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17 Software Sales Tips from Industry Star Service-now.com (Page 1 of 4)

Service-now.com seems to be on everyone's radar. The Solana Beach, Calif.-based developer, which sells cloud-based IT service management apps, posted 2009 revenues that were 3,441% higher than 2006 -- good enough for the #69 slot on the Inc. 500 list of fastest-growing companies.

And last month, analyst firm Gartner Group named Service-now.com as the "challenger" to its Magic Quadrant review of IT apps, where BMC Software is Gartner's named leader.  

Keep in mind, BMC was founded in 1980 and is a $2 billion company. Other competitors in the IT management space include CA Technologies ($4.4 billion revenue), Hewlett-Packard ($114.2 billion), and IBM ($95.8 billion). 

For relatively tiny Service-now.com, founded just six years ago, to be named as the challenger -- essentially the #2 position in Gartner's hierarchy -- is a pretty spectacular David vs. Goliath story.

When Service-now.com filed its 2009 report with Inc., the firm had 132 employees. That's now up to 250, with eight to 12 people being added every month. The company just signed a lease for 40,000 square feet of office space.

Rob Luddy, Service-now.com's VP of worldwide sales, joined the company in 2005. He recently revealed 17 secrets of Service-now.com's amazing success:

Tip #1: Build a better mousetrap.

"We have had a phenomenal amount of growth and success," Luddy says. "Since 2005 we have grown to 525 enterprise-class customers. We sell a pretty large suite of applications used by the CIO to run their organizations. 

"We started with and unfair advantage, in that we had a keen understanding of the marketplace. 

"We built a better mousetrap -- it really is better, faster, and cheaper than what's currently on the market. 

"I had the good luck to be able to launch with a very strong value proposition."

Tip #2: Get them in the door, even if the ticket price is small.

"Our customers make a minimal investment that's a six-figure transaction to start with," says Luddy, "but have a tendency to grow over 24 months. Sales tickets start in the $100K to $150K range, but grow over a period of time. 

"We did very small transactions at the start. Our first customer, in September 2005, paid $2,640 per year. I was thrilled, because they were paying me money to use our technology. They have grown and flourished wildly, and are now paying us well in excess of $200K per year.

"We're a software-as-a-service company -- we license on a subscription. Our typical contract is 36 months; our contracts all pretty much look like that."

Tip #3: Focus. Focus. Focus. Then focus some more.

"This is about understanding a marketplace and being 100% committed to doing one thing and doing one thing well," Luddy says.

"You will meet a lot of people who will be anxious to drag you off in one direction or another. 'Hey, I can get $50 if I change my direction just a little!'

"We stayed focused on our core service, and did not go chasing after everybody who walked into our lives. Avoid the temptation that's not in your core business."

Tip #4: Pay attention to sales first, your business plan second.

"We never worried about the business plan or how much revenue we were supposed to generated on a monthly or quarterly or annually plan," says Luddy.

"I mean, we had a business plan in place, but our focus was on five paying customers. Just focus on getting five legitimate customers who will pay you money for your product. If we could get five, the first five would lead to 15 others, and that first 20 would lead us to 100 others."

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