Sometimes, a big exit is just that — a way for dominant player to incrementally improve or defend an existing business. But in certain cases, an acquisition can materially change the direction of a company, providing a keystone to build something altogether new.
If Google’s $1.1 billion acquisition of Waze was the biggest exit in local tech over the past few years, Intuit’s buy of Demandforce was arguably the most important. Since shelling out $424 million dollars for the retention-marketing software provider, the company has quietly executed on a strategy to position itself an integrated solutions provider for small businesses. The strategy centers around the company’s ability to bring together the back-office functionality provided by its existing Quickbooks product with the front-office marketing and CRM capabilities provided by Demandforce.
Street Fight recently caught up with DemandForce’s chief marketing officer Patrick Barry to discuss Intuit’s small business strategy, the blurred lines between marketing and operations, and the rise of marketing automation.
It’s been 18 months since the acquisition closed. How deeply are you working with Intuit’s other businesses?
Very closely — Intuit has a group that’s focused on small business, which we’re part of, that is about half of the company. That SMB group has a broad portfolio of product, centering around Quickbooks and payments, but primarily Intuit has been focused on the back-office functionality — you know: how do you run a more efficient operation; how do you get paid; how do you pay employees and do invoices etc. With DemandForce coming into the fold, for the first time the company has a front-office strategy that brings together all of these things. It connects the back-office data with the front-office functionality into a single ecosystem.
There’s been a lot of talk about small business customer relationship management recently. Where does CRM, both in terminology and function, fit into this equation?
To be honest, I think CRM is a bit of a misnomer. The type of solution that has traditionally called itself a CRM is more narrowly subscribed around managing specific lists of contacts. But then there’s marketing, which is mostly treated as a separate product.
But in enterprise, for instance, you see some new marketing automation programs that sit on top of a CRM product. Marketing automation alone is a $5 billion business, excluding CRM. Is it going to be identical in the small business market? I’m not sure. But we see the front-office as something more substantive, including everything that has traditionally been called CRM as well as a lot of the stuff that’s now called marketing automation. It’s managing for a business all of the consumer-facing services and touchpoints in an optimal and automated way.
Do your customers think of that as a marketing expense, which is pulled out of the small and fixed budgets that have were traditionally spent on search or banner ads?
The perception of what we do will differ from market to market. But marketing spend historically has been a percent of budget and then it’s done. What we’re trying to do is position the product as broader shift, a fundamental shifting of their business process and the way they interact with customers. To up-level that process, and keep continuous improvement of my business instead of “I’m spending it and it’s gone.”
From Constant Contact and GoDaddy to Yahoo, there’s number of well-capitalized companies who are looking to aggregate small business solutions in some form or another. When you look at your product set moving forward, where’s the edge in Intuit’s product set?
We don’t look at it from the standpoint of an edge. We look at it from the standpoint of how do we make our customer’s business’ great. Marketing is