Note: This article is the second in a three-part series by ACT! software co-founder and co-creator, Mike Muhney. In part one of this series, Muhney discussed the journey of developing ACT! in the mid-1980s in the midst of the emerging PC market. After successfully launching ACT!, and even after winning the PC Magazine Editor’s Choice Award, the software category where ACT! belonged was still unclear. In this article, Muhney recounts the process of breaking away from the herd and claiming a new territory.
After its creation, ACT! existed in a state of suspended animation categorically and stood the risk of the journalistic community placing us in whichever category they chose. We had an intense desire to claim our own identity. We knew that if we created a category, we stood the best chance of leading it…Marketing 101, right?
In addition to the emerging software developers, there were a core of “celebrity” journalists arriving on the scene. These were the “go-to” people and their word carried influence and weight. Who were they? Well, names like Jim Seymour, John Dvorak, Michael Miller, Stewart Alsop and Esther Dyson were all extremely influential. They could help to make or break companies—at least that was always the assumption.
To assist in marketing efforts and provide the connections to these and other prominent writers and/or publications, we sought to hire a PR firm. We went for the “Top Gun” of the day, Regis McKenna. (For those of you unfamiliar with the firm, Regis McKenna was who Steve Jobs turned to for help for his fledgling company called Apple.) The firm touted themselves as the premier marketing firm as well. Certainly, we thought, these bright minds could help us to define ourselves, and thereby separate us from the herd.
Not only did we want to distinguish our software, but we sought to be the first to define the category of what ACT! would eventually create: contact management. We knew it was a “crapshoot.” Take too long and let someone beat us to the punch or rush the process and miss the mark entirely.
Digging to Define the New Product
I vividly recall in my first meeting with top executives at Regis McKenna in Silicon Valley, someone said, “Clients don’t pick us, we pick them.” They were a great firm and had notable clients, but we were not a Silicon Valley firm. We were founded and headquartered in the Dallas/Fort Worth, Texas area. Fortunately, Regis McKenna had a branch in DFW. But even their best talent could not come up with a satisfactory category name for our product.
By this time, we were becoming well connected to the top journalists of the day. Regis McKenna prepped us on what to say, but we still had one glaring hole in our PR strategy, the answer to the biggest question of all: What was ACT!? We could define its features and capabilities in depth, but we had no word, so to speak, to attach the definition to.
Just to backtrack a bit, it’s important to point out that we started ACT! based on another software product called QuotePro, which my business partner Pat Sullivan wrote. He designed it for salespeople at PC retail stores, such a Computerland, MicroAge, Entre, etc. It generated a written quote that assured a multi-product/multi-component sale would not drop below a baseline profit margin.
We used to say, “Yesterday, these salespeople were selling washers and dryers, and today they’re selling computer technology and therefore need the tools to gain a competitive edge.” Essentially, we sought to help relationship-centric professionals distinguish themselves from their competition and develop customer loyalty. Because the product was written in Lotus Symphony we called the company Conductor Software—after all, it was designed to be simpático with Lotus Symphony.
We raised $100,000 from an angel investor and thereby launched Conductor Software. After spending $85,000 trying to build our little start-up, Pat and I literally said to each other “this dog ain’t gonna hunt.” We were desperately determined to survive, so we had to come up with another idea. (See post one for more on the events leading up to the creation of ACT!) So, we created a new product, ACT!, but our company name, Conductor Software, had no apparent synergy with our new product.
Competition Emerges, Along with the Category
Each passing day brought with it the growing risk that others might beat us to the punch and begin classifying our product for us. Our success in meeting the needs of professionals led to enthusiastic acceptance of our solution, which then led to competition. We were now approaching 25 employees, but still had yet to nail down where ACT! fit (even with the help of the aforementioned PR firm). Given this emerging competition, and the journalistic inclination to group all of us, Pat and I once again reached out for marketing expertise. We didn’t mind the developing competitive terrain, but we were concerned that if we, as the market creator and leader, didn’t identify the category, someone else would.
Prominent in that era were two premier marketing experts, Jack Trout and Al Ries, who were also well-published authors of such books as Positioning, Bottom Up Marketing, Marketing Warfare, and others.
We enlisted their marketing expertise to see if they could help us, and if so, if we could afford them. We couldn’t really, but they gave us a gut-wrenching price that we could swallow if we swallowed hard. And swallow hard we did. Trout and Ries were well aware of ACT!, and they were intrigued by the challenge, which would only further their already well-established credentials. As it would turn out, they would enjoy the association with as much as we would with them.
At Last: Defining the Seemingly Undefinable
Trout and Ries requested everything we had in the way of information and marketing materials to prepare for our scheduled visit to their New York City office. Nine of the top executives of Conductor Software made the trip, reasoning that the more heads we put together, the better. Trout and Ries wanted each of us to describe the various ways we saw ACT! and how we and our customers used it.
One of the most unusual exercises I’ve ever participated in occurred in that first hour. Trout and Ries asked all nine of us to describe ACT! in four or fewer words. This was a huge departure from our typical meetings in which we took turns delivering long soliloquies about defining ourselves – all while disregarding everyone else in the room. It was no surprise to us that in the meeting, we ALL exceeded the four-word limit.
Each of us said very different things, which revealed that none of us were singing from the same hymnal, so to speak. And therein laid the problem.
While Trout led the exercise, Ries went silently to the flipboard and started writing. So as we were successively going around the room trying to answer the question, we were also watching what Al Ries was writing: the major categories, in two-word combinations. It was like watching a piece of clay pottery taking shape. We knew something was coming; we just didn’t know what. So, we all sat at the table watching him write down…
Presto! Each and every one of us in the room “got it!” In retrospect, it seems to have evolved so naturally.
We made it too complicated, and in that effort, were blind to the realization that elegance comes from simplicity. It unshackled us from our own inability to define who we were and where we belonged.
To the best of my memory, this is what Jack Trout said to us about what he had just written:
“Every one of the major software categories has only two words—that’s all it takes to describe it. You guys have started something that is unique and can simply be described as contact software. And, the really cool thing about creating that as the category is that the word ‘ACT!’ happens to also be a syllable of the word ‘contact’ so every time any of your competitors have to say what category they belong to they are going to mention your name. It’s brilliant! I also suggest that you change the name of your company from Conductor Software to Contact Software and capitalize on this even further.”
And we did without hesitation. We entered their offices that morning as Conductor Software, but little did we know that we would leave their office not only defining a new category, but we left with a new company name as well.
Twenty-three years later, the category known as contact management, and its progeny customer relationship management (CRM), is a multi-billion dollar industry. The category of contact management has undergone several shifts and iterations, most recently following the trends of social networking. However, the core principles of relationship management remain as valid today as they were when we first sought to fill the need. Compounded with changes brought by new technology, the challenge to adhere to the core values becomes increasingly evident. More relationships to manage, on more devices, and more platforms.
So, what’s next? Stay tuned for the final article, where I’ll discuss the future of relationship management…the good, the bad, and the ugly.
Thumbnail created by Kerrie Longo.