Five Consequences of Selling Software to Consumers + How To Overcome Them

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0:07[Music] so my name is Jordan Scheer I'm this is my second microphone and it's a really great conference everyone's so far it's been really great so last year and end this year everyone's talking about how they're selling software to businesses and nobody really tells you about how to sell software to consumers and there's many reasons why everyone would just say though just don't do it and I'm here to tell you why today and how you can and get past that so we're gonna overcome some of these consequences so a little bit about me uh my name Jordan Scheer I I build the minimal readers an RSS feed

0:47reader and it's you know I sell it to consumers and I make pretty good money at it selling Atkins to consumers so why shouldn't why should you listen to me so about six years ago I started selling software to consumers is actually a really neat little app I was in my last year of college and I really wanted to explore some new technology things and really get into learning how to market online and sell online but here's the thing so I sell software to consumers that's a really big deal because a lot of people are trying to stay away from it it's a plague right so let me tell

1:24you about my first product song to consumers there's one time purchased downloadable non-recurring revenue windows-only and it was shareware yes we used the term shareware on the marketing site when we launched it it was a to-do app yes I made money making a to-do app that's crazy so but apparently these are the five deadly sins of micro confidence makes me a masochist right it's it just it's really hard to sell software to consumers but I was able to quit my job last year and allowed me to pursue new activities and you know Google Reader was shutting down I was like yeah I'm gonna go sell software to consumers what

2:07that doesn't make any sense so anybody out in the audience who sells software to businesses raise your hand does anybody sell software to consumers wait keep your hands up okay okay not bad anybody want to sell software to consumers oh yeah all right that's pretty good so at this point I just want to take a little intermission I don't have any kids so here's a picture of some cats and you can infer what you want on that anyway so it's telling the consumers is like selling to a crowd right there best reached if you're young Adam and they have this mom mob mentality they kind of flock where the

2:47rest of the crowd is walking so what's so bad about selling software to consumers everyone will say just don't do it but here's why consumers don't know that they have a problem that's it's crazy they don't know that they have a problem or they don't want to admit that they have a problem and because of this they aren't looking for solution so this is why broadcast medium kind of really works well advertising like on TV because there's a whole bunch of people sitting at home on the couch not really you know just in some potato chips and they don't really know they have a problem and then they start saying oh I

3:21hear this commercial and here's the symptoms oh yeah wait I have that problem and here's a solution go to your doctor and get this pill and take it and have the and you know really kind of take that that problem and nip it in the bud so when you're selling software to consumers the first goal the first step that you have to take so you have to find a way to reach them and broadcast medium worked great with that when you're selling something like a little product or something like that on TV but I you really need to figure out a way to reach them online and a lot of people aren't

3:57looking for the solution online so you need to be able to develop an audience around where you can where you can actually get in touch with them kind of teach them that they have a problem because that's the next step you have to be able to teach them that one they have the problem to that you have a solution to that problem and three that they should pay you for that problem and then after that you want to be able to teach them that other people they know might have that problem and other people they know might want a solution to that problem and the cycle

4:31keeps going and going and going kind of build this virality into your your audience but here's the real thing customers don't want to pay you every month so recurring revenue is gray but they don't want to shell out cash every month but here's the real fact they don't want to pay you at all at all so how do you take this the problem that market doesn't want to pay you I know we're gonna make our app free yeah that doesn't make any sense you need a way to actually bring revenue into your business and so you're not selling anything if you're giving everything away for free so the next hey

5:09we're gonna put a bunch of ads on it right but the thing with ads is that you have to have a large enough audience to actually capitalize on selling those ads and then you actually have to have an ad network that works for you so the first part is actually reaching that audience and getting them in your product and it's free so they can use it as much as I want and then slap bunch of ads on it and kind of try to figure that out so let's go back to free we're just gonna make it a freemium product we're gonna give a whole bunch of stuff away for

5:37free we've got a nice little premium app plan on there and we're gonna try to upsell everyone to that but the problem with that is that you really have to convert a lot of people from free to pay to actually make any money because consumers don't want to pay you anything I also lean towards free trials because I have a paid plan on my product and I give away a 7-day free trial you can use as much as you want and if you like it you keep it if not you go away but here's the thing is it's good to have a source of revenue so it's really

6:10good to actually figure out a way that you can monetize a consumer audience but the thing is is they don't want to pay you so try to figure out is it ad that works best for this market is it a freemium product that that works best for this market and kind of being able to reach them and upsell them into a premium plan or does a free trial work better for you the next thing is that consumers are price sensitive really price sensitive because they don't want to pay at all but here's the thing so a lifetime value of a consumer that's really price sensitive is actually

