Main Marketing Channels of Software Development Companies (Survey Results)

In October, Techreviewer.co conducted a survey and research among software development companies to gain insights into their current marketing strategies, challenges, and plans for the future. The survey received responses from over 30 companies of all sizes, providing a comprehensive overview of the software development industry landscape.

The survey results revealed several key trends, including:

• The most effective marketing channels for software development companies are content marketing and search engine optimization (SEO), social media marketing, and referral platforms.
• The biggest threats facing software development companies are economic uncertainty, rising costs, and talent shortages.
• Companies plan to increase their investment in existing marketing channels, such as content marketing, SEO, and social media marketing.
• Companies are also exploring new marketing technologies like AI-enhanced tools and buyer intent data.

The survey findings provide valuable insights for software development companies looking to enhance their marketing strategies and achieve success in the competitive software development industry. Companies can make informed decisions that drive growth and success by understanding the most effective marketing channels, the biggest threats, and the latest trends.

Participants overview

Company size

Techreviewer.co recently conducted a survey focusing on the mail marketing channels used by software development companies. The survey gathered data from a diverse range of companies, categorized by their team sizes. 

Here's a breakdown of the responses based on the size of the companies:

• Team size 10 – 49 - This category represented 39.4% of the companies surveyed. It indicates a significant portion of smaller to medium-sized companies, suggesting a prevalent use of mail marketing in this segment.
• Team size 50 – 99 - Accounting for 27.3% of the responses, this group signifies a strong presence of medium-sized companies in the survey. Their marketing strategies could offer a different perspective compared to smaller firms.
• Team size less than 10 - Smaller companies, with team sizes of less than 10, comprised 15.2% of the survey participants. Their inclusion is vital for understanding how very small teams utilize mail marketing.
• Team size 100 – 249 - These larger companies constituted 9.1% of the survey. Their practices could provide insights into mail marketing strategies at a larger scale.
• Team size 250 – 999 - Also making up 9.1% of the responses, this category includes some of the largest companies surveyed. Their approaches to mail marketing might differ significantly from those of smaller companies.
  

The survey's broad range of company sizes offers a comprehensive view of mail marketing practices across the software development industry. This diversity in participants ensures a well-rounded understanding of how different-sized companies approach mail marketing.

Location

Based on the survey data regarding the geographical locations of the companies, the distribution of their headquarters is as follows:

• India - 27.27% of the companies are located in India, indicating a significant presence in the region.
• Ukraine - 15.15% of the companies are based in Ukraine, notably representing Eastern Europe.
• United States - 12.12% of the companies have their base in the United States, reflecting a strong presence in North America.
• Greece and Cyprus - Each country is home to 6.06% of the companies, suggesting a moderate representation in these regions.
• Poland - Also accounts for 6.06% of the companies, indicating its role in the European tech landscape.
• Lithuania, Hungary, North Macedonia, United Kingdom, Czechia, London, UAE, Bosnia and Herzegovina, and Uruguay - Each of these locations accounts for 3.03% of the companies, illustrating a diverse global distribution.

This variety in locations reflects the global nature of the software development industry, with a strong presence in India, Ukraine, and the United States and a broad representation across Europe and other regions.

Types of customers

Price range

The survey results regarding the current hourly price range of software development companies reveal the following distribution:

• $30 – $49 / hr - This pricing bracket is the most common, with 39.4% of companies falling within this range. This suggests a competitive pricing strategy that balances affordability with perceived value, likely targeting many clients, including startups and small to medium-sized businesses.
• $50 – $99 / hr - A close second, 36.4% of the companies charge between $50 and $99 per hour. This range is typically associated with companies with a strong market presence, possibly offering more specialized or advanced services.
• $20 – $29 / hr - 15.2% of companies have set their rates between $20 and $29 per hour. This lower pricing is indicative of companies that might be new to the market, aiming to attract clients with budget constraints or operating in regions with lower operational costs.
• <$20 / hr - A smaller segment, constituting 9.1% of companies, charges less than $20 per hour. This could indicate either companies in the early stages of development, those situated in economies with lower living costs, or businesses focusing on highly competitive pricing to gain market entry.

