by Luanne Johnson
Copyright ©1997, Luanne Johnson, All Rights Reserved
When I started my software company, Argonaut Information Systems,
Inc., in 1971, one of the first things that struck me was how different selling software
products was from selling programming services. I had worked for a company that sold
system design and programming services and I had several friends who had become
consultants, meaning that they were selling their programming skills on a contract basis
to several different clients. I was enamored with the idea of software as a product and
acquired the rights to a payroll system and an accounts payable system for IBM 360/DOS
computers which I believed could be sold off-the-shelf without any modification and with a
minimum of installation and support services. I rather naively thought that this would
allow me to make good money on a part-time basis so that I could spend more time with my
family.
The company that had originally developed the application systems I
acquired had been selling them for a couple of years so I also received a list of
potential customers who had already received sales materials and, to my surprise, the list
included companies from all over the United States. This was completely different from the
experience of my friends who were selling system design and programming services. When
they entered into a contract with a client, it required their physical presence at the
customer’s office for several weeks or months, so proximity to the customer was
important both from their and their customers’ point-of-view.
Companies that were looking to buy a payroll or accounts payable
software product, however, didn’t consider proximity to the vendor to be an important
factor and as a result I had a prospective customer list that was all over the place. All
of the sales that I made the first year that I was in business came from that initial
prospect list and they were all over the country. I didn’t have a customer that was
close to home until I had been in business for over a year.
I did have to make some adjustments to my expectations regarding how
much service I would have to provide to my customers. The systems I had acquired
weren’t as easy to install as I thought they would be. But the installation process
rarely took more than a couple of weeks, so it was still very feasible to sell our
products to customers anywhere in the U.S.
As I worked my way through that list of prospects and began to think
about where my next prospect list was coming from, I began to understand the difficulty of
generating enough prospects locally and why the predecessor company had to market
country-wide. My friends who were selling services could focus on getting repeat contracts
from the same clients or word-of-mouth referrals to other companies because they could
sell their programming skills to work on whatever programming projects a company had going
at the time. Most of their sales efforts consisted of networking with data processing
managers to find out which companies were gearing up for big development projects and
needed extra programming staff.
I had to find companies that 1) needed a payroll or accounts payable
system, 2) had business practices that fit with the functionality of the systems I was
selling, and 3) had the purchase of a payroll or accounts payable system in their budget
in the near future. It didn’t do any good to find a company that needed a payroll
system if there wasn’t a fit between their business procedures and my software or if
they had postponed buying a payroll system to next year’s budget cycle. Or to find a
company that was a perfect fit to my software if they had just finished writing their own
payroll in-house. It didn’t take me long to figure out that I had to contact hundreds
of companies in order to find the dozens of companies that I needed as genuine prospects
to be able to make several sales a month. No wonder the predecessor company hadn’t
limited itself to a local market.
On the other hand, that company had gone broke trying to set up
sales offices all over the country and I knew I wasn’t going to try that approach. I
had to settle for advertising in national trade publications but I didn’t really have
enough money to even do that properly. I couldn’t afford big display ads in
Computerworld or Datamation and the response I got to classified ads in those publications
was minimal.
I do not know how, or if, I could have solved this problem if it
hadn’t been for ICP. The ICP (International Computer Programs) Quarterly was a
catalog of software products published by Larry Welke in Indianapolis. It originally cost
me nothing at all to put a listing describing my software products in the catalog which
was sent to hundreds of data processing managers who subscribed to it because it was such
a good source of information. The ICP Quarterly quickly became our primary source for
sales leads.
As Welke expanded ICP’s product line, he added publications
that were distributed at no cost to data processing managers and began charging the
software vendors to list their projects. These publications, too, were a very
cost-effective way for a small company like Argonaut to advertise because the leads they
generated were so highly qualified. A data processing manager who took the time to read
through the descriptions of all the payroll systems listed in an ICP catalog was someone
who had a serious and current interest in buying a payroll system. Furthermore, he or she
had already determined that our system was a good match to their requirements or they
wouldn’t bother to contact us for more information. Throughout the 1970s, over 80% of
our sales were generated from leads that we got initially from our listings in the ICP
publications.
It’s hard for me to imagine what form the software industry
would have taken if Larry Welke hadn’t started publishing the ICP catalogs in 1967.
He certainly made it possible for a small company like Argonaut to compete on a very
effective basis with much larger companies with a lot more financial resources. By the
mid-1980s, when Argonaut was finally sold, the massive consolidation of the software
industry was well underway. I think, however, that it would have had to happen much sooner
if the small companies hadn’t had a marketing resource like ICP.
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