By Chuck Drobny

I built a successful small software development company and won a majority market share by violating the generally accepted business rules for selling customer software. I went against the traditional grain and was more successful than my consulting competitors who followed the rules.

I often get a lot of advice from colleagues and others on how to structure my software agreements, and much of that advice is based on how large companies operate; many insist it’s the only way to go. But I’ve learned differently, as the chart below illustrates. I've outlined the generally accepted approach in today’s business vs. the approach I’ve taken. In each case, mine has proven to be successful.
Figure A
Consulting area
Generally accepted method
My approach
Contracting
Bid each job as a whole.
Always bid time and material.
Specifications
Develop detailed specifications up front and integrate them into the contract.
Established business goals and allowed development to change during the development process.
Copyright
Establish a firm copyright against adjustments or changes to the code.
Sold an open system and encouraged customers to make changes.
Upgrading
Sell each upgrade as an add-on so customers pay for every improvement.
Incorporated all improvements into new versions at no additional charge.
Standardization
Develop one application that fits all users.
Developed one application for each user.
Partnership
Develop hooks to ensure the user employs peripherals whose sale enhances revenue.
Developed a flexible interface to guarantee no one peripheral vendor became preeminent over others.

The need for trust and communication
It’s easier to go with the grain in business, but I don’t think it would have proven as successful in my career. In going against longstanding principles, I learned that my process required a close working relationship and trust between the customers and me. We kept up a lot of open communications and were very honest whenever we made a mistake.

For example, my customers greatly appreciated that I didn't bind them into sole source agreements. Because I didn't prevent them from turning either internally or externally to another supplier, they actually drew closer to me as a supplier. The very provisions that others said would result in a loss of revenue actually became the reason for my revenue growth.

I acknowledge that it wasn’t 100 percent perfect. My approach worked well with customers who were trustworthy and whose principal contacts were people of character and integrity. When I extended the same favorable arrangements to others, the relationships became strained. I wasn't sorry to lose their business, though, because I believed they would have been unprofitable under any circumstances.

The big lesson I’ve learned in building a business is not to be afraid to go your own way. It can be the key to establishing and maintaining a profitable customer relationship.