Manage Software Features When You Syndicate to Differentiate Offers

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.

Ira Michael Blonder

© IMB Enterprises, Inc. & Ira Michael Blonder, 2013 All Rights Reserved


Leverage Channel Partnerships Fairly Maintaining Non Exclusive Relations Where Possible

Product marketing plans for products and/or services targeted for channel distribution must include safeguards against the possibility of granting exclusivity to specific partners. The trick here is to proceed carefully and in such a manner that exclusivity is never presumed, implied or ever delivered.

Typical channel distribution prospects are familiar with negotiations based on non exclusive rights to sell products and, in most cases, there is no problem navigating through these negotiations to a successful conclusion for all parties. But much responsibility rests on the shoulders of the manufacturer or ISV to maximize the benefit of channel partnerships framed on a non exclusive basis. Indeed, “more the merrier” ought to be the underlying objective of all of these campaigns. The key driver is revenue; therefore, the more sales personnel selling the product for you, the better.

Consider the downside of granting exclusivity to specific partners: revenue potential tops out at:

  • The outer limits of geographical reach for the channel prospect
  • The maximum revenue potential represented by the size of the vertical market size serviced by your channel prospect, and, of most importance
  • The channel partner’s reputation at any given moment in time

Better not to go there.

Better, as well to nest your channel strategy (built on a resolution to maintain non exclusive affiliations with partners) within a greater marketing pan that augments channel revenue with a direct national sales effort and a white box syndication effort. Marketing management should play the role of ambassador to the market, spending quality time with any/all partners to indoctrinate them to the plan.

As well, marketing management should present the broad product value proposition directly to the marketplace. This effort will be particularly useful for partners as it will provide the wind to their sails, lowering the burden that would otherwise fall on them to magnetize the market for the product.

A comprehensive plan as I’ve just sketched can take an emerging business very far along with regard to attaining critical “escape velocity” to power into revenue positive territory. Of course, cash positive will also spell that much more benefit for the business, not to mention providing the fuel needed to expand programs and, potentially help management decide when it makes sense to eschew under the radar marketing for something more palpable.

Nevertheless, the final decision about whether or not it makes sense to switch from covert to overt marketing shouldn’t be made just upon revenue levels. More of that in another post.

© IMB Enterprises, Inc. & Ira Michael Blonder, 2011 All Rights Reserved


Use White Label or OEM Products to Turbo Charge Sales Into Enterprise Business Targets

Consider offering a white label or Original Equipment Manufacturer (OEM) version of your tangible or intangible product or solution to create an entirely separate dimension to your enterprise sales efforts for large corporate prospects.

With regard to intangibles, as long as your intangible product has been branded, and your product marketing strategy has been clearly defined, it is entirely appropriate to consider distribution via white label or OEM channels. It is also appropriate to avail of these channels for businesses with market visibility and, as well, for businesses that have opted to operate under the radar of the marketplace.

In fact, availing of White Label or OEM channels is especially useful when a business is operating under the radar. Indirect sales channels (inclusive of white label and OEM) equip a business with powerful tools to test the receptivity of markets in many ways; for just one example, to test market readiness to a scalable offering that presents different feature sets for different portions market segments. Further, if your white label or OEM customers are larger than you and speak with a more authoritative voice within the market (quite often this relationship will be the case as, in my experience, it is larger businesses with an established market position that will spend the time to reconnoiter the periphery and unearth companies, like your under the radar effort, to protect their market positions) then you can establish inroads to prospects that promise rich streams of repeat buy potential by riding on the backs of their success and established procurement relationships.

I have considerable experience working with a business that spent the necessary time building products into scalable offerings. Consider that the objective of building scalable products, in this case (specifically, a computer hardware solution for sharing computer peripherals), was not only to empower white label and OEM partners to penetrate different portions of the market, but also to open an opportunity to attack the same market via a direct sales force which was properly segmented (via features and discernable market segment strategy) to permit coexistence with healthy indirect channels, all addressing the same customers and prospects.

Of course, it is critically important that the boundaries of permitted activity for indirect white label and OEM partners be clearly defined through your partnership agreements. Better to carefully structure these agreements before commencing negotiations than to rudely discover loopholes after the fact.

© IMB Enterprises, Inc. & Ira Michael Blonder, 2011 All Rights Reserved