In 2012, we launched our Top 20 Most Popular Software Series, our best attempt at recognizing the market leaders in every major software sector. And by leaders, I don’t mean the software companies with the best, easiest-to-use, or most cutting edge products – although they are often included. Unfortunately, those adjectives are pretty subjective. By market leaders, I mean the most widely adopted solutions.
As we’ve expanded our Top 20 infographics to almost 25 software sectors over the past three years, we’ve gotten many questions—most of them from the software vendors we reach out to for inclusion, and mostly related to how and why we rank these software solutions in the first place. This post attempts to answer some of our most common “FAQs” about Capterra’s Top 20 Infographics.
Why did we launch the series?
Our goal was to come up with a metric that was completely objective and helped anyone who wanted to know which software players in a given sector were the most popular. Why? Because software buyers want to know, and one of our core values is to be ‘ridiculously helpful’—to provide the data software buyers need to make an informed decision. It doesn’t mean they intend to buy the most popular; identifying the major players is merely a first natural step for many people when making a major purchase decision. And unfortunately, there was no resource – online or offline – that accomplished this in any sort of comprehensive, apples-to-apples context.
What is the goal of the series?
By providing this market overview to software buyers, many of the buyers click through to the related software directory on Capterra. Once there, they are able to view all of the software category options listed on Capterra— not just the Top 20. And even for the buyers that do not click through, these Top 20 content pieces help to raise the overall awareness for the directories themselves. For example, after launching our three most recent infographics, traffic to those directories increased an average of 13%* within the first month post-launch. (*13% more than our overall site traffic increased within the same timeframes.) That’s 13% percent more potential software buyers viewing all the solutions in that sector.
How does Capterra rank software solutions?
We’ve developed a custom popularity index, which we use to rank the solutions in each section. The algorithm factors in the following components to develop a popularity score for each solution:
- Number of customers: Unique organizations using the software;
- Number of active users: Individuals at those organizations who actively use the software;
- Social presence: Comprised of six factors—Twitter followers, Facebook Company Page Likes, LinkedIn Company Page followers, Google+ Company followers, Klout score, and # of Capterra reviews.
The three components are not weighted equally, though. Number of customers and users each account for 40% of the score, while social indicators only account for 20%.
Why not just run a market share report?
Why not simply identify all the players in a space and rank them by revenue? Wouldn’t that accomplish the same goals? For a variety of reasons, ranking by revenue is not possible, or really preferable. Most software companies are privately held, and privately held companies aren’t required to report their revenue publicly to shareholders. And even if a company does share their revenue, they often do not break it down by product line. However, the most important reason we don’t include revenue in our calculation is that not all software products are priced equally. For instance, even though two competing software products may have identical revenue, one may have a much larger presence in the market than the other if its price point is lower. Therefore, including revenue in our calculation would unfairly give more weight to more expensive products. Software buyers were asking for information on market share, popularity, and adoption, not the software company that makes the most money. That’s the report we wanted to give them.
So—why then—not just use number of customers? In the business software space, not all customers are created equally. A customer with thousands of users has greater adoption than one with just dozens. Focusing just on users would have a similar problem. A higher customer count is synonymous with higher adoption, only if the total number of users is the same. Taking both customer and user numbers into account seems to easily solve this problem.
We almost completed the algorithm after those two inputs, but in our research, we noticed another trend. The faster-growing software vendors were typically investing heavily in their engagement with the online community. This dialog was taking place in a variety of places online. Some preferred Facebook, while others preferred Twitter, Google+, or LinkedIn. We debated internally how to best measure not just number of followers, but how engaged those followers were with the brand. So in addition to followers on those networks, we added in Klout score and Capterra reviews. As social media is somewhat of a newer trend, we didn’t want to place it on equal footing with the first two components. We felt number of customers and users were more important, since they are more substantive than social engagement. That’s why our equation is weighted accordingly.
What if we don’t share our customer or user numbers publicly?
Like revenue, customer and user counts are also considered to be private data by many. But we have found that a growing number of software companies do share these numbers very proactively, highlighting them on their website, in press releases or blog posts. They may even share them with occasional industry analysts or journalists.
Why doesn’t every software company share these numbers? I believe there are two primary reasons. Many buyers will only pick a vendor that has lots of others clients; it seems like a safe choice. Keeping your numbers a secret helps prevents you from being excluded based on numbers alone. The second reason is fear. Even if a company’s customer and user counts are high or respectable, many business owners are accustomed to being the only ones who know this information. Fear of the unknown – of what might happen if those numbers are suddenly made available to the public – is common. For example, what if our customer or user number dips? What if growth slows? Entrepreneurs are known for being great mitigators of risk, and keeping as much information private as possible is one way to reduce a perceived risk. I do believe that not being transparent – particularly once you are no longer a startup – is becoming a potentially greater risk in an age when transparency is being more heavily valued than ever.
But we recognize that these things take time. For those companies that do not release their customer and user numbers publicly for whatever reason, we are happy to either accept estimates or generate estimates for these numbers ourselves. If a company opts for the latter, we then contact the company to let them know our estimates and give them a chance to alter or accept them.
What constitutes an “active user”? Do free users count?
One of our biggest challenges has been the way we define our terms. Do we allow software companies to include free accounts in their user numbers? We do, except for free trial customers. Free software, including both ad-supported and open-source software, while currently a tiny part of the market, is a real phenomenon. It deserves to be included in the sectors where it exists. And it gets more complicated than “free”. For example, while we stress that we want active users as opposed to every user that has ever used your software, what counts as active? When is the last time they would have had to have logged in? Daily? Monthly? Quarterly? Where do you draw the line? Uncovering these layers in how we define our terms has been part of the journey for us. These are the questions that we continue to answer as we improve our series going forward.
How do you know software companies aren’t lying or exaggerating their numbers?
We ask clarifying questions when receiving the reported numbers to ensure that each company is measuring them in a consistent way. That said, when a software company provides an estimate, we take them at their word. We do not audit them. We believe that the open nature of the report – the fact that the entire world, including all the analysts and competitors who are positioned to make educated guesses, will see the numbers they’ve provided – will act as a check on people’s consciences and encourage them to provide estimates that are based in reality. Yes, people lie, but they tend to do so less when everyone is watching.
Why do you include social media numbers as part of your ranking?
We believe the vendors that engage with influencers in their industry (customers, prospects, analysts, bloggers, journalists, even other vendors) position themselves to achieve a greater voice and authority within their sector. Failure to engage will hinder continued adoption of your software; If not immediately, then in the near future. It may not prevent you from being a player, but it will likely have a material, negative impact on your business. While quality of product is and should be a major priority for your company, there is no denying that social engagement will be a factor in spreading word of your software’s value and overall success, if it isn’t already.
It is also worth noting that the six indicators that comprise the social component are not fixed. As different platforms for software-related dialog start up and die off, Capterra will continuously analyze which ones are the most active and are worthy of inclusion. And, if you’re still not convinced social voice has an impact on market share, keep in mind that this component is given half the weight of the other two factors. Regardless of how socially engaged a vendor is, active customers and users are the primary drivers of ranking in the Top 20 Series.
I hope this post has been able to clarify the reasoning behind our Top 20 infographic series and answer your questions. As we continue to expand this series going forward, we welcome and encourage you to reach out with any questions, concerns, thoughts, or comments. We’re always happy to chat, and would love ideas on how to make these rankings more useful and more reflective of each specific industry.