Q: In working with emerging tech providers, what do you see as some of the business drivers for these companies to monetize their software?
Since a lot of them are in early- to mid-stage growth they’re trying to generate as much revenue as possible – which shouldn’t come as a surprise. The difference is that they need to prove-out their revenue models to shareholders and private equity firms, so having visibility into repeatable, consistent revenue streams is paramount.
Another big driver is flexibility - for those in new markets where there aren’t a lot of products in a given space, they know they need flexibility in how they package and price their products as their markets and customers evolve.
Last but certainly not least is a focus on user experience and customer satisfaction. Asking customers to manually download software updates or pull them off an FTP site is far from ideal. Deploying (and taking) updates timely is as critical for them as it is for the "big guys."
Unfortunately these processes are typically perceived to be more “back office” and don’t get much attention – so you’ll find development teams building license key generators and databases or even spreadsheets to track all the entitlement data. In doing that they’re taking their attention away from what they do best.
Some just build the licensing and associated processes themselves, but it’s not their core competency. Some see that and some don’t.
Q: So they build the functionality themselves – does that work for them?
Not usually. In the beginning when one or two products are sold, all customers get access to all features and pay for service level support separately – it can work. But it’s just not that simple - they don’t have much visibility into which customers license which products, how and where their products are being used (geo location, what operating system, etc.), software updates aren’t automated, and the list goes on and on.
Without a scalable Software Monetization strategy the problems grow as the business grows - more customers license more products while the product variations increase – so instead of two products the company now has ten – which has now increased the complexity of which customers get which versions and how they’re supported.
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For more insights read "Rethink Your Software Monetization Strategy"