Here’s the playbook for building and selling software to small businesses

In the last four years, Womply sold software to well over 100,000 small businesses nationwide. How’d we do it?

There are many reasons, but at the top of the list: we got our initial business strategy right in the face of opposition. Since our earliest days, we were focused on a “distribution-first” strategy. In short, I believed that if we built best-in-class product distribution, then we’d have a strong enough business to build best-in-class software later.

That’s not how most software companies are built. More often than not these days, companies spend the bulk of their time adding features, improving design, and reacting to their customers’ every whim, even if they don’t make sense. Often, the result is bloated software that isn’t highly saleable.

The market pressures software companies to do this, but they do it willingly. Only as an afterthought do they consider how to sell.

Once software companies sign up a few customers, they go deep with them and ask “how can I deliver even more value to this customer?” That inevitably leads to product investments focused on adding more value to the customers they already have — features that create value only after a sale is made.

This strategy might make sense in markets where there are very few customers, each of which is worth a lot (i.e. the enterprise software market). But in the small business market, you have tons of customers, each of which spends very little. To boot, small business customers need simplicity over the complexity of excessive features. Therefore, the biggest challenge in selling software to small businesses is not justifying a price increase, but rather increasing customer count.

So, at Womply we focused our resources on a different question: “How can we sell more efficiently to the next small business, and the one after that?” We prioritized features and capabilities that helped us broaden our customer base rather than respond to every feature request from our earliest customers. We polished our onboarding flow for years instead of polishing the features that came after it. Our best investments helped us acquire more customers and deliver more value to existing ones, but more often than not we had to make a choice between the two.

In a world with limited time and money, we decided to go against the grain and focus everything we had on distribution. We didn’t take this approach because we didn’t care about our customers; to the contrary, we’re obsessed with them. But we realized that to one day serve millions of businesses, we had to stay in business ourselves.

There were known costs to this strategy. Our product sold well but often didn’t add enough long-term value to certain types of customers. That caused some customer frustration and churn, both of which were expected. Plenty of investors told us we were crazy and didn’t even bother to analyze the market dynamics or our company’s unit economics. Some employees quit because they didn’t get it. But we continued prioritizing distribution for many years until we were sure we’d cracked it. Only then did we start shifting resources to adding more value.

Today, we have a highly efficient distribution engine attached to best-in-class products. And our product and engineering resources are roughly split between working on acquisition and building or improving features. We got to product excellence, but we took a revenue-first approach to getting there.

Recently we’ve found another area where we’re contrarian. Investors and other companies are focused on driving engagement in small business software. They view product engagement as a proxy for value delivery. This might make sense for enterprise users but it misunderstands the entire goal of most small business software, which is to perform work automatically and get out of the way.

I think about small business software as just another employee. Small business owners are hiring our software to do jobs for them. This is often boring and tedious work that they don’t want to do, don’t have time to do, or can’t do themselves. We can do a lot of jobs for them that help them run their businesses with confidence and grow if they want to. We can collect data they can’t access, crunch numbers and run forecasts, watch their backs and email their customers — all automatically.

For busy small business owners, Quickbooks does your accounting and Womply monitors your business and engages your customers.

If you think about software like it’s an employee, then it helps describe how that software should operate and how a manager should manage it. So what are the characteristics of a great employee?

A great employee takes on a broad set of responsibilities, gathers their own context, makes sense of it automatically, executes autonomously without intervention, reports back on the results, learns quickly based on new information and repeats. Great employees don’t require constant management. You can trust them to get the job done and to bother you only when they need your help.

A bad employee, by contrast, is one who requires constant context, direction, and supervision. You can’t trust what they do and you’re not really sure why you’re paying them because you could do the job better and faster yourself with less frustration and no uncertainty.

At Womply, our product strategy is focused on reducing engagement from small business owners because we want our software to be a great employee, not a bad one. We find the jobs they do manually and automate them in software so they can focus on the things that can’t be automated, such as greeting customers in their stores.

The dynamics of the small business market are different. This is not enterprise. This is not consumer. It’s something altogether different, and it requires a different approach to building and selling software. Small business owners are finally adopting software in droves. They’re late to the game, but they’re not stupid.

And the smartest ones are using Womply.