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Client Solutions In Enterprise Software
You are 3 months into building the MVP for your enterprise software startup. Your product is ready for launch. You have had the time to hire a few sales folks to go out and sell your product. The product is quite successful and a bunch of clients sign up for the product. How you onboard your client can be make or break for the long term relationship with the client. A lot of early stage companies focus on sales, but the secret sauce for long term growth and retention is implementation of the product. Obviously, you can’t have the later without the former, but I want to highlight why having a client solutions function can sometimes be as important as (if not more than) having a sales function.
Enterprise software (think customer service software, hedge fund trading software) is different than commercial software (Kayak, Airbnb, Facebook) in usage, complexity and price. There are fewer users using enterprise software, functionality is more rich, and product margins are higher. In contrast to enterprise software, you don’t see a huge need for sales and client solutions in the commercial software business. Competition to sell an enterprise product is a lot more cut-throat because deals are much bigger. Enterprise software is built to be more configurable because of the ability to satisfy niche workflows and use-cases.
A lot of pure-bred software engineers have asked me the value of client solutions. Shoudn’t software “just work”? Here are a couple of reasons why enterprise software companies must provide client solutions right after you start selling the product:
Deriving Value
If the software configuration is left to the client, there is a high likelihood that the client uses the product in unintended ways, and worse, only uses some functionality and ignores rest. Chances are, the client won’t derive the full intended value from the product. This is more common than one would think. When economic times are good, enterprise executives are wallet-happy. Especially during times like right now, when interest rates are dirt low and the COO expects the value derived from the software to be higher than the IRR from placing that money in other investments. Executives get easily impressed by the sales demo and agree to buy the software, without fully understanding implementation and use-cases.
For example, often implementation is left to the head of IT at the client. An important motivation for the head of IT is saving infrastructure costs. Since he is not an end user of the product, he decides to allocate a single machine instead of load balancing between two machines. Product is not as snappy and users don’t know to describe the problem or know that the product could be much faster. End result, users shy away from using the product. Everything stays status quo until the economy turns downhill, and executives look for any and all ways to reduce expenses. Your software is not being used the way you wanted it to be and therefore not sticky. As a result, the client wants out.
The best way to get around such problems is to build a client solutions team and hire a few really good ‘consultants’ (who are really just employees of the startup) to take responsibility of implementing the software after sales sells. Consultants implement the software the way it was meant to be used and consistently work with the client to derive value. This makes software sticky. Client executives see the real value and see the point of their investment even when times are bad.
Product Feedback
Traditionally, product management populates the feature backlog and sets the roadmap for features to come. Having your consultant implement and maintain a client relationships helps gain continuous feedback like nothing else. This constant feedback helps hold a pulse on client satisfaction. It helps prioritize the features that are being requested by different clients instead of simply predicting or relying on clients that spend the most.
Firms usually have more than a single product offering and in cases where your consultant is able to monitor the client’s satisfaction, he is able to cross sell other products, allowing further stickiness.
Fixing The Sales Demo Hangover
Sales is a hard job and sales engineers do everything in their power to control the things they can during a demo. More often than not, client will see a stellar demo but the cobwebs don’t get exposed until the client starts using it. The devil always lies in the details. Sales does a fantastic job with sandboxed data but come implementation time, the product doesn’t suit all possible use-cases. Almost no product ever does. The client is unhappy even before the product is live!
Instead, by assigning a consultant to the implementation, he is able to provide most value by building workarounds where the product doesn’t completely satisfy the use-case, maintaining the client relationship and best of all, channeling these edge use-cases back into the product. If those features get added to the next sprint release, it is a win-win situation for both the client and the product.
Configuration vs Customization
Designing a product to be highly configurable is obviously very good, but the configuration framework (things like rules based database or locale settings) won’t be able to handle all the different use-cases. The solution is to design a product that is highly customizable, but it can be a double-edged sword. Consultants are able to accommodate use cases / workflows by building custom solutions. Unless you end up incorporating all these customizations back into the product in a timely manner, upgrading the client to the next version will be very hard.
In early stages of high growth start ups, prioritization of features is extremely important. It is probably the most important thing that makes or breaks a product. Having a consultant to build workarounds and customizations allows the product team to focus on the absolutely necessary features or bug fixes that have broader applicability for the product. This buys time with clients who can’t be immediately accommodated by the product team.
The downside of having a client solutions department is obvious. There is an initial upfront capital expense. The size of the department needs to scale with the deals in the sales pipeline. It is quite hard (and often expensive) to hire consultants who have good functional knowledge, are good at customer service and have the technical capability to build workarounds and customizations in the product. One can’t make too many mistakes with these hires because quality of service directly correlates with client retention and these hires are the face of the product.
There are so many things that can’t be controlled by a company, including market conditions, competition, and clients going out of business. The one important thing that a company can control is the implementation, and there is no better way than to build a client solutions organization to excel at that.