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Re: [XP] No customer-side iterations means trouble

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  • Steven Gordon
    Maybe, you should target customers who have been burned by your cheap competitors and market the difference in your approach. Some things that might be
    Message 1 of 8 , Feb 28, 2006
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      Maybe, you should target customers who have been burned by your "cheap"
      competitors and market the difference in your approach. Some things that
      might be attractive to customers who have experienced the low quality, the
      time and cost overrruns, and the expensive change orders perpetrated by your
      competitors:

      1. Guaranteeing working software every 2 weeks for a fixed price per
      iteration
      2. Allowing the customer to make changes to requirements and their
      priorities every 2 weeks
      3. Allowing the customer to cancel at any time and receive the working
      code (they have to pay down their total bill, of course)


      If you find you still cannot generate business this way, you could take #2
      off the table and use the charges for the inevitable changes to justify
      bidding lower, but it will effect customer value and satisfaction in the
      long run.

      Steven Gordon

      On 2/28/06, Paolo Nusco Perrotta <ml@...> wrote:

      >
      > Now let's see what your competitor is doing. They have another approach
      > to keeping their prices low: they hire cheap people. They'll have lots
      > of defects, they'll be overtime, and in the end the customer will
      > probably be sorry. Still, they'll be very competitive when it comes to
      > winning the client in the first place. If demand is low, they'll
      > effectively win the market.
      >
      > Unfortunately, I'm not talking from a theoretical point of view. This is
      > exactly what is happening in my Country right now. Software houses tend
      > to hire very cheap, unexperienced people. I heard many companies
      > formulating this explicitly: "We don't need experienced developers, we
      > need developers within our budget". Of course, there is wide distrust of
      > software development because of that. Still, that's the market for us.
      > Other than moving abroad, I wonder if I can do anything about it. How
      > can I make a promise of quality before the system is built?
      >
      > Paolo Perrotta
      > Bologna, Italy
      >


      [Non-text portions of this message have been removed]
    • William Pietri
      ... With any product, a lot of people are mysteriously happy to buy rank garbage if they can get it at 30% off. I can think of a few options while still
      Message 2 of 8 , Feb 28, 2006
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        Paolo "Nusco" Perrotta wrote:
        > Now let's see what your competitor is doing. They have another approach
        > to keeping their prices low: they hire cheap people. They'll have lots
        > of defects, they'll be overtime, and in the end the customer will
        > probably be sorry. Still, they'll be very competitive when it comes to
        > winning the client in the first place. If demand is low, they'll
        > effectively win the market.
        >
        > [...] Of course, there is wide distrust of
        > software development because of that. Still, that's the market for us.
        > Other than moving abroad, I wonder if I can do anything about it. How
        > can I make a promise of quality before the system is built?

        With any product, a lot of people are mysteriously happy to buy rank
        garbage if they can get it at 30% off. I can think of a few options
        while still maintaining quality:

        1. Become known as a high-quality producer for discerning buyers. For
        this, study the way other high-quality brands work. For example,
        Apple is very interesting, as are the high-end car companies.
        2. Directly sell to the distrust. Tell them you're different, tell
        them why, and then offer to prove it in ways your competitors will
        fear to match. Like weekly deliveries, the ability to terminate
        the contract at any time, and a 100% money-back guarantee for the
        most recent 30 days of work, even if they previously accepted it.
        3. Lie as much as they do. Promise miracles for pennies and then make
        it up in change fees, skimping on features, adding additional
        charges for this and that, and using all the other tricks your
        competitors use. Except low internal quality, of course, as that
        costs you just as much as them.


        Personally I work from 1 and 2. My feeling is that people who insist on
        making foolish purchasing decisions are in need of an education about
        themselves that I can't provide them. After they have been burnt a few
        times, I find them much more amenable to listening. There have been
        times that I have managed to catch clients who still needed that
        education, and I've never found them worth the hassle.

        However, I've seen large, successful companies work from #3. In
        particular, I saw one company spend $5 million with a major consulting
        firm and get only a half-working system just as the client's clients
        were expecting service, service based on contracts with large penalty
        fees for problems or delays. The consulting company then stopped work in
        the middle of all of this because it was a time-and-materials job, and
        the money was up. They didn't come back until *another* $5 million
        contract was signed.

        It made me ill to see it happen, but honestly, they deserved one another.

        William


        [Non-text portions of this message have been removed]
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