Sales teams in oil and gas service companies are struggling this year. E&P capital spending has been slashed across the board. Many projects have been deferred or even cancelled to preserve cash. For the service companies there is little appetite to spend on new initiatives, bring new products to market and invest in new technology.
If your company is trying to launch a new software product to the oil and gas market, chances are you are really struggling to get solid uptake and traction. How can you create value for your company when you know that meeting sales targets is going to be challenging, even with low expectations for revenue gain?
At EMCO, we are seeing a changing mindset from some of our clients that are developing software products. We are seeing a shift in strategy as the realities of the down market set in, and as people accept that forecasts for new sales are going to be hard to meet. In this market we see companies looking for options, and analyzing how they can create growth in different and innovative ways.
For software investors, two things that always drive value are revenue from sales and depth of the user base. One option for companies to consider is to give away software for free and to exit 2016 with a larger installed user base. With this strategy, companies can answer the question of “How can I create the most value for investors now, when I know that sales are going to be challenged”?
Below are the three options for creating software value in today’s market:
1 – Give software away for free
With this, free means free. No hidden costs and no implementation surcharges. You can package certain aspects of your software platform into a free application, but the idea is that if you advertise it as free, you must deliver on that promise to your customer.
2 – Ensure the free package delivers value
Many things that are advertised as free don’t live up to expectations. The key here is to make the free part of your platform have enough functionality that it provides utility for your customer and drives longstanding engagement. That means that your software is delivering value for your customer and makes a difference in his business and performance.
3 – Provide an outstanding user experience
You can scale back on functionality for the free software version, but you can’t dial back customer service. Driving customer engagement and stickiness requires a full-blown effort from your service team. This means everything from the signup process, to customer onboarding, user training, and technical support has to be delivered for the free customers in the same manner as if they had paid full price.
Of course, your long term mission is to convert the free users to paid customers. This can be accomplished by upselling them to modules that have increased functionality, moving them over to a different platform that provides increased value, or placing them on a maintenance contract. However, you must be careful that you don’t try to make this move too soon. Pressing your customer to make a move to a paid offering before he is fully committed to your platform can be detrimental to your strategy to increase user count. Your sales team is best positioned to have these discussions with customers and to understand how they are using your software, and what their long term goals are.
Any new offering must be communicated with a marketing campaign that reaches your target audience. You need to ensure that your prospects know that you have a free software offering, be able to understand what is offered in your package, and how that compares to other similar offerings that may or may not be free.
At EMCO Partners, we work with clients to develop strategies that increase the enterprise value of their business and help make them attractive for investors. In today’s challenging market, companies need to be open minded, and consider all options when trying to create value and drive growth.