That's generically how you develop software. What distinguishes Great Plains is the effort invested in determining what features customers can really use, and then testing and refining them before a general release.
For starters, marketing-research manager Catherine Bickle conducts annual new-customer surveys. These are in-depth, 20-minute phone sessions, using a questionnaire 14 pages long. "We take people who have owned our products for 6 to 12 months, and draw up a statistically valid sample of about 600," she says. "We ask them all sorts of things. Basically, we try to forecast what they will need five years from now."
Beyond that, Bordages's unit runs user-satisfaction surveys and partner surveys. It draws on the customer list to find beta sites to test new products. And it runs competitive analyses to discover what the enemy is up to and how it can be defeated. The unit goes so far as to track down "lost leads" -- prospects who bought competing software -- to see how they made the decision.
Finally, Great Plains makes extensive use of some 50 user groups around the country that meet monthly or quarterly. Sales, marketing, and development people from Fargo go into the field to discuss current or projected needs with people using the company's software every day. Those kinds of initiatives allow for a market-driven approach. "When you do all these things, what you bring to the table is really easy to sell," says sales chief Dan Malmstrom. "We offer people exactly what they've told us they want."
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The company's savvy use of the customer list culminated in the spring of 1991, when Great Plains rolled out Version 6, in its biggest sales campaign ever.
Programmers had translated some 2,000 suggestions into more than 100 new features. Ten new modules were set for release -- everything from accounts receivable and cash management to payroll and inventory. They came with bright new packaging, new documentation, and new manuals.
The first marketing wave addressed the distribution channel -- the more than 2,000 resellers and installers who act as Great Plains' primary customers. In early April the company's account managers traveled the country, conducting partner meetings and explaining the benefits of the upgrades. Most important, each dealer was given an "opportunity work sheet."
"We were able to run the customer list by reseller," says Don Nelson, director of channel management. "Each dealer got a complete list of his or her customers, including the support plans they were on and the modules they owned." To make sure all customers were included, Great Plains identified "orphans," users whose vendors had retired or gone out of business, and reassigned them to active local dealers.
The work sheet also spelled out how much money dealers could make if their clients bought upgrades. By and large the dealers earned 50% commissions on modules they sold to new customers, and 10% commissions on upgrades that their installed base purchased. Follow-on services -- installation, customizing, and training -- could boost their revenues.
To speed sales, substantial discounts applied if clients bought Version 6 products before May 31. New Great Plains customers pay $795 for most modules, but existing users upgrading before the deadline got them for $89. "That sounds as though we took a big hit, but we could make money even at that price," says Malmstrom. "Installed customers had paid full retail at some point. Maybe they'd spent $7,000 already for eight or nine modules. With this program, they could keep all that software current for $700 or $800."
On the second marketing wave, Nelson's team appealed to customers with personalized direct mailings to the entire installed base. The letters detailed the product improvements, describing how they met business needs. Customers even got individualized invoices, so they'd know exactly what upgrading would cost.
The resellers got copies of those same letters. "I knew what my clients were looking at, and I knew the week the mailing would hit their doors," says David Haabestad, who was a New Hampshire-based dealer at the time and is now a product-marketing manager for Great Plains. "So I had it on my schedule to start contacting them after a certain date. I was not a great marketing machine myself -- I was reactionary. This enabled me to be proactive."
With all that groundwork, response came fast and heavy. By the end of May, after just three weeks of shipping product, 34% of the company's customers had purchased Version 6. Within three months of release fully half had upgraded. That May was the biggest month in the history of the company -- in one day alone it moved 13 tons of product. And as the May 31 deadline approached, even Burgum was down in the shipping room, working almost around the clock in his trademark white sneakers.
He's done well by the humble lessons he learned at the grain elevator. By putting customer satisfaction above all else and shunning the fast buck, he has succeeded, bit by bit, in his strategy of long-term viability.
Now the tortoise is breaking into the clear. In a field in which many companies have shot out of the blocks and then lost steam, Great Plains has grown every quarter for 11 consecutive years. Revenues have climbed at a compounded annual rate of 37%, while sales of the closely held company have reached an estimated $25 million. And in surveys of CPAs who evaluate and support PC-based accounting systems, Great Plains has swept top honors for five years running among a dozen or so competitors.
"Year after year, you see Great Plains pulling away from the pack," says Lindy Thomas, the San Francisco dealer. "It is bettering the product and everything it stands for."
Ray August, the Price Waterhouse CPA, agrees. "With the dedication of all those people, Great Plains will be able to go in a lot of directions other people, because of limited resources, won't be able to go. You have 380 people there living and breathing Great Plains Software every day. And that sort of momentum is going to be very hard for anybody to stop."
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