The Consumerization of Intelligent Software: Key Insights and Drivers

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The Consumerization of Intelligent Software: Key Insights and Drivers

Traditionally, selling software to enterprises has called for heavy investments in sales and marketing and long sales cycles.  By contrast, consumerization of software represents a big shift in how software solutions are priced, distributed, and marketed.  Simply put, Consumerized Software applications are engineered so that individual knowledge workers, teams, and departments within larger enterprises can discover, deploy, and adopt these solutions in a bottom-up, federated, and democratized manner.  To wit, think about your company’s installation of Oracle (traditional model) versus your team’s adoption of DocuSign (Consumerized model).

In recent years we’ve seen a number of software companies successfully implement this strategy to achieve outsize growth while maintaining capital efficiency.  Rather than investing heavily in sales and marketing to woo centralized IT and procurement heads, this new breed of software company prioritizes data and analytics to create intuitive, useful, usable, and viral products that offer rapid time-to-value to end-users.

The Consumerization of Software is being driven by shifts in the enterprise buying process — increasing trust in employees to choose their preferred solutions, rising end-user expectations of consumer-like ease-of-use, as well recurring fits of corporate angst with overpriced shelf-ware that no-one uses (or knows how to use).

Intelligent Software companies—such as the ones we at OMEGA like to back—are driven by data and powered by AI, enabling heightened personalization, capability-set, and functionality out-of-the-box.  As Intelligent Software eats Traditional Software, we expect to see increased adoption of Consumerized distribution models.  These companies leverage data and analytics to create intuitive, viral products that offer rapid time-to-value for the end-user.  In turn, this is a cost-effective way for companies to build large user bases, optimize product adoption, and facilitate organic grow within and across organizations.

A successful Consumerized go-to-market strategy centers around creating as much value for customers in the shortest amount of time (what we at OMEGA refer to as rapid time-to-value).  In contrast to traditional GTM motion where sales leads and product building follows, Consumerized Software companies start with a product that solves a real pain point as well consciously architect low-friction adoption. In our experience, there are a few critical requisites to building a successful Consumerized GTM strategy:

1. Alignment across Company Functions

2. User Centricity

3. Conscious Focus on Low-Friction Adoption

4. Expansion and Monetization Hooks

 

Examples of Consumerized Software Companies

 

1. Alignment across Company Functions

For an organization to successfully implement a Consumerized GTM model, there needs to be buy-in, and alignment across functions—sales, marketing, product, customer success, and engineering.

Disseminating key customer and product information allows teams to quickly gather feedback, iterate, and launch feature updates that address the target user’s pain point. When switching costs between software alternatives are low, delivering relevant and immediate value is a huge difference-maker in driving adoption. To be successful, guardrails need to be set in place for teams to clearly understand their goals and deadlines, prioritize and implement product updates, and seamlessly communicate with all relevant stakeholders involved.

 

2. User Centricity

A key to a the Consumerized model is the ability to provide rapid time-to-value for users. To do so, it’s critical for companies to understand the end-user and their pain point, and know exactly how the product addresses it. Unlike traditional enterprise companies where sales teams communicate with, educate, and understand the buyers of the product, Consumerized companies must sit at the intersection of real-time customer and product data to holistically understand the value the product drives for the user — generating PQLs (Product-Qualified Leads) rather than MQLs (Marketing-Qualified Leads).

As a result, data becomes the foundation, providing necessary context that bridges the gap between users’ actions and feedback. Pulling the right levers to collect, interpret, and understand key customer / product data, then looping that feedback back into new features, updates, or functionality (and repeat) creates a virtuous cycle that can result in rapid adoption and expansion within organizations. This can be difficult to execute, but fortunately, there are many emerging tools that focus on aggregating and analyzing contextual data to influence product decisions (we will save that discussion for a future article).

 

3. Conscious Focus on Low-Friction Adoption

Consumerized models work when the user can on-board and adopt the product on their own. Habits are formed when users independently reach their “aha” moment and organically discover additional features over the course of their journey, culminating in retention and eventually a large, engaged user base.

A successful onboarding process provides an intuitive, easy-to-use experience and allows users to explore the product in an independent, low-commitment fashion. Enabling users to naturally navigate features and realize rapid value increases the likelihood they continue using the product and ultimately promote it to colleagues or friends. Any potential friction preventing the user from experiencing the core product value proposition must be consciously reduced. Part of this can be done by leveraging analytics to truly understand and fully address the user pain point, but another key component is reducing barriers to adoption — e.g., cost, complexity, confusion. It’s just as important that the product delivers a great user experience as that it delivers great functionality. Consumerized products allow users to get started for free and build-in upsell as incremental features provide continued value.

 

4. Expansion and Monetization Hooks

Individual end-user adoption is the first step; ultimately, wider enterprise adoption is pivotal to building scale. A great way to accomplish this is by expanding organically within organizations and proactively identifying / converting upsell opportunities.

Strong product virality and network effects—users realizing additional incremental value by inviting more users or promoting the platform—catalyzes expansion opportunities within existing users’ networks. A viral product lends itself to spreading across departments rather than remain confined to specific workgroups.

While virality can increase adoption, to monetize, a portion must convert to paid.  Effective ways to do accomplish that is by leveraging: (a) Self-serve payments; and (b) Actionable insights into customer and product data.

Successful monetization prioritizes frictionless payment and can be achieved though price discrimination via feature sets, usage limits, or pricing combined with an integrated checkout process. To independently convert, users must see a compelling path to deriving additional value and an easy way to get there.

Customer and product data provides detailed contextual insight into usage, engagement, pain-points, and user behavior. This can be a substantive advantage in identifying users / accounts with the highest propensity to convert to paid, churn, or buy an enterprise deal.

 

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A Consumerized GTM strategy is playing out as one of the more effective ways to enable rapid growth of Intelligent Software companies in a cost-effective manner.  Moreover, there is now an entire ecosystem of products that are empowering companies to be product-led (a discussion we will save for a future article). We expect that Consumerized solutions will continue to gain more attention and market share for the foreseeable future.

 

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