These pricing structures reflect diverse business strategies and market positioning among software development companies. The prevalence of the $30 – $49 and $50 – $99 ranges suggests a market leaning towards moderately priced services, likely reflecting a balance of experience, expertise, and market demand.

Types of services companies offer

The survey responses regarding the types of services offered by software development companies indicate a clear inclination towards outsourcing and staffing, with varying degrees of specialization:

• Outsourcing and Staffing (60.6%): A significant majority of the companies, 60.6%, offer both outsourcing and staffing services. This dual approach suggests a flexible business model catering to a wide range of client needs. Companies offering both services can provide comprehensive solutions, from handling entire projects (outsourcing) to supplementing client teams with specific skills (staffing).
• Outsourcing (27.3%): Approximately a quarter of the companies, 27.3%, specialize exclusively in outsourcing services. This focus might indicate a strong capability in taking over entire projects, offering end-to-end solutions, and managing complex tasks without direct oversight from the client. These companies likely have robust project management systems and are adept at working independently.
• Staffing (12.1%): A smaller segment, 12.1% of the companies, is dedicated solely to staffing services. This specialization suggests these companies are focused on providing talent and specific skill sets to augment client teams. They might excel in understanding client environments and requirements, offering personnel who can seamlessly integrate into existing projects and workflows.

This distribution strongly emphasizes outsourcing in the industry, either as a standalone service or combined with staffing. The prevalence of companies offering both services reflects a trend towards versatility and adaptability in meeting varied client demands. The distinct but smaller niche of companies focusing solely on staffing indicates a dedicated market segment catering to immediate and specific talent needs.

Marketing channels

Primary channels

The most popular marketing channels for IT services companies are content marketing and search engine optimization (SEO) (84.8%), referral platforms (like clutch.co, techreviewer.co, goodfirms.co, etc.) (84.8%), and social media marketing (63.6%). These channels effectively attract organic traffic and leads, which can then be converted into paying customers.

Other popular marketing channels include referrals (63.6%), email marketing (54.5%), and industry events (39.4%). These channels can effectively reach a targeted audience of potential customers, but they may not be as effective at generating organic traffic as content marketing, SEO, and social media marketing.

PPC advertising is a paid marketing channel that can effectively drive traffic to a website or landing page. However, it is important to note that PPC advertising can be expensive, and it is not always effective in the long term.

Webinars and events are also marketing channels that can be effective for software development companies. However, these channels are not as popular as the other channels mentioned in this analysis.

Overall, the most effective marketing channels for software development companies are those that can generate organic traffic and leads. These channels include content marketing, SEO, social media marketing, referrals, and email marketing. PPC advertising, webinars, and events can also be effective but may not be as effective in the long term.

Which marketing channels have been most effective in the past year

The most effective marketing channel in the past year was referrals, with 51.5% of companies reporting it as one of their most effective channels. This suggests that word-of-mouth marketing is still a powerful way to reach new customers.

Other effective marketing channels include:

• Content marketing and search engine optimization (SEO): 36.4% of companies reported this channel as effective. This suggests that creating high-quality content and optimizing it for search engines can be a good way to attract organic traffic to your website.
• Social media marketing: 33.3% of companies reported this channel as effective. This suggests that social media can be valuable for connecting with potential customers and building relationships.
• Referral platforms: 30.3% of companies reported this channel as effective. This suggests that using referral platforms can be a good way to generate leads and acquire new customers.
• Networking and public relations (PR): 36.4% of companies reported this channel as effective. This suggests that networking and building relationships with journalists and influencers can be a good way to generate positive publicity for your company.

Other marketing channels, such as PPC advertising, email marketing, and industry events, were reported as effective by a smaller percentage of companies.

Overall, the most effective marketing channels in the past year focused on building relationships and creating high-quality content. Companies that can effectively leverage these channels will be well-positioned for success in future years.

Channels have not lived up to companies' expectations

The survey responses regarding marketing channels that have not met the expectations of software development companies provide a nuanced view of the challenges and shifting effectiveness in various marketing strategies:

Key Findings:

• Email marketing is the most disappointing channel, failing to meet expectations for 36.4% of companies.
• Referral platforms like Clutch and GoodFirms disappoint 30.3% of companies, suggesting that their services may not always yield the desired results.
• Content marketing and SEO underperform for 21.2% of companies, likely due to the high level of competition and dynamic nature of search algorithms.
• 24.2% are disappointed with PPC advertising, likely due to its cost and difficulty achieving a consistent return on investment.
• Industry events disappoint 21.2% of respondents, suggesting they might not always attract the right audience or provide sufficient value.

