Whether a business is turning to software to sell a product, or is selling software as its product, the business ultimately needs a strong ROI from this software. Unfortunately, most businesses struggle to make software development a profitable investment. More than 70% of all software projects fail on budget or timeline, according to industry research from the Standish Group.
The reality is that too many businesses develop software products that end up being over budget, delivered late, or not a product that contributes to bottom-line profitability. In many cases, businesses struggle to articulate how this software will contribute to the bottom line. Sometimes businesses greenlight software with a “build it and they will come” mentality. Other times, businesses experiment with software, hoping that they’ll learn by doing what “catches on” with their employees and/or their customers.
The most effective way to move forward with any type of software development – especially custom software development – is to have a clear vision and plan for how this investment will help advance the business’s profitability goals. Let’s explore five key strategies that businesses should be using to turn their software products into profitable business lines:
Know your market niche inside and out
Many businesses struggle to articulate a specific market niche they want to serve. They tend to think in broad strokes about large swaths of customers – beyond what’s realistic for them to achieve with a new software product. They don’t understand basic demographic information, nor do they understand the preferences, priorities and sensibilities of their customers.
As a result, these businesses lack a clear sense of who they’re building their software product for, and end up building products that don’t resonate with anyone.
The best way to overcome these challenges is to clearly identify a specific, narrowly tailored market niche for every software product – and then get to know this customer profile inside and out. Then, as the software is being developed, the software development team should be making all of its design decisions through the lens of the customer profile.
Only when the business keeps this customer profile front and center can the business build something that will optimally resonate with a market niche.
Set clear business-, market- and customer-centric goals
By the time a team has been assigned to develop a software product, the business needs to have developed and communicated a clear set of goals for the project. These goals should fall into three categories: business-centric, market-centric and customer-centric goals.
For business-centric goals, the company should articulate how the software will help increase the company’s valuation, or help the company attain a certain percentage increase in sales, or shape the company’s exit strategy.
For market-centric goals, the company should articulate how the software will help it expand into a specific new industry vertical, or challenge the dominance of a competitor product within a shared marketplace.
For customer-centric goals, the company should articulate how the new software product will improve customer satisfaction metrics, or contribute to a certain number of customers paying for an upgraded plan or service.
Identify a specific customer problem you can solve
Many software products are developed because someone in the company has an idea. In some cases, that idea is linked to a specific customer pain point, but that’s not always the case.
To add value to a business’s bottom line, every software product should be fully aligned to solve a problem for customers. The pain point needs to be specific, and it needs to be one that the customer would agree is an issue that software can help solve.
Without a clear understanding of this pain point, businesses will likely face a disconnect between the price tag of the investment and its impact on the company’s bottom line.
Be able to distinguish between what you’re selling vs. upselling
A customer-facing software product should never be a simple yes or no proposition.
Once a customer has bought into a product, the next step is for the business to figure out how to expand its relationship with the customer. In other words, the business needs both a clear plan for how to initially hook customers on a product, and an equally clear, articulated plan for how they’ll upsell new, related services and features to the same customer.
Businesses should be using these selling and upselling strategies to help drive improvements to the products themselves over time.
Decide at the upfront how you’ll measure success
Software products are most likely to resonate with customers when the business holds itself accountable to meeting bottom-line profitability goals. And the most effective way to create this accountability is by establishing performance metrics at the upfront that are based on the company’s goals for the product.
These metrics for measuring success should encompass sales, marketing, activation and onboarding, customer engagement, and customer satisfaction. These metrics serve as powerful reinforcement that as software products are developed and refined and expanded, the product development team is held continuously accountable to moving the needle on profitability.
Final thoughts
Businesses often find that their ROI from investing in software application development and mobile app development isn’t where they want it to be. But it doesn’t have to be that way. To turn software products into profitable business lines, businesses should get to know their market niche inside and out, set clear goals, identify a specific customer pain point they can help solve, understand the difference between what they’re selling vs. upselling, and decide at the upfront how they’ll measure success.
Outcode specializes in helping businesses make strategic investments in custom software development to build profitable business lines. To learn more about how we can get a strong ROI on software products for your business, please reach out to us.
