Every marketing consultant worth his or her salt will tell you that the key to success is to differentiate your business and your product offering in the marketplace. They will tell you to choose a specific customer segment and build a product or service that uniquely addresses their needs.
The concept of building and delivering a unique value proposition with a particular customer group is the essence to generating better margins by taking pressure off price. It prevents you from being commoditized.
The freight transportation industry in North America is enormous. It is estimated that there are some 1.6 million businesses in North America alone – with about 600,000 have two or more employees. I tell my staff that the biggest danger to our trucking software & freight brokerage software business is seeing all 1.6 million companies as possible customers – trying to develop and sell a product that meets everyone’s needs.
In doing so you soon find out that ‘trying to be all things to everybody’ leads you to a place where your business is so stretched, and so sprawling, that you can’t deliver on your promises. Ultimately you end up being ‘nothing to no one’.
It’s tough enough trying to build a good business and deliver on your promises, handling the inevitable bumps in the road along the way, but if you don’t figure out how you are different and cultivate your that difference, then you will get grinded on price.
Yes – the grinding negotiation.
A while back I read an article by Todd Dills in Overdrive and listened to a Podcast from a very nice owner of a small trucking company who had it all figured out in my opinion. His wisdom and character shone through as he spoke about the importance of relationships and how cultivating those can help you from getting grinded on price.
I spend a lot of my thinking time at thinking about how Tailwind Transportation Software can differentiate itself in the marketplace. I realized that the first thing we needed to do is get very clear about our definition of a ‘product’.
There is a tendency for technology companies to get completely lost in their software. It takes a while for software companies after they launch a ‘Software-as-a-Service’ platform to realize it’s no longer just about the software anymore… but rather, in equal measure, it’s about the ‘Service’ .
Sort of looks and feels like this.
‘SOFTWARE as a service’
Many people think that running a ‘Software as a Service’ business is simply selling the same client server software, hosting it for customers at a third party location, and simply changing to monthly pricing model.
That would be a mistake.
Over the past two-years as we have transformed the business here at Tailwind we have learned a few things.
- It’s not about the Software, stupid! It’s about changing behavior. It is about helping trucking and freight brokerage companies improve personal performance and company results. As a ‘software as a service’ provider you are helping your customers change and improve their business outcomes each and every day.
- Service is an equal sibling to Software. It demands that a business think clearly about their customers’ needs and figure how to address them on a ‘just in time’ basis through new ways of delivering services that help foster adoption of the software – videos, in-app communication, self-help documents – as well as services that augment the software and help drive the desired business outcomes.
- You are joined at the hip! The pricing of ‘Software as a Service’ better balances the risk between buyer and seller. Too often in the past, the buyer of trucking software paid up front, incurring significant risk with little chance to really figure out just how the software would work for their particular business. Now with Free Trialing and a monthly payment program, both parties can move ‘lock-step’ through a transparent and mutually beneficial process.
- The Power of Changing NOW. There is immediacy to this business model. Long gone are the days of scheduling a demo, getting the buying committee assembled, and going through long buying cycles to make a decision about whether some software can help your business. You can get access to it and start using and assessing it within five minutes of registration. Business moves fast. Trucking companies have to move fast, and are constantly moving for that matter. Trucking software needs to do the same.
But the biggest learning we gained from this journey is that differentiation wasn’t just about the customer segments we chose, or the services and software we provide, more profoundly it was about us. It was about our ability to change our own behavior; challenge our own assumptions about software, about service, and especially about selling. It forced us to create a ‘just in time’ business model built around the customer – one that aligns our development, servicing and communication about our product. In total it was about our company culture – and our ability to work together.
Moving to a ‘software-as-a-service’ business model awakened us to the great power of truly embracing customer feedback – accepting it without reservation, and then working hard to adapt and improve quickly.
Yes, there are still some big bumps in the road, but as a group we are confident about navigating our way through the highways and byways of the nation. We now see that our strength is our company culture, our ability to think and move quickly in tune with the changing needs of our customers.
And if we can do that more quickly than our competition – well, now that’s a true differentiation isn’t it?
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