About this time, the clarity management team began to realize that its original marketing plan was also askew. When Rapport was first conceived, everyone figured it would be sold to one person in a department. It was priced just under $900 in a conscious effort to keep it below the $1,000 cost of a typical Unix program. The thinking was, once all the people around saw how easy it was to use, they'd clamor for copies of their own. "Wrong," says Peterson. "Almost all of our sales are to whole departments or to an entire company." That means a longer sales cycle, different manuals for group sales, and, more important, different pricing. Now Rapport buyers typically get a 50% discount for orders of more than 50 copies. That revised strategy shows up in Clarity's projections, in which the average per-unit price decreases each year.
Since Rapport -- like all Unix software -- isn't available in any retail channel, Clarity's seen little reason to do much advertising. Rather, Smith is shelling out his promotional dollars to create a presence on the trade-show circuit. At last year's Uniforum, a trade show for Unix users, Clarity spent $60,000 for a booth and attracted 600 sales leads.
Much of the word about Clarity goes out through the sales effort, which engages one-third of the company's 32 employees. Each of the six salespeople shepherds one channel of distribution, from the value-added resellers, who include Rapport in large contracts, to the hardware makers themselves. Smith has fielded two additional salespeople in Europe, who work with 12 distributors there. Three people work in telemarketing, shuttling queries and leads to distributors in their areas. Though Rapport is available only in English today, Smith plans to have French and German versions by this summer.
But Clarity is garnering the most success by riding the coattails of workstation sales and vigorously pursuing distribution through original equipment manufacturers. A trend in Clarity's favor is that large corporations are switching from giant mainframe computers to a string of workstations -- in short, swapping a centralized and expensive piece of hardware for a number of cheaper, and in some cases faster, machines. That's forcing workstations into areas that normally would accommodate PCs linked to a mainframe. Also, some businesses, like brokerage houses, are souping up their computing power to run ever more complex programs. They too are turning to workstation vendors like Sun Microsystems Inc., Digital Equipment Corp., and Hewlett-Packard. Increasingly, offices in Fortune 1,000 companies are becoming mix-and-match collections of PCs, Macs, and Unix computers.
Paul Schumann, Clarity's vice-president of sales and the former head of BusinessLand's U.S. network, arranged for the top workstation makers to refer leads to his group. For instance, Sun -- the industry leader -- is making its biggest gains selling outside engineering departments, which had been its traditional niche. Rapport, with its ready ability to share documents with PCs and Macs, is an attractive package for Sun to push in its own sales pitch. And this past January, Clarity finalized a deal with San Jose based Acer/Altos to have Rapport bundled for sale with the hardware maker's workstation systems.
To make it easy to try Rapport, Schumann offers the program free for 30 days. If the user likes it, he or she can buy a license through an electronic-mail number, and with it an entry code. Otherwise, after a month the program can no longer be entered without the code and becomes useless. Once an order is placed, Clarity promises to have copies out the door within 24 hours. Since software is digital data stored on magnetic tapes, duplicates can be easily made and there's little reason to keep large quantities in inventory. Clarity, like most software companies, uses an outside supplier who stands by the phone when a big order is pending. Overall, Clarity has shipped around 4,000 units to date.
Still, sales are falling well short of Smith's initial goals. And since his volume discount and OEM distribution strategies will require selling relatively greater numbers of units with each successive year, Smith's biggest challenge is keeping a tight rein on expenses. Despite lower revenues, he intends to be in the black for the fourth quarter of 1992, as planned. Jim Lawrence, Clarity's chief financial officer, is trying to make sure that expenses don't creep up any faster than half the rate of sales. All the top officers have forgone raises, and for the first year, Lawrence even used an outside bookkeeper. Tight times means there was no Christmas party, and hiring was frozen back in July.
Smith admits he's stretching people as far as he can. For technical support, critical in helping customers familiarize themselves with a new product, there is an electronic-mail service for customers to use if they have questions. If it's a routine query -- as most are -- a prepared message is sent back to the customer. "Our support team is 2 people," says Smith with a laugh. "Folks think we have 30. The edge is our automated support by E-mail." Also, he admits, those two employees work 12-hour days. Fortunately, there's little aftermarket service needed for Rapport. Once customers get a copy, they start customizing the program to their own needs.
