As you begin to market and position your product with customers you will want to pay attention to ideas that are repetitive and worth building for the future vs those features that will only benefit an individual client. It’s important to decide early on are you a product company or are you going to become a custom development shop.
Custom development shops exist and are plentiful for organizations who have an individual process they need to solve for. As a product company, your solution needs to solve for the many, not the few. Let’s take an example of a bad decision vs a good\great decision.
You have the next great solution for the widget automation process. There is a relatively large market and you are following fast along with others that have been in this space. (See Competitive Analysis article).
You and your team meet with a prospective customer. They love your product, but they need you to make some changes because of the way they do business. They need you to restructure the data architecture and change some steps in the process. After all, they are the big new company and they have multiple stakeholders, departments and an established way of doing things. Even though what you are offering is a new way – the way of the future, it doesn’t fit their way. The customer says we would be willing to pay you for that change in the software.
Right there at that moment, you have faced the “Are you going to become a custom development shop question?”
The initial reaction may be wow this could help us run for another 6 months. But, is 6 months and one customer worth the cost of all the areas of strain on the business. You may say but its revenue, how could\would it affects each area of the business?
Let’s break down this one decision to add custom features for an individual client to your product and the eventual cost for that decision.
- Product Development
This customization in the lifecycle of software product development will change all of the priorities and scope of the current development schedule and team process in place. The ultimate cost of this change for a client will put delays on delivering other product requirements for other customers than just this one, especially when you are a small team working to solve a larger problem.
Lack of focus with a one-off feature\process will cause a team to need to re-architect as well as design new code that after development also need to enter a quality assurance cycle every time you release the next set of functionality forever. As long as this code lives and is active in use you will need to make sure you are not breaking the code for that one client.
Is this worth the money? Is this a process you want to support long term?
“We must learn what customers really want, not what they say they want or what we think they should want. We must discover whether we are on a path that will lead to growing a sustainable business.” This is a valuable statement to remember from a book every entrepreneur should read by Eric Ries. The Lean Startup
This client is then going to expect that you support them just like all of your other clients which ties into the next area.
- Customer Service
Those on the team who are responsible for the support of the product and all other customers now need to learn a new piece of functionality not in use by any other customer.
This customer will have the same support expectations as all of your customers even though you now have one custom piece of software and the rest is standard functionality.
Now that you have done this project, those in a sales role may look for other opportunities for revenue that are not in the core business which will drive you further away from your goals. If a precedent was set with this client that it’s about revenue, not focus, staff will follow your choice and look for revenue and not about providing value for a larger group of customers.
- Human Resources
Unfortunately, this decision also has a direct correlation to personal needs or even worse personnel loss. Not being able to support or build to meet the clients’ needs causes a negative outlook on individuals performance causing them to leave or even worse bringing down what may have been a very positive culture.
On the flip side, it can be a very good decision to do work on a different piece of functionality when you continue to hear the same requests repetitively as you prospect. Customer-funded development will help your product road map. Especially when you can aggregate that cost across multiple customers for the longevity of the product. In turn, it will help with overall customer retention. Finding multiple customer partners willing to make that investment in you is great for your business. To learn more about this, we would suggest reading the book The Four Steps to the Epiphany: Successful Strategies for Products that Win by Steve Blank. Having multiple customer partners willing to make that investment with you, AND make sure the “custom” work is common between customers and consistent with your long term plans is an ideal place to be in the early stages of your business.
Last modified: June 12, 2019