is best to look for opportunities to expand functionality within the target market to increase the revenue potential for a sale and provide opportunities to have add-on sales to the current clients.
At Linian, after we had over 65% of the mutual fund assets in Canada being valued by our solution, we expanded our product to provide portfolio modelling and trading. The new functionality opened up new opportunities in existing clients and our brand in the industry enabled us to acquire new wealth management clients that needed portfolio modelling and trading, but not mutual fund accounting.
A good reliable product is the foundation for commercial success in the B2B software market, but leaders do marketing really well. They create awareness and develop mind share with buyers. Buyers like to buy successful products as its viewed as safer. In the 80’s the saying was “no one gets fired for buying IBM”. In the late 90’s, Siebel became the dominant CRM, even though the product was difficult to use and expensive to manage. Siebel was known for being a company that was difficult to deal with. But they did marketing really well and became the safe choice for large firms. Today, Microsoft and Salesforce both have strong CRM solutions. But Salesforce is the market leader based on stronger marketing and sales.
The lesson for software product companies is to not under estimate the importance of a strong marketing program, to generate awareness, demand and support your sales force. Successful sales people are attracted to companies with strong marketing, as it helps them achieve their financial goals. And successful sales people will help to drive more sales.
After a short period of semi retirement, I am looking forward to get back to business and helping companies in an industry that I have spent most of my working life in. The premise that Rourke Advisory has been founded on is that there are many innovative B2B software product companies that have their success limited by a lack of marketing and sales experience. Many of the most innovative companies are founded by technologists. They know how to build a great product, but not how to package and communicate to the market or sell across borders. Traditionally marketing and sales have been learned by the firm’s Principals by trial and error. Hiring senior sales and marketing resources is typically not possible due to budget constraints and the fact that many of the senior resources want to be part of an organisation that already has a proven product and defined sales processes
Through Rourke Advisory, I will be helping companies on a services basis to build marketing, branding and sales strategies to accelerate growth while reducing costly mistakes. My practical experience in launching B2B software products in Canada and the US can help grow sales and help to enable additional funding rounds or ultimately a business sale. Buyers want to see companies with successful products that show demonstrated revenue growth.