The problems of selling a 'modular' software system

Modularity comes at a cost…

Modularity comes at a cost…

For years, a lot of software has been sold on a ‘modular’ basis, with the view that customers can buy only the critical functions that they need now, at a lower cost, then add on extra functionality and capabilities as their needs (and their budget) grows.

For over 25 years, I sold a legacy accounting system that was completely modular based. This system had over 20 modules and we had customers using as little as 3 modules, right up to the full suite. At the outset, this seemed like a great idea - after all, a smaller business that was just starting out and had a couple of employees didn’t need full inventory and warehousing. Just the basic debtors and creditors control, and perhaps a general ledger with bank reconciliations. As their product lines (and their cashflow) grew, we could add inventory control, and perhaps purchasing.

However, we repeatedly came across situations where customers would actually refuse to upgrade, even though they needed the extra modules because they were struggling to cope with just a subset of features. We also had customers who would purchase the extra modules, receive training and implementation assistance, then a year later we’d go on site and realise that they simply weren’t using them any more.

This always bugged me and I couldn’t understand their rationale behind this. To me, it was counter productive and wasteful.

Then it happened to me.

We have been using HubSpot’s free CRM offering here at my startup HR Partner for a few months now. Our very small team loves the software, and I like how it integrates with our support system, our G-Suite emails and other services we use. It was a great contact management tool, however we were starting to push against the edges of the capabilities, so two weeks ago, seeing as we were growing and increasing our cashflow, I decided to bite the bullet and sign up for HubSpot’s full sales and marketing professional suites - a not insignificant investment in terms of time and money.

After the first week of training and setting up configurations and being excited about things, I noticed after a few days that my team members, and myself, were reverting back to just using the contact management functionality. I mean, we had these great tools for capturing form information, setting up automated email reply sequences, automatically scheduling demo bookings etc. all with a press of a single button (and sometimes not even that), but we were going back to typing long hand repeated emails and booking demos the ‘old way’.

This process made me realise that sheer working habits and ‘muscle memory’ dictates a lot of the ways that a team will work. Old habits die hard.

The other thing I realised is that we probably tried to change too much too quickly. Had I rolled out the new features piecemeal over a few weeks, it might have been easier for the team to get completely familiar with one feature before having to learn another one. To that end, I am still rolling out all the fabulous automation that HubSpot has, but slower, and with a little more discipline. I am also listening to the feedback from team members during the rollout, to hear what their thoughts are on each little feature, plus seeing if they have any suggestions for improvement, rather than just setting everything up myself and telling them to go use it.

One last thing I’ve noticed is that if a software system has a lot of features, and most of those features are hidden away out of sight (because the customer has never activated those modules), then it is much, much harder to lead the customer on the path of discovery towards those new modules. We came across this scenario time and time again with the legacy accounting system I spoke about earlier. Our customers would simply have no clue that they could do ‘x’ in that software because they had never seen anything in the system that even hinted at it. It was only during regular on site consulting calls that we would have to talk to the customer about it whenever we discovered there was a need for it.

Even with HubSpot, I am astounded every day when I see what added functionality there is within the system. I would have completely redesigned some of our business practices and processes differently had I known what we would have unlocked by signing up for the full plan. To change them now is much more difficult than setting them up a certain way at the outset.

Taking all this into consideration, I am glad that we designed our flagship SaaS app HR Partner differently. We considered having a ‘modular’ structure at one stage (and indeed, at one stage we even hid the extra modules on the menu that we thought our customers would not use yet), but eschewed that path to provide an ‘all in the box’ solution. The only thing we charge extra for is the Timesheet module, but only about 10% of our customers actually use that, and it is not really an ‘optional’ thing anyhow, but rather something that you would need straight away.

So if you sign up for HR Partner, you get everything available to you at the same monthly subscription price. Users who are curious can click around and self discover new functionality, and they can ask us about it if they need a hand setting it up - or else they can simply play and experiment at their own pace. No need to talk to a consultant or support person and get roped into paying extra. Also, by knowing that the functionality is there, they can better plan to implement it in the future, or set up processes now which will accommodate the extra features down the track.

Do you sell modular software systems? I would love to hear your thoughts on the pros and cons of this methodology.