Triage Business Development
February 15th, 2009
If you are leading an Early stage technology company focused on biz apps, you should ask yourself the following questions:
1. Are you certain you are focused on solving the problems that will drive the highest return for YOUR business?
2. Are your current projects likely to result in high quality, high ROI, fast implementation that lead to future sales inside that customer and act as a catalyst for sales in to new customers?
3. How much are you building out ’standard product’ with your funds rather than customer funded?
4. If you have been able to convince customers to pay for your development, have you been able to build a reusable and most important - resalable solution?
5. Are you turning down business inside your customers? Can you really be focused unless you say no - a lot?
6. Are you sometimes chasing after evolving customer requirements? feeling like you don’t get credit for Herculean efforts to meet their demands?
7. How are you managing demand for your solution in advance of the need? Are you actively cultivating relationships with the next 10 customers?
If you feel that you are comfortable with your answers to all the above questions, then you are on the right track. If you are not comfortable with your answers to these questions, you might want to keep reading.
Over the past fifteen years, I have been working with small application software companies and products that have had to sort out their niche, choose which problems and customers to attack and find a way to balance focus with opportunistic growth. This is an interesting challenge when you are a small, unproven company competing with giant service companies like IBM and Accenture and mega-software players like SAP and Oracle.
One of the most valuable methods to business growth I have seen, is what I call ‘Triage’ business development (it’s much more than sales).
“Triage - A process for sorting injured people into groups based on their need for or likely benefit from immediate medical treatment.”
There are a lot of wounds that you can heal in almost any market. The challenge will be in identifying the wounds that are the most painful and consistent from company to company and developing a common treatment. If you do this effectively, it has the following impact:
- lower product development costs,
- higher quality implementations,
- increased sales momentum and
- most important: ability to solve more problems inside existing customers.
Why is solving more problems inside customers so important? They will often pay for you to develop a solution that you can then resell to others.
If you can do this well, you have the opportunity to scale the business much faster. You also have the opportunity to scale with less capital by leveraging other people’s money – your customers. However, this is not an easy thing to do. There are many challenges in trying to adopt this process:
• How do you retain IP when customers are giving you the ideas?
• How do you avoid getting ‘pigeonholed’ into a small area by your customers and not allowed the opportunity to expand?
• How do you balance customer requests for unique requirements with reusable functions that you really want to build?
• How do you keep a customer happy when you sell them something for $500K and three years later they have spent $5 million plus?
• How do you develop the discipline to turn away business that is not triage?
• Are you really triaging? This can be difficult to judge without an effective test.
If you don’t do this well and set the platform early - your product will become too broad too early which causes a lot of cost management problems but more important - it kills sales momentum. Most people don’t see it coming either. Responding to customer demand to build a new module sounds like a no-brainer decision. More solutions = more sales. Unfortunately, the opposite is true in early stage technology companies.
I have lived through this process with four different products over the last fifteen years. Sometimes we did it great, other times we made mistakes.
One of the best examples from my past was with a purchasing application – we initially sold the customer a $2.2 million project (after they rejected a $30,000 pilot offer) and 4 years later, we had generated almost $20 million in revenue from this relationship – by moving from one triage opportunity to the next. With the same purchasing app, we had previously sold a $5 million, 3 year-deal with a mega-retailer that allowed us to choose which enhancements would be rolled into our core product (which they paid for) and which ones would not.
There are a lot of people that know how to do this, but many more who failed and don’t understand why. If you think your business could leverage this approach, find someone that knows how to do it.