6:47really small because they don't want to pay you a lot of money and then with that I you don't have a large enough margin to actually focus on any kind of paid acquisition to kind of bring people into your app so you kind of really stuck in this conundrum again consumers don't want to pay you at all now here's an actual quote from someone who sent me I would never pay you four dollars but I might be convinced to pay you $2 that's ridiculous ridiculous now here's one that's it's a little more closer to home while four dollars isn't much it's three dollars more than I'm willing to spend are you

7:26kidding me so what they're really saying is I'm not willing to pay you four dollars or three dollars for two dollars because you haven't sold me on this yet because they can't see the problem they don't know they have the problem they can't see the problem so you have to be able and be communicated communicating to them of this problem and kind of really making them realize oh I have this problem so remember they don't well and because of that they don't value your solution they don't know they have the problem so they don't value the solution you're offering because they don't they don't have the problem I

8:02don't have the problem I'm not gonna pay anything for it so you really have to show versus tell show them that they have the problem show them the solution show them everything you have to be really really really I clear on this is what you're getting and this is why you need it and this is why you need to buy it today versus just telling them about all these features and benefits and etcetera etcetera and the next thing is consumers spend very little money on software with a couple of exceptions there are people in the audience they have consumer software business they know that there are a couple of

8:39exceptions the two that I think are pretty interesting right now is that unless it's entertainment either someone will actually pay for Spotify they'll pay for you know a subscription service to you know funny videos online it's or unless it's mobile so that's games music videos apps anything that can be bought in an in-app purchase it's an entertainment product and consumers really resonate with that so raise your hand if anybody here knows candy crush on the iPhone how many of you have actually purchased okay that's great so King digital makes a 1.5 million dollars in profit now it seems pretty low it's actually per day yeah it's an entertainment product it's

9:29a consumer market they can make that money because it is it it focuses on that consumer mentality that I want something fun I want to feel good about it and you know it kind of has this gamification of actually going to the next level when everyone wants to be Superman so we move on but this is actually what you get when you are king digital you actually get Scrooge McDuck diving into a nice big pool of money so the next thing is actually consumers are fuzzy creatures with feelings so if you think about a business and selling to a business that's a what do you think

10:07about its corporate headquarters offices glass and steel and concrete right consumers are wetware we have feelings we you know purchase something not because it actually provides its value it's because it makes us feel good inside and that's what your product needs to strive to be your product makes me feel better about myself and if the product doesn't make you feel good or if it doesn't make the consumer feel good you're gonna have a lot of buyer's remorse after they actually make that purchase which means they are going to be happy they're gonna be nagging you to death emailing you all the time and you're gonna have a really really high

10:44support so your consumer product needs to be able to make them feel comfortable during the sales process it needs to be predictable you can't surprise them it needs to make them feel safe and secure or ultimately it needs to make them feel badass and that's been talked about many times but the real thing is you're a car salesman and you're selling this really pimped out stretch Mini and to these consumers here's the thing you can succeed selling software to consumers but prepare to work harder it is really hard to sell it's really hard to get that audience large enough to actually make money because their price

11:27sensitive the consumers are actually not giving you any like a high enough margin to go and actually you know to pay you acquisition all this stuff you have to work really hard that's a lot of boots on the ground going out and really you know just like attacking attacking that market everything needs to be larger to actually make everything the numbers work but here's the thing to avoid avoid a free product right you actually should be making some kind of revenue when you want to be in business but also avoid experimental business models there are some proven things that work when some software to consumers and that's the the

12:06freemium the free trials etc but that is really dependent on the market that you're actually actually targeting and that's because and you should be targeting an audience that an audience that can sell for you there's a lot of people that if you're purchasing on King digital right at the candy crush game you make the purchase and you post to your Facebook that you've gotten to level 5000 and you're moving on up into this you know high ranking world of of candy crush and I it's the slice a little viral nature that actually kind of brings new people in because they want to be a part of your club you want

12:47to sell at the highest possible price which is really small because you're selling to consumers they're very price sensitive so you should keep your costs really low and that's a problem that I have with my product is it has a really high infrastructure cost so my margins are actually really small so I need a lot of people coming in my funnel to actually make any money and if you can build entertainment into your product I actually build an entertainment product it makes things a little bit easier and if you could automate everything because these consumers are fuzzy creature that have feelings they may have a little bit of larger support burden I'm

13:27so awesome at the onboarding as possible and the support as possible can can really make things a little bit easier and be available to handhold when you need to they are consumers are you and me right we don't want to feel like it's just a business of taking our money we need to be able to feel comfortable with who we're dealing who we're dealing with but the final thing is you shouldn't ignore businesses a business opportunities a lot of companies started with a consumer product and are actually moving more towards an enterprise or business a business setting and there are a couple of prime examples Dropbox being one of

14:04just a couple days ago releasing a more business focused section of their product but ultimately if you follow some simple rules and and work really hard and make things that people like and talk about and sell for you can profit he likes you [Applause] [Music]