Going Where the Money Is: A Veteran’s Guide to Building Software Products that Sell

[ryanmaynard]

After 15 years in the software industry, one thing is clear: to build a successful product, you need to go where the money is. This means targeting the right customers, solving the right problems, and structuring your business to ensure sustainable growth. Here’s how you can do just that by working backwards from the sale.

1. Understand Your Market: Why B2B is King

• Selling to software engineers: They(we) are cheap, picky, and hard to sell to. They often expect discounts and may not see the value in paying for something they believe they could build themselves. Plus, why compete against some of the smartest people you know? It isn't impossible, but for what it takes you to make 100k selling to devs you will have sold 10M to B2B clients.
• B2C challenges: High support costs, higher churn, and the need for constant customer attraction. The competition is fierce, and margins are low, making it hard to break even.
• Why B2B works: Target larger, slower-moving businesses like those in industrial or manufacturing sectors. These companies have budgets, need reliable tools, and if your product is priced at $200/month or less, it’s often considered a trivial expense that doesn’t require multiple layers of approval.

2. Build Relationships, Not Just Products

• Access clients cheaply or freely: If you can’t get in front of your ideal client without spending a ton of money on ads, you’re hosed.
• Affiliate or referral relationships: Find someone influential in a town’s chamber of commerce or someone who runs an association or cooperative for your target market. Striking up a deal with these key players gives you access to a broad audience without high costs.
• MLM in reverse: Convert someone who can be an evangelist for you. They might do this out of pride, monetary incentive, or both. The goal is to find influencers who have the trust and respect of your target market.

3. Leverage Creative Marketing Strategies

• Refer to unlock: Offer customers product Y for free if they refer three other businesses via email and product Z if they refer ten others. This incentivizes purchases and expands your customer base through word-of-mouth.
• Giveaways: People love getting something for free. If they believe they can win something of value by sharing your product with others, they’re more likely to spread the word, reducing acquisition costs and increasing brand visibility.

4. Target the Boring, Unsexy Businesses

• Stay away from retail or consumer projects: These areas are crowded, and competition is fierce. I'm not saying its impossible. Or that it isn't worth it. But try to keep it simple for your first project - you'll alright be fighting off plenty of excuses as it is, no need to leave room for more.
• Focus on industrial parks: Boring, unsexy businesses often have real problems that need solving and are willing to pay for effective solutions. These businesses are more likely to value your product and stick with it long-term, leading to lower churn and higher lifetime value.

5. The Power of Self-Financing

• Avoid a race to the bottom: Pricing often becomes a race to the bottom. Offering self-financing can be a game-changer. Companies don't reject price, they reject price 100% upfront, right now. If you present options that are softer to their cash flow, you're more like to get a contract.
• Align interests long-term: Self-financing keeps IP in your possession, creates a steady stream of annuities, stabilizes income, makes it easier to close larger sales, and builds forward momentum.

6. Build a Community Around Your Product

• Involve the industry in your product development: Create groups of people within the industry and involve them in the development process. Solicit their advice, invite them to be part of a community, and let them watch as you release early versions.
• Turn early adopters into advocates: When people feel they were part of the beginning, they are far more likely to champion the work. This sense of ownership can turn early adopters into vocal advocates for your product.

Working backwards from the sale means starting with the end in mind—knowing who your ideal customer is, understanding their problems, and figuring out how to reach them without breaking the bank. By focusing on B2B, particularly in the industrial and manufacturing sectors, building strong relationships, and using creative marketing strategies, you can position your product for success.