Marketing Survival Newsletter - Marketing Concepts for CAD Developers
The question for this newsletter is: How can the third party developer take advantage of a new market? As many developers are finding in the existing market, selling a CAD add-on takes more than announcing the availability of the product. In fact, in my consultations I focus on three elements of successful marketing:
1. Creating product awareness
2. Creating product demand
3. Creating supply and satisfaction
If a company can achieve all three of these elements, they will be successful.
The problem is that it is getting harder and harder to profitably achieve these goals. The cost of reaching the consumer and closing sales is constantly increasing. Advertising in national magazines is very expensive and often the results are less than hoped for. National shows are no longer cost effective, and direct mailings are often too expensive for one technical application to support. In addition, many AutoCAD developers are finding that their caboose is tied to a train that now has it’s own caboose. Autodesk has it’s own third party products.
The result is that many developers are seeing sales drop at a time when they must invest more to be successful. As a result, many developers are leaving the CAD market for greener pastures. My advice is, instead of leaving the market, develop new strategies to compete in an expanding low cost CAD market.
Lower cost CAD platforms will expand an already growing market and increase demand for quality add-on applications. That’s the upside. The same lower cost of CAD programs will also pull down the price of add-on applications. This means lower margins for developers and resellers. That’s the downside. The most logical solutions are higher volumes, and lower marketing/sales costs. Here are my five tips for successful sales/marketing in this new environment.
EXPAND YOUR PRODUCT OFFERING
For some time I have preached the virtue of large numbers when it comes to product lines. If you have one application your marketing cost is carried by one product, and you can only sell one product to each customer (plus follow on sales for upgrades). If you have 5 products you spread marketing costs, and can make multiple sales to each customer (plus follow on sales for upgrades). The advantages are obvious. With more products your per-product marketing/sales costs are lower, you make more sales to each customer, and your profit is much higher.
If you have 5 products you spread marketing costs,
and can make multiple sales to each customer
The problem is that most small developers have only one or two products. The solution is working with other developers to spread marketing costs, and decrease the cost per lead generated. You can do this by co-oping on marketing activities, sharing leads, sharing sales teams, and selling complementary products. This can be achieved by partnering with another company, by licensing or purchasing another product, or by licensing your product to another company. The result is the same, you lower your costs, expand your market, and increase profits.
Group products that combine to provide a solution
Understand that your first objective is to reduce your cost per lead. This is done through co-op marketing activities. Once you have the lead, you can then reduce your cost per sale by expanding your product offering and creating multiple sales to a single customer.
SOLUTION SETS
Another way to expand your markets and reduce your marketing cost is to develop what I call market solution sets. A solution set is a group of products that combine to address a need in a specific market.
Autodesk is trying to do this through their market groups. The problem is that although Autodesk can provide some technical assistance and industry focus, they cannot provide the catalyst for bringing together specific developers to integrate their applications.
None-the-less, if solution sets can be developed, they can be marketed together allowing the developer to share costs and increase profits.
INTERNATIONAL
To my surprise I still run into a large number of developers who do not sell their products outside of North America. I’m surprised because I feel that every developer should, at the very least, be selling product in every English speaking market. For most applications this includes North America, England, Scandinavia, much of Asia, India, and Australia.
The key to selling outside of our borders if finding the right partner
Granted, selling in any market outside of the United States takes a little work. But, it doesn’t have to be that much effort, and the profit can be substantial. The key to selling outside of our borders is finding the right partner.
Product can be sold direct in the US, but selling overseas requires a distributor. Someone who will champion your products, and manage sales for you. In most countries AutoCAD is sold through a strict distributor - dealer channel. And, the distributor actually provides a value added service. They are required to maintain technical staff, provide installation and support, in addition to marketing and selling product.
If you find the right partner, they can manage your product introduction and sales, and all you invest is some initial training, product development, continued support, and a slightly higher product discount.
THE INTERNET
My final suggestion is to look at the Internet. Most of you have some form of Internet activity going on currently. But few of you are selling through the net. Not all products can be sold over the web but almost all products can have information, demonstration programs, and product updates via the web.
If you haven’t hit the web yet, go for it. Your programs are just sitting there waiting for the asking. One trick to being successful on the web is maintaining your search engines. What you say, update search engines? Yes, update them regularly.
One trick to being successful on the web
is maintaining your search engines
The best way to keep your hit rates up on a web page is to stay in touch with the latest catch phrases in your industry. People search for product based on what they are thinking about currently. For example, if I have a rendering program I might logically list "rendering, visualization, 3D, and design" in my search engines. But, who would have thought of "entities, multimedia, or presentation" without reading the latest story in a CAD magazine.
The point being that understanding what your potential customer is thinking about and making sure you can be found via those thoughts is smart web site management.
Another tip for your web site is make sure anyone downloading anything must give their name, company, phone and fax. I assume you automatically log their email address. If not, get that. This gives you a way to follow up. Without follow up, you’re missing your best chance to close the sale. Once you have captured their name, you also have them in your marketing database for future activity.
So there you have it. Several ways to increase your marketing clout, decrease marketing and sales costs, and address those expanding markets as CAD companies begin to fight it out for those add-on CAD seats.
Oh, my final recommendation for being successful in this market…hire a good consultant. No one can do all this alone.
~Nick Vasilieff
This newsletter was written by Nickolai N. Vasilieff; freelance writer and marketing consultant specializing in high technology industries.
For more information see www.nvasilieff.com. To contact Nick with questions or feedback, call 503-267-6339 or email vasilieff@mac.com.
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