ISVs should look to manage software features as they consider syndication deals. Syndicated products should never be exact replicas of house brands. Product marketing must make sure that markets perceive syndicated products as wholly separate. Failing on these points can produce serious problems.
Features can be managed by either including a set of capabilities for a specific syndication customer, or by eliminating some of the functions of the house brand for the syndicated product. Sales should explore prospects from different vertical markets to exploit product features as a strong negotiating point. The expense of customizing a product to meet the needs of a specific customer are comparatively trivial when compared to the revenue likely lost by allowing a house brand to be syndicated as is.
Developing leads to product syndication deals for different vertical markets also opens an opportunity to approach any negotiation as a non-exclusive situation. Syndicators will often try to obtain exclusive rights. Early stage ISVs may be tempted to accept these offers, but should resist. Most exclusive deals produce less than favorable results. It always makes sense to retain your right to market with as few constraints as possible. OEMs should have a chance to purchase rights for specific vertical markets, but even in these cases ISVs need to retain the right to periodically review performance. The option should always be available to make market changes, just as you should retain the right to reassign territories for products sold based on geographic location.
Prospects who can integrate your product into their own solution are particularly promising. When your house brand becomes simply a module in a larger system it is difficult for the average end customer to know it is there.
It never makes sense to abdicate your right to continue to market your house brand. Use pricing as an additional method of differentiating your product from OEM versions. OEM versions should always carry a higher retail cost.
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