Referrals, with a human touch: How Software Advice overcame a broken business model to grow to 50 employees

January 4, 2013

Don Fornes launched Software Advice–a free service that recommends the right software for buyers in industries from construction to retail–in 2005, after he noticed there was no lead gen service for the small and midsize software business market. Fornes started the company alone, but today he employs about 50 people, and his Austin-based business has referred more than 97,000 buyers and built relationships with about 750 software vendors.

That growth came with great difficulty. “We have what I refer to as our ‘treasure chest of failures’ that we’ve learned from,” Fornes says. “So there are a lot of things we’ve initially failed at and learned over time.”
Software Advice is free for customers: The company makes its money when they foster good matches between software buyers and software vendors. But in 2007, despite making hundreds of referrals, Software Advice had only a few thousand dollars in revenue to show for it.  Their business was not working.

Fornes and his business partner were introducing buyers and software companies based on information the buyers submitted through a form on the Software Advice website. “After about six months of generating these referrals, I went to the software vendor community I was working with and said, ‘How are those referrals working out?’” Fornes says. “And they said, ‘Not very good.’”

Fornes and his business partner delved into the matter and started to call their buyers. They discovered a variety of reasons for failed matches–some buyers weren’t serious, others were looking at the wrong products–but overall they hadn’t been guided in the right direction. To correct this, Fornes and his business partner changed their model to include a team of analysts to ascertain each buyer’s needs and guide them in their choice. That meant introducing some old-fashioned phone calls into their online business.

“It was a big decision because it felt offline,” says Fornes. “It didn’t feel like web marketing or user-generated content or what we thought the business was going to be, but after we did it for awhile, we got great feedback from software buyers and the software companies. We were able to increase how much we were compensated when we made a good match, and it has really become a differentiator for our business.”

Software Advice is five years older and much larger now, and Fornes says the business increase is “almost not comparable.” Fornes says no introductions are made without a phone call. It’s central to what Software Advice does.

“I think a lot of people who have attempted to do what we do or did it before wanted to do it in an exclusively online fashion because it’s incredibly efficient,” Fornes says. “It’s less difficult for the intermediary to do what they do if all they’re doing is web marketing and passing along information, but by seeking the path less traveled and doing that harder work of introducing an offline human component, we’re just able to improve the value for the software buyers and the companies in a way that is only possible with that hybrid online-offline model.”

Another key to the success of the analysts, and all employees, is that Fornes makes sure the proper technology is available to support them. While trying to perfect Software Advice’s website in the early days, the company was using off-the-shelf content management software. But after stumbling across a college kid on summer break who insisted on rewriting everything from scratch, they realized the value in customization. Shortly after that, they hired Software Advice’s first developer, who serves as CTO. Fornes says the culture of automation has made an enormous difference in the business.

“We build exactly what we need instead of buying it off the shelf,” he says. “And so every employee in our company who runs some function has the resources to define technological solutions to their challenges.”
And while the importance of generating more sophisticated content on the website is ever-increasing, the human element is still the foundation of Software Advice.

“There are many very sophisticated businesses starting up around technology and building apps or some kind of technology, inventing or innovating new things,” Fornes says. “That’s not my expertise. There are other people much better at that. But most of the businesses out there including those startups that may get to an expansion stage or a more mature stage eventually will be dealing with the challenge of attracting or retaining, managing, measuring, compensating great people. And that and the culture that supports that is what’s really critical to success.”

Scott Danielson

Scott Danielson

Scott is the Customer Success Manager at Perfect Audience. He holds a degree from Illinois State University and has over 13 years experience working in the customer service/tech support field.
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