Software Publishers As Channel Cannibals: 4 Ways To Avoid Being Eaten

Yesterday I spotted this post on Accounting Today announcing Freshbooks’ new CPA certification program which aptly is titled “Bean Counters” and aimed at the CPA market.

According to the website –  benefits offered include great rewards such as: CPE Credits, Client Discount and Referral Program, Badge, Listing in “Find a Certified Bean Counter”.

I use Freshbooks for my billing. I love it and recommend it to anyone who is seeking a simple online invoicing program which allows for online estimating/quoting (with customer approval) and invoicing. Using electronic delivery of Freshbooks invoices I estimate we save anywhere from $50 to $100 per month in postage. That’s not bad considering the entire fee we pay to use Freshbooks is about $ 300 per year.

My question is not about Freshbooks – I’m using them as an example of a publisher which appears to be just starting a channel effort. To point out how channel and certification programs offered by software publishers can go from well intentioned to cannibalistic as market growth for products slows.

Is certification for any product the first step software publishers take in a long road aimed at locking in consultants to one particular solution or publisher, imposing tough impossible to avoid future fee increases and ultimately ignoring the consultant(s) and selling direct to the customer(s) the consultant brought to the relationship.

Increasingly my feeling is that this is the case.

It never starts out that way. When demand is growing for products and services everyone is happy – publisher and consultant.

As soon as demand slows some publishers starts to look a bit like cannibals – staring intently at their partners not as partners but as a desperately needed source of revenue. Soon there’s a steady increase in the  paid “classes” the consultant must take, the level of product that must be sold and ultimately when nothing else is left to take — a reduction in the margin paid to the consultant for product previously sold.

I see this pattern happening over and over and over.

While I don’t have a solution for this trend – here are four specific strategies that have helped me avoid being eaten by software publishers:

    • Go Local – No matter how hard they try big software publishers have enormous difficulty making money when forced to service customers locally.  You’re local. They’re not. Need any more info? Get your ass on site.
    • Secret Sauce – If all you’re doing is providing help desk level service – you have created a perfect commodity business where the software publisher will replace you. It’s only a matter of time.  Add value to your customers by creating unique reporting tools, data imports, integrations or code that greatly increases the value of their software – and your services. These are nearly impossible for a publisher to replace – at least if done properly. Yes it’s tougher to do – but isn’t that why they call it work?

Poster via: Despair

  • Mirror (Some) Publisher  Policies– When the publisher requires a customer to be on a maintenance plan or refuses to service them – create your own local plan and require customers to join or refuse to continue servicing them. Most publishers aren’t (too) dumb – just greedy. Learn from their strategy. Mirror them. There’s no business model to becoming an unpaid evangelist or working as the unpaid complaint department for an ever shrinking commission on someone else’s maintenance fee. Yes some customers will leave. Let them go bankrupt your  dumb competitor who still bills hourly in 1 minute increments and doesn’t charge for quick questions.
  • Hustle Faster – If your “secret sauce” is thin –  don’t despair – you can beat publishers by responding faster and being more complete in your replies to customer inquiries. Collaborate with other (smarter)  partners you know and trust. Customers pay for speed. Customers pay a premium for speed and quality. Give them your cell number, personal email – and don’t worry 99% never use it but they’ll have an increased measure of comfort knowing that they could call you in an emergency. Do you think software publishers are giving out cell phone numbers of their help desk staff? If the customer wants to text, Facebook Message, Google Chat, BBM  or Skype you – do it! Wake up – it’s 2012 not 1986 – hustle smarter.
Above all lose the expectation that any software publisher is in business to make you money. Publishers are in business to make money for themselves or their shareholders. Just as you should be. It’s tougher to change than stay the same – but isn’t that why they call it work?

Now get to work.