Oleg Puzanov is a software engineer and serial entrepreneur with over 20 years of experience in the tech industry. He has co-founded several companies, including Enji.ai and Mad Devs, where he serves as the CSO. In this article, Oleg shares insights he has gained from his entrepreneurial background to demonstrate a new client strategy for service companies.
Imagine a group of talented software developers who create their own service company after working on a project for one client. The team can build excellent, high-quality products and wants to find new clients.
They decide on three traditional approaches:
- Marketing through content and ads
- Cold outreach directly to other companies by email and LinkedIn messages
- Emails to spam lists
The result: No new leads. Are they doing something wrong? Yes and no. The problem this team encountered is one they may not be aware of. It turns out that 91% of B2B sales are influenced by word of mouth in some way.
This means that the majority of clients, at least the high-paying and trustworthy ones, will not pay a service company if they have no idea who this team is or if they do not know someone who can recommend them. It makes sense if you think about it.
Clients planning to spend hundreds of thousands of dollars, or millions, on a software project are not going to do a Google search for contractors and pick the team with the nicest website. They want recommendations from people they trust.
If that is true, why do service companies not focus on building personal networks? The answer is found in the organic growth of many service companies. Their leaders lack a product mindset.
Organic growth in service companies
Let us review the difference between a product and a service mindset:
- Service mindset: Focused on solving the immediate concerns and requests of clients.
- Product mindset: Focused on providing long-term value to a client.
Service companies, as their name suggests, tend to follow the former approach due to how they appear. Typically, there are two scenarios:
Scenario #1: By "accident"
One programmer gets an order from a client. They complete it, and the client orders a bigger project. The programmer asks some friends to help. Now, they have a team, and the client makes recommendations to other companies to hire them. Soon, they create a company.
Scenario #2: Wanting more
A small team of developers within another company decides to start their own company to pursue their ambitions and make more money. They separate from the larger organization and work for them as contractors.
In both scenarios, organic growth brought clients to these service companies. There was no need for the business's leaders to attract clients through other means, and, as a result, there was little impulse to develop a product mindset.
A service mindset limits a service company in two ways. First, after many clients, developers become drones that fulfill every wish of the client without attempting to build value. Second, it restricts the opportunities available to the company for finding new clients.
The problem is that clients do not always know what they want. A product mindset helps service companies overcome this stalemate and create a better value proposition. Clients want a product that works and will bring them revenue and growth.
A service company's engineers need to think beyond the code they write for a particular feature and consider how their work will affect the product's continued success in the future. That is how long-term relationships are born in software development.
A side-effect of the product mindset is connected with the influence of word-of-mouth marketing. By providing more value to clients, they will appreciate a contractor's work and refer that company to others.
Likewise, this approach will help a business understand the value of developing its own product, an investment that will produce leads far beyond the capabilities of marketing and your current clients. Let me show you how by describing how Mad Devs is getting clients through its product Enji.
Mad Devs creates Enji
In 2016, Mad Devs developed Comedian, an internal product that automated reminders for developers to write text stand-ups. The product mindset of several of our team members guided Mad Devs to see the value this tool brought to us and our clients. We wanted more, and through testing and expanding features, Comedian grew to become Enji in 2021, an AI tool that gathers data from across a company to provide analytics and insights to leaders in minutes.
Enji is Mad Devs' product. How does it help us find new clients? First, Enji's story proves that we are dedicated to improving our work and giving clients the best experience possible. That is what a product does: it demonstrates a company's skills and experience in solving a problem. The second way Enji delivers clients to Mad Devs is through access to the world of accelerators and other programs that help startups grow.
You can score extra points through "eating your own dogfood," when you use the product yourself, which is what Mad Devs does. This adds extra evidence to your case when sharing your product with potential clients and partners. If your company is using it and gaining value, then others will too.
Ticket to the club
Can you imagine a service company participating in an accelerator? I cannot, and that is because it would not happen. Accelerators are meant to support companies that will continue to grow and scale with a product. As I have mentioned, service companies operate under a different model.
A service company like Mad Devs gains access to this world with Enji as the ticket, and that is where the magic happens. I have participated in over four accelerators and other programs to develop Enji.ai into a robust product that can compete on the market. As an added bonus, I found opportunities to promote Mad Devs' software services.
Performance at Draper University and photo with Tim Draper
While focusing on Enji and development strategies, I met with entrepreneurs developing their own businesses and products, many of which require software solutions. The catch is that these founders are not typically developers.
We would discuss problems and roadblocks in our projects, and I became an unofficial consultant to help them overcome software issues they did not understand or even knew they had. We developed a relationship and built trust in each other. That is something a Google ad or even a well-written blog post struggles to accomplish.
If Enji could not solve their issues and the entrepreneurs required software development, I referred them to Mad Devs. Without Enji, I could not have done this, at least not on the scale that is possible now. A product gives service companies access to these individuals who would not find you without that personal connection.
I have helped many founders without any payment for Mad Devs, but my time was an investment. Later, they knew who to contact about larger issues and long-term contracts. Likewise, they can refer others to Mad Devs.
The result:
Service companies can easily find one long-term client by developing a product and participating in accelerators. With a little more effort, that number can be increased. Getting accepted into an accelerator is not easy, and several nuances must be considered. Specifically, the two types that companies can participate in:
Classic accelerator
- Examples include Y Combinator, Techstars, and AngelPad
- Give money in exchange for equity
- Require experience, skills, and resources to move to the next level
- Strict about conflict of interests, focused on product
Owners will need to agree to the conditions of the accelerator and understand them carefully. While it is not possible to remain connected to a service company while participating, founders can still refer to the company and engage in helpful and sales conversations.
Equity-free accelerators
- Examples include BetterFuture AI, Draper University, and Accelerate Prosperity
- No need to demonstrate a lack of a conflict of interest
- Emphasis on personality and personal qualities, the product, and the idea
In this type of accelerator, it is necessary to stand out with an original idea. Participants should match these requirements and stand out.
In both cases, a company can scale its participation in accelerators. At first, I was the only one attending these programs, but now, two Enji team members are participating in other accelerators. The connections and relationships I described above will now be tripled with three individuals working to market Enji and Mad Devs to entrepreneurs globally.
Products influence growth and development
Service companies expand their network of contacts and clients with a product. It does not need to be 100% ready, either. Give clients a platform that can be customized for their needs and requirements. It should solve a need in the market or an industry.
Even better, create products for different needs in different sectors to expand outreach. A product can be anything that helps clients scale and grow. Those are the requirements, and here are the steps:
- Grow the product
- Make sales
- Expand network of clients and contacts
- Repeat
The product does not need to make lots of money but should create a margin (even a negative one). Accelerators and programs will provide insights to enhance the product's functionality and improve its value.
If done right, founders will have a product on its way to being scaled and finding clients, while the service company will gain recognition and expand its network for future projects. Another added benefit is that any employees involved in the process and the founders will gain invaluable experience and knowledge from participating.
It is a win-win situation in either case. Build your products and start finding clients!
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