Your intentions were good. You only sold some consulting to help the customer add some bespoke features or do some data integration. But, very quickly, it spiralled out of control and you are hiring more and more consultants and selling more AI consulting than actual software licenses. I discuss business with many AI entrepreneurs and all share a major challenge: they want to sell software, SaaS licenses and grow, but end up becoming a professional services company, with gross margins much lower than comparable SaaS companies and a lower ratio of recurring revenue over total revenue.AI
How do you avoid the AI Consulting trap? How do you sell licenses and limit the amount of professional services? The truth is that this is just as much a sales and marketing challenge as it is a product challenge.
Know Your Market
Sell Your Vision & AI Solution to that Problem
Now that you know who you’re selling to, and what their problems are, you need to sell your solution to their problem. Avoid describing your technology to the potential buyer, because if you do, then he will create his own personal roadmap and return with a laundry list of bespoke features that would create a perfect product-market fit for him and him-only.
Sell Repeatable Projects not AI Consulting Projects
Often, I hear, this is all well and good but every project we do is slightly different, so we need to customize the software. If you know who you’re marketing to and you know what problem you solve, then you can specialize your offer as narrowly as possible so that every project is as similar as possible.
Self Service is King
This is more of a product decision but too often AI companies focus on building software that is too complicated for self-service. This is a by-product of “just one more feature” syndrome. As a result, the only people who can configure the tool are those who built it. As a consequence, your company will become a consultancy. Self-service, whether you are targeting business users or technical, allows you to limit your consulting because you let either managed service provider partners or your customer themselves do the work. The more focused you are on one problem, the fewer features you need to make a sale, the easier it is to build a self-service tool.