Further Observations:

• Notably, only 6% of companies report consistent success with all channels, highlighting the importance of choosing the right channels for specific goals and audiences.
• Referrals disappoint the least (6.1%), reinforcing the importance of word-of-mouth marketing in the software development industry.
• Social media marketing and networking/PR underperform for 15.2% of companies each, suggesting room for improvement in their strategies and execution.
• Only a small percentage are disappointed with events and exhibition participation (3%).

Software development companies experience varying levels of success with different marketing channels. Email marketing, referral platforms, content marketing/SEO, PPC advertising, and industry events are the most common sources of disappointment. Companies should carefully evaluate each channel's effectiveness based on their specific goals and target audiences, adapt their strategies accordingly, and leverage the power of referrals to complement other marketing efforts.

Comparison with the main marketing channels

As you can see, there is a general trend of the channels that are most commonly used as primary channels and are most likely to disappoint companies. This suggests that companies may not always be using these channels effectively, or that the channels themselves may not be as effective as they once were.

The only exception to this trend is referrals, which are both a primary channel for many companies and a channel that very few companies are disappointed with. This suggests that referrals are a very effective marketing channel for software development companies.

Overall, it is clear that software development companies are facing challenges in the current marketing landscape. The once reliable channels are no longer as effective, and companies are struggling to find new channels that work for them. Companies that can overcome these challenges will be well-positioned for success in the years to come.

Marketing budget

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How much companies spend to acquire a new customer

The most common response is "under NDA", which means that 24.24% of the companies did not disclose how much they spend to acquire a new customer. The next most common response is "Don't know", which means that 12.12% of the companies do not know how much they spend to acquire a new customer. Overall, the data shows that there is a wide range of amounts that software development companies spend to acquire a new customer. Some companies spend as little as $10, while others spend as much as $15,500.

Important factors that influence customers' purchase decisions

The survey responses regarding the factors influencing customers' purchase decisions in the software development industry provide a comprehensive view of what drives client choices. 

Here's an analysis of each factor based on the provided percentages:

Key Findings:

• Price is the most important factor influencing customers' purchase decisions, with 87.9% of companies reporting it as a key factor. This suggests that price is a major consideration for software development buyers.
• Quality is another important factor, with 78.8% of companies reporting it as a key factor. This suggests buyers are willing to pay a premium for high-quality software solutions.
• Features are also important, with 48.5% of companies reporting them as a key factor. This suggests buyers are looking for software that meets their needs and requirements.
• Brand reputation, customer reviews, social proof, customer support, scalability, and relationship with the vendor are all considered important factors by a smaller percentage of companies. However, these factors can still be influential in the purchase decision process.

Additional Insights:

• The importance of price and quality is consistent with the findings of other studies on purchase decision factors.
• Features' importance suggests buyers are becoming more sophisticated and demanding in their software requirements.
• The importance of brand reputation, customer reviews, social proof, customer support, scalability, and relationship with the vendor suggests that buyers are also considering factors beyond price and quality when making their decisions.

Recommendations for IT services companies:

• Focus on providing high-quality software solutions at competitive prices.
• Clearly communicate the features and benefits of your software to potential customers.
• Build a strong brand reputation.
• Encourage positive customer reviews and testimonials.
• Provide excellent customer support.
• Develop strong relationships with your customers.

By following these recommendations, software development companies can increase their chances of winning and retaining new customers.

Current Market State

Competition

The majority of companies (72.7%) describe the current competitive landscape in their market as highly competitive. This suggests that there are a large number of companies competing for a relatively small number of customers. As a result, companies need to be very competitive in order to succeed.

A smaller percentage of companies (21.2%) describe the competitive landscape as competitive. This suggests that a moderate number of companies are competing in the market. Companies in this market must be able to differentiate themselves from their competitors to succeed.

