The document discusses the strategy used by Womply to successfully sell software to over 100,000 small businesses. Key aspects of their strategy included prioritizing distribution and sales over adding new features to better serve existing customers. They focused on selling efficiently to more customers rather than deepening engagement with early customers. This distribution-first approach was contrarian to typical software company strategies but allowed Womply to build a strong customer base that then supported investing in product excellence.

1. The Playbook for Building
and Selling Software
to Small Businesses
Toby Scammell

2. In the last 4 years, Womply sold software to
over 100,000 small businesses nationwide.

3. So how’d we do it? Well there are
many reasons…

4. At the top of the list: we got our initial
business strategy right in the face of
opposition.

5. Since our earliest days, we were focused on
a “distribution-first” strategy.

6. I believed that if we built best-in-class
product distribution, then we’d have a strong
enough business to build best-in-class
software later.

7. That’s not how most software companies
are built. More often than not these days,
companies spend the bulk of their time
adding features, improving design, and
reacting to their customers’ every whim,
even if they don’t make sense.

8. Often, the result is bloated software that
isn’t highly saleable.

9. The market pressures software
companies to do this, but they do it
willingly. Only as an afterthought do they
consider how to sell.

10. Once software companies sign up a few
customers, they go deep with them and
ask “how can I deliver even more value to
this customer?” That inevitably leads to
product investments focused on adding
more value to the customers they already
have -- features that create value only
after a sale is made.

11. This strategy might make sense in
markets where there are very few
customers, each of which is worth a
lot. But in the small business market,
you have tons of customers, each of
which spends very little.

12. Small businesses need simplicity over the
complexity of excessive features.
Therefore, the biggest challenge in selling
software to small businesses is not
justifying a price increase, but rather
increasing customer count.

13. At Womply, we focused our resources on
this question: “How can we sell more
efficiently to the next small business, and
the one after that?”

14. We prioritized features and capabilities
that helped us broaden our customer
base rather than respond to every feature
request from our earliest customers. We
polished our onboarding flow for years
instead of polishing the features that
came after it.

15. Our best investments helped us
acquire more customers and deliver
more value to existing ones, but more
often than not we had to make a
choice between the two.

16. In a world with limited time and money,
we decided to go against the grain and
focus everything we had on distribution.
We didn’t take this approach because we
didn’t care about our customers; to the
contrary, we’re obsessed with them.

17. We realized that to one day serve millions
of businesses, we had to stay in business
ourselves.

18. There were known costs to this strategy.
Our product sold well but often didn’t add
enough long-term value to certain types
of customers. That caused some
customer frustration and churn, both of
which were expected.

19. Plenty of investors told us we were crazy
and didn’t even bother to analyze the
market dynamics or our company’s unit
economics. Some employees quit
because they didn’t get it. But we
continued prioritizing distribution for many
years until we were sure we’d cracked it.

20. Today, we have a highly efficient
distribution engine attached to best-in-
class products. And our product and
engineering resources are roughly split
between working on acquisition and
building or improving features. We got to
product excellence, but we took a
revenue-first approach to get there.

21. Recently we’ve found another area where
we’re contrarian. Investors and other
companies are focused on driving
engagement in small business software.
They view product engagement as a
proxy for value delivery.

22. I think about small business software as
just another employee. Small business
owners are hiring our software to do jobs
for them. This is often boring and tedious
work that they don’t want to do, don’t
have time to do, or can’t do themselves.

23. We can do a lot of jobs for them that
help them run their businesses with
confidence and grow if they want to.
We can collect data they can’t access,
crunch numbers and run forecasts,
watch their backs and email their
customers -- all automatically.

24. For small businesses, Quickbooks
does your accounting and Womply
monitors your business and engages
your customers.

25. If you think of software like it’s an
employee, then it helps describe how that
software should operate and how a
manager should manage it. So what are
the characteristics of a great employee?

26. A great employee takes on a broad set of
responsibilities, gathers their own context,
makes sense of it automatically, without
intervention, reports back on the results,
learns quickly based on new information,
and repeats.

27. A bad employee is one who requires
constant context, direction, and
supervision. You can’t trust what they do
and you’re not really sure why you’re
paying them because you could do the
job better and faster yourself with less
frustration and no uncertainty.

28. At Womply, our product strategy
is focused on reducing
engagement from small
business owners because we
want our software to be a great
employee, not a bad one.

29. The dynamics of the small
business market are different. This
is not enterprise. This is not
consumer. It’s something different,
and it requires a different approach
to building and selling software.
Small business owners are finally
adopting software… and the
smartest ones are using Womply.