I confess: I'm a sucker for cleverness.
Admittedly, clever is no substitute for substance -- but in an industry in which "Send in the Clones" is a theme song, companies that do something out of the ordinary to capture market share deserve mention. (In computerdom, you know, today's innovation determines tomorrow's clone. . . . )
Take California-based Software Resource Group: It's a tiny software company with decent products.
But, realistically, how the heck can it break into software markets dominated by the Lotuses, Ashton-Tates and Borland Internationals of the world? How can it make itself stand out from the software that gluts retail shelves?
It can't -- so it's developed its own new channel of distribution.
Pick up any one of the 350,000 copies of the April 15 PC Magazine -- if you can find one. Inside, you'll see an insert of a floppy disc with Software Resource's "Brown Bag" IBM PC word processing software.
Nope -- it's not your basic demo disc. This is a fully functioning program that probably can fulfill most of your writing needs. The obvious question: How do these people make money?
The (clever) answer: The Brown Bag program is designed to run three times. After the third time, it locks up.
To run it permanently, you have to call the company and give it your credit-card number. For $89, you get a program that unlocks the Brown Bag word processor, and you're off and typing again.
Software Resource gets its money, and you have had the opportunity to completely and freely test a program before you buy it.
That's smart marketing. Indeed, Phillipe Kahn, the guru of low-cost software at Borland, has called it "the best marketing concept I've ever heard of . . . . " When Phillipe effuses, I listen.
"A demo disc in a magazine is creative and powerful," says Software Resource President Sandy Schupper, "but the fault is that it doesn't let you really use it. You can't get the full flavor of it.
"It's what I call 'remote fulfillment' because you can't get immediate gratification of using the program even if you like it. You have to go off to some computer store -- and they've got a backroom full of WordStars which they try to sell you instead. We believe this will be the new channel of distribution of software for the consumer."
Could be. Trendlines certainly indicate that computer stores are becoming less of a factor in software sales. According to market research firm InfoCorp, the percentage of software selling through retail dropped from 70 percent in 1984 to roughly 50 percent last year.
There are a couple of obvious reasons for that. First, mail-order and direct sales of software are skyrocketing; second, computer stores traditionally have made less money selling software than hardware.
Moreover, retailers are notorious for their unwillingness/inability to provide after-sale technical support -- mainly because there's little money in it.
Direct mail bypasses the potential pitfalls of the retail channel and is the marketing equivalent of sending a free sample to the consumer's home -- much as a Unilever or Procter & Gamble does with a new shampoo or detergent.
"The most important part is that we provide our full technical support before the product is sold," Schupper said. "We provide toll-free no-charge technical support to our customers before they pay us a nickel."
Okay. . . . Okay . . . but does it work? Do people respond?
According to Schupper, nearly 5,000 people have called in about the Brown Bag processor, and he says "a large majority" of that number actually have purchased the package by phone. He says that Software Resource needs a 2 percent "hit rate" from the 350,000 discs inserted in the magazine -- that's 7,000 buyers -- to make a profit. He thinks that, ultimately, the hit rate will approach 10 percent.
That's not extraordinary -- but it beats the heck out of being backroomed in a local Computerland. The real question is: What is the cost of acquiring a customer? Secondarily, what is the opportunity for pass-along and word-of-mouth sales?
Now I know what you're thinking: What about piracy? What about people who will just rip these suckers off?
The bottom line is that Software Resource believes that the overwhelming majority of people are ethical and that the comparatively low price will discourage stealing. Good luck, folks.
The company plans to offer more Brown Bag disc PC magazine inserts this summer with a memory resident "ThinkTank"-like outline processor and this fall with a database manager.
Note: I think there will be two ways to determine the future role of this distribution approach: Is it imitated, and will this technique be used to market a new software product category where there is no real competition?
For more information, Software Resource Group's phone number is: (408) 395-9568.