A very small percentage of companies (6.1%) describe the competitive landscape as somewhat competitive. This suggests that a relatively small number of companies are competing in the market. Companies in this market may have an easier time succeeding than companies in more competitive markets.

No companies describe the competitive landscape as not competitive. This suggests that all companies in the market face some degree of competition.

Overall, the competitive landscape in the software development market is highly competitive. Companies need to be able to differentiate themselves from their competitors in order to succeed.

Biggest challenges in attracting new customers

The biggest challenges in attracting new customers are generating leads (81.8%), increasing competition (48.5%), and lack of brand awareness (42.4%).

• Generating leads is the most common challenge, with 81.8% of companies reporting it. Companies need to find effective ways to reach potential customers and generate interest in their products or services.
• Increasing competition: The software development market is highly competitive, and companies need to differentiate themselves from their competitors to succeed. 48.5% of companies reported this as a challenge.
• Lack of brand awareness: Many companies struggle to get their name out there and build brand awareness. 42.4% of companies reported this as a challenge.

Other challenges include:

• High customer acquisition cost: It can be expensive to acquire new customers, and companies need to ensure that their marketing and sales efforts are cost-effective. 30.3% of companies reported this as a challenge.
• Long sales cycle: The sales cycle for software development projects can be long, and companies need to be able to nurture leads and keep them engaged throughout the sales process. 63.6% of companies reported this as a challenge.
• Keeping up with the latest technology trends: The software development industry is constantly evolving, and companies need to be able to keep up with the latest trends in order to remain competitive. 12.1% of companies reported this as a challenge.
• Differentiating your company from the competition: There are a lot of software development companies out there, and companies need to be able to find a way to stand out from the crowd. 33.3% of companies reported this as a challenge.
• Closing deals: Even if a company has a great product or service and a strong sales team, closing deals can still be difficult. 33.3% of companies reported this as a challenge.
• Retaining customers: It is often easier and more cost-effective to retain existing customers than to acquire new ones. 9.1% of companies reported this as a challenge.
• Industry recession: The software development industry is cyclical, and companies can be affected by recessions. 3% of companies reported this as a challenge.

Companies can overcome these challenges by developing a strong marketing and sales strategy, differentiating themselves from their competitors, and providing excellent customer service.

The current state of the IT Services market

Several key trends characterize the IT services market:

• Growth and competitiveness: The market is growing rapidly, with a majority (57.6%) of companies perceiving it as both growing and competitive. This growth is being fueled by increasing demand for IT services from businesses of all sizes.
• Rapid change and innovation: The IT services market is constantly evolving, with new technologies and trends emerging all the time. This rapid pace of change is driven by factors such as the rise of cloud computing, artificial intelligence, and data analytics.
• Fragmentation and complexity: The IT services market is fragmented, with a wide range of providers offering a variety of services. This complexity can make it difficult for businesses to find the right provider for their needs.
• Consolidation and maturing: The IT services market is also undergoing consolidation, with larger providers acquiring smaller companies. This consolidation is leading to a more mature market with a smaller number of larger providers.
• Disruption and transformation: New technologies and business models disrupt the IT services market. These disruptions are transforming the way that IT services are delivered and consumed.
• Customer-centricity and outcome-driven: IT services providers increasingly focus on customer needs and outcomes. This shift is driven by the increasing demand for IT services that can help businesses achieve their specific goals.
• Data-driven and AI-powered: IT services providers increasingly use data and AI to improve their services. This trend is leading to more personalized and effective IT solutions.
• Security-conscious and compliant: IT services providers are increasingly aware of the importance of data security and compliance. This awareness is driven by the increasing number of data breaches and the growing complexity of data regulations.

Overall, the IT services market is a dynamic and evolving industry with a bright future. Companies that can adapt to the changing landscape and provide innovative and customer-centric solutions will be well-positioned for success.

Marketing Plans

Channels companies plan to invest

Software development companies are planning to invest more in marketing channels that focus on creating high-quality content, building relationships, and nurturing leads. This suggests that these channels are becoming increasingly important for reaching and converting potential customers.

The top three marketing channels that companies plan to invest more in are:

1. Content marketing and SEO: 69.7% of companies plan to increase their content marketing and SEO investment. This is likely due to the effectiveness of these channels in attracting organic traffic to websites and generating leads.
2. Social media marketing: 48.5% of companies plan to increase their investment in social media marketing. This is likely due to the ability of social media to connect with potential customers and build relationships.
3. Referral platforms: 45.5% of companies plan to increase their investment in referral platforms. This is likely due to the effectiveness of these platforms in generating leads from existing customers.

Other marketing channels that companies plan to invest more in include:

• Email marketing (42.4%)
• Referrals (36.3%)
• Industry events (27.3%)
• Networking and public relations (PR) (24.2%)

It is interesting to note that companies are planning to invest less in events and exhibitions, with only 3% of companies reporting plans to increase their spending in this area. This suggests that these channels may be becoming less effective for reaching potential customers.

Overall, software development companies plan to focus their marketing efforts on channels that effectively reach and convert potential customers. This includes creating high-quality content, building relationships, and nurturing leads.

Biggest threats in the next year

The top three threats identified by software development companies are:

1. Economic recession: 75.8% of companies are concerned about the possibility of an economic recession in the next year. This is likely due to the potential for a recession to reduce demand for IT services and make it more difficult for companies to find funding.
2. Rising costs of labor: 42.4% of companies are concerned about the rising cost of labor. This is likely due to the increasing demand for skilled IT workers and the shortage of qualified candidates.
3. Loss of key employees: 27.3% of companies are concerned about the loss of key employees. This is likely due to the high demand for skilled IT workers and the ease with which they can find new jobs.

Other threats identified by companies include:

• New competitors entering the market (18.2%)
• Skills shortage (9.1%)
• Increased customer churn (27.3%)
• War in Ukraine (3%)

It is interesting to note that only 6.1% of companies do not see any threats in the next year. This suggests that the vast majority of companies are aware of the challenges they face and are taking steps to mitigate them.

The biggest threats facing software development companies in the next year are economic uncertainty, rising costs, and talent shortages. Companies that can successfully navigate these challenges will be well-positioned for success.

New marketing channels or tactics companies considering implementing in the next 12 months

Key findings:

• Increasing investment in existing channels: Many companies are planning to increase their investment in existing marketing channels that have proven to be effective, such as content marketing, SEO, and PPC.
• Focus on building relationships: Several companies plan to build relationships with their current customers and use these relationships to generate referrals.
• Exploring new technologies: Some companies are planning to explore new marketing technologies, such as AI-enhanced tools and buyer intent data.
• Strengthening brand awareness: Several companies are planning to focus on increasing brand awareness and demand generation.
• Silk Data: Silk Data plans to strengthen its team and existing marketing channels. Focus on content marketing and SEO to be useful to users and clients.
• LinkedIn: A couple of companies are planning to start with LinkedIn lead generation and grow its brand visibility online.

Overall, software development companies plan to take various marketing approaches in the next 12 months. Some companies focus on increasing their investment in existing channels, while others explore new technologies or strengthen brand awareness. The most successful companies will be those that can adapt to the changing marketing landscape and find new ways to reach and engage their target audience.

Conclusion

The survey findings provide valuable insights for software development companies looking to enhance their marketing strategies and achieve success in the competitive software development industry. By understanding the most effective marketing channels, the biggest threats, and the latest trends, companies can make informed decisions that will drive growth and success.

Key Takeaways:

• Content marketing and SEO, social media marketing, and referral platforms are the most effective marketing channels for software development companies.
• Economic uncertainty, rising costs, and talent shortages are the biggest threats facing software development companies in the next year.
• Companies are planning to increase their investment in existing marketing channels, such as content marketing, SEO, and social media marketing.
• Companies are also exploring new marketing technologies, such as AI-enhanced tools and buyer intent data.

Recommendations:

• Software development companies should focus on creating high-quality content, building relationships, and nurturing leads.
• You should be aware of the potential for an economic recession and take steps to mitigate the risks.
• You should develop a plan to address the rising cost of labor and the shortage of skilled IT workers.
• You should explore new marketing technologies and tactics to stay ahead of the curve.

By following these recommendations, software development companies can increase their chances of success in the competitive software development industry. IT Outposts

Some of the companies that participated in the survey:

7L International, Profinit, IT Outposts