Back when Bill Gates and Steve Jobs were selling software, they could pretty much rely on the business principle “if you build it, they will come.” Today, the competition to get clients for your software startup is rife with unpredictable variables from regulations to social media to hosting platforms. Even the usual threats like piracy, global competitors, and hiring challenges are cranked up in a world where pretty much everything runs on ones and zeroes.
For software entrepreneurs in today’s market, whether your company is VC-backed or nonfunded, if you build it, you better pull out all the stops in order to get noticed, stand out, get your product out there, and start making money from it. But how to get clients for startup software company in the current cutthroat climate?
You may be a genius on the software development side of the equation. But when it comes to selling the product to customers, even the smartest developers need some specific marketing strategies, working knowledge of certain tools, and of course confidence in your product that’ll get customers to follow you like the Pied Piper. The other thing you need is something that may not have occurred to you — but is actually one of the most important pieces of the puzzle to have in place: tech company insurance. This article explains more about why this type of business insurance is so critical to getting clients for your software startup, what types of insurance potential clients might ask for, and additional proven strategies you can employ to get your product in the right hands.
Why You Need a Certificate of Insurance to Get clients
If you’ve delayed getting insurance so far, whether because your business is unfunded and investors haven’t asked for it, you’re worried about costs, or even because you don’t think you need it yet – now’s the time. In fact, it’s essential to have the right policies secured well before you get your foot in the door of any reputable company, before anyone uses your product such as beta testers, before you set up shop, or before any contracts are signed. It’s for your own benefit, but also your clients’.
Specifically, you need a Certificate of Insurance (COI), which is a document from your insurance company attesting that you have the correct coverage and it’s for the right amount. The COI demonstrates that you can protect people you do business with from risk exposure, third-party claims, or anything that goes wrong with your product. (Embroker’s COI solution makes it easy to obtain your COI quickly when you need it.)
Once you’ve bought your policies, your insurance company should give you a COI –usually for free – that has your company name, the type of coverage, the duration of the coverage, and the coverage amounts. Here are more reasons you need a COI:
Your customers require it. Having a COI certainly adds to your credibility and boosts potential customers’ faith in you, your company, and your product. But customers will want to see evidence of low risk exposure and protection against third-party liability – especially if you deal with any personally identifiable information.
Your contracts stipulate it. Since contracts are legal documents, you can bet your clients’ legal eagles are going to make sure that you are legally able to protect the client from any problems that may arise from doing business with you.
Your company headquarters mandates it. If you work in an office, your landlord will want to make sure that they’re protected from anything that might go wrong in your company or your product (i.e. a claimant can’t come to them for money). You’ll need it if you work from home, too, or you could literally lose your house if anything goes wrong.
Your reputation and that of your investors are impacted by it. When you’re out pitching your product, potential clients will know you’re serious, credible, willing to back up your company, and willing to protect others, such as directors’ and officers, when you have a COI.
Business requirements demand it. Depending on what type of software you’re selling and to whom, you may need additional licenses or certificates to legally engage in contracts. The licensing board or certifying agency may require a COI for your participation in their program.
What types of Insurance are Necessary for Software Startups to Get Clients?
Anyone you do business with is going to ask to see a COI to determine what their own risk is of entering into an agreement with your company. Here are the key types of insurance your clients want you to have, and why.
Directors & Officers (D&O). Directors and Officers insurance protects executive-level folks in the company, such as the CEO, the president, and members of the board, against claims like misuse of company funds or charges of lack of corporate governance. D&O also protects the company’s own personal financial risks. It allows the leadership the freedom to make decisions without the fear of personal financial loss.
- Why your clients want you to have D&O. A D&O policy creates more security for your company in general, bolstering its reputation and its ability to attract high-quality executives and employees. For your clients, a D&O policy may provide incentive for them to work with you because they know you are willing to put your money where your mouth is to personally protect people and assets.
Employment Practices Liability (EPLI). This type of business insurance protects you and your company from employment claims, including accusations of discrimination, wrongful termination, harassment, etc.
- Why your clients want you to have EPLI. Employment claims have been rising recently, and they can be very expensive, time-consuming, and bad for your company’s reputation. Clients want to make sure you have EPLI partly to reduce their company’s risk – both financial and reputational.
Tech Errors & Omissions, including Cyber Protection. Tech E&O is a specialized insurance product created to protect the specific liability risks that people in the tech industry face. Often referred to as professional liability insurance, E&O for technology companies is similar to malpractice insurance for doctors. It protects you against any claims arising from potential errors in your product, failures, and other kinds of problems. Cyber coverage protects you if third-party information is comprised in a cyberattack.
- Why your clients want you to have Tech Errors & Omissions coverage. If something goes wrong with your product, your client will endure losses in their business, money, time, employees, and even their reputation. They want to know you can compensate them for these losses.
Fiduciary Liability. For companies that are funded and have employees, fiduciary liability helps protect against claims of mismanagement of employee benefits program and the legal liability arising out of your company’s role as a fiduciary.
- Why your clients want you to have Fiduciary Liability coverage. These claims can be financially devastating. Your clients want to know you’ll survive these types of claims and not abandon customers who rely on your product.
Successful Strategies for How to Get Clients for Startup Software Company
While some people were born to sell, other folks – software entrepreneurs, for example, often would rather work behind the scenes developing cool products. Whether you yourself are engaged in selling or if you delegate this responsibility, here are some proven strategies for gaining clients.
Beta testers. Recruiting beta testers (and even alpha testers, for that matter) is a proven way to get some momentum going on an early release or pre-release of your software. You’ll get valuable testing and feedback from real-world trials and gain name recognition, too. You can find beta-testing models online, which explain how to launch a test. Make sure your product is in pretty good shape before you enlist beta testers, though, because your reputation can be impacted if your beta test goes poorly.
Cold emails. In the old days, cold calling was the norm in sales. In today’s world, the cold email is the standard opening salvo to introduce yourself to potential buyers. The value of a cold email is that it’s sitting right there in your clients’ inbox and they’ll have to do something with it. Cold emails also have the benefit of being trackable so you can use data to determine what works and what can be improved upon. You can set up a series of sales email “journeys” – a set of three or so – on a few different topics and timed to your potential customers’ needs and interests. Be creative about your subject lines and your follow up to stand out.
Free trials. People love free, but free trials can be risky for your business. For example, users may never convert to paying for your product or it can jeopardize your business model. But, done well, free trials can be super effective to gain a competitive advantage.
Online forums. Join online communitiues to learn effective ways of marketing your product, make contact and share tips with other entrepreneurs, and stay current on news and trends in the industry. Here are a few forums you can try:
- Designer News. This is a community for software designers and others in the tech industry.
- GrowthHackers. Comprehensive resources, tools, and advice for software developers.
- Hubspot. Customer relationship management tools for software professionals.
Thought leadership. Establish yourself as a leader in your industry by writing a blog on LinkedIn, recording video tips on YouTube, doing a TED talk, or anything else that gets your name and product out there and attracting an audience.
Developing Trust Is Vital to Gaining Customers
Developing software and selling it require very different skill sets. What potential clients really want to know – beyond whether your product will help them – is whether you’re trustworthy. Establishing a strong foundation built on a solid product, good people, and proper insurance coverage, will go a long way toward boosting clients’ trust in you and your company.