This is the first article in a series that sets the stage for further materials on marketing software products and services. In this series, we’re going to explain some fundamentals and basic concepts behind modern software marketing. We’ll go through some general marketing theory, traditional marketing concepts and will see how do they apply to software marketing. We’ll start with a high-level overview of what modern marketing is and then move straight into specifics of marketing used for software products and services.
Why marketing for software is essential: simply because software is now ubiquitous. It’s present everywhere, from apps running on our smartphones or wearable gadgets to software used in large organizations for storing large amounts of data or operating some business-critical tasks, down to software operating trains, airplanes, self-driving cars and space vehicles. Look at the IT spending forecast: businesses, small and large alike, are going to spend more on software in the upcoming years. We’re incredibly dependent on software, and it amazingly changes and shapes our lives. It also changes the way we order and consume other products and services: Uber, Amazon, eBay, Spotify, and others are just a few examples off the top of my head. The way modern banking works, the way we share our personal lives with friends, colleagues, and relatives, all recent hype around self-driving cars, where machine learning and sophisticated data analysis are involved… What an exciting time to be in the software industry!
Software development as a discipline is evolving incredibly fast, with more and more new programming languages, frameworks, and technologies emerging every year. There are a lot of people now who can do programming. While software development is at the cutting edge, marketing for software is falling far behind. With hundreds of thousands of new software products and services released every year, all too many of them do not achieve commercial success. One reason is that software companies and startups often fail to develop a competency in marketing. Many of those new companies mistakenly believe that marketing is superfluous, that their apps or online services are so cool, they don’t need anything else. They think tech superiority, fresh UI and just “being cool” are all they need to convince buyers to adopt their products. Software developers have a hard time becoming customer oriented, and market focused. Nevertheless, successful commercialization of software products and services requires an intimate understanding of users and customers - their underlying needs and problems, their ways of doing business and their mindsets. Because tech superiority alone is insufficient for ensuring the success of software products, software development companies must develop their marketing competencies. Thriving in the oversaturated software marketplace requires mastery of a diverse set of both marketing and software development skills and capabilities. People doing software marketing must be versatile, yet focused, flexible yet determined, tenacious yet open-minded. Their skills must include understanding the market trends, wants and needs; investing wisely in future technologies; understanding customers intimately; leveraging the skills and capabilities of various departments within a company; understanding how software is developed, and what processes and methodologies developers use; offering a compelling value proposition; developing marketing campaigns that deliver value and have positive ROI; pricing with an eye to customer value; and harmonizing both internal and external communications. This list is not exhaustive.
Software marketing is not the same as marketing traditional products and services. Nevertheless, it is still marketing, so many traditional marketing concepts apply pretty well. In our software marketing learning center, we’ll go through various marketing strategies, programs, and tactics and see how they should be modified and adapted for the software realities.
The main reason why software marketing is different from traditional marketing and why it requires unique approaches is that software is so much different from any other products and services we know. It’s intangible, it has many unique characteristics, it’s being bought and sold differently, there are tons of free and open source software which often has more benefits over proprietary software, there’s almost always much higher degree of uncertainty about how to use and enjoy the full benefits of the particular software solution relative to other alternatives. High levels of consumers’ fear, uncertainty, and doubt contribute to the need for different marketing approaches. In addition, the competitive environment in software industry is something different and not found in more traditional contexts, given open source projects and freeware as one of many other examples. Another point is that in the software marketplace, newcomers, disruptive startups and outsiders of yesterday can quickly change the game and overtake big industry incumbents in a matter of months.
Given the software market density, velocity and a high level of consumer uncertainty, the error margin is smaller comparing to conventional markets. As a result, software development teams and marketers working with them must execute basic marketing principles flawlessly and with precision. Knowing how to segment the market and how to select the appropriate target segments, how to conduct market research, how to clearly communicate the benefits of a software product or service relative to other solutions, how to develop relationships and alliances and last but not least, how to work with software developers and other departments within the company to reach the company goals are critical modern marketing competencies.
Even software development teams and companies that understand the importance of marketing face uncertainty and complications in their marketing decision making. Marketing is sometimes either an afterthought to the product/technology development or not given the same importance as the software development. Even worse, marketing is quite often done in a silo of marketing departments which are entirely divorced from consumer realities and real processes happening in the product development teams. Cross-functional collaboration between engineers and marketers is a necessity but is extremely difficult to implement well. A further complication is that many people hired to do marketing for software products and services often lack understanding of how to market in the industry and/or how software is produced and what are the limitations of the team or technologies used for the product creation. Even well-known software development companies such as Microsoft, Google, Amazon, and others - who are perceived as being great marketers - have failed at fundamental marketing concepts many times and expressed publicly they are not sufficiently “market driven.”
The failure rates of software products and services, as well as any other innovative products, are higher than the failure rates of products in general. Did you know that 9 out of 10 startups fail? Most of the startups are either pure software startups or those that substantially rely on software, where software is at the core of their product or service. In the funding of startups, venture capitalists often take into account the real world stats and expect that most of the investments will fail. Do you know what is the top reason for a fail?: No market need. That’s the clear evidence of the high importance of marketing at the early stages of product development. Marketing should never be an afterthought for small/new or large companies alike. A significant amount of various studies demonstrates: tech superiority alone is insufficient for ensuring the success of a software product. Marketing and software development should co-exist and complement each other to maximize the odds of success. At least, good marketing makes the process controlled rather than obscure, uncertain and blind. Even if a product or service is doomed to fail, with marketing done the right way, you’ll know that well in advance, which gives you a room for a necessary maneuver.
One crucial marketing competency is to think beyond the technology itself and to gain sophisticated insights about the customers who will adopt and use their software products. You probably know the famous saying popular among marketers: “railroads are not in the railroad business, they are in the transportation business.” To successfully market software solutions, companies must have an intimate understanding of their customers’ real needs, wants and problems.
We hope our learning center will help you to navigate around modern marketing and software development concepts and will provide you with strategies and tools to maximize the odds of success of your software projects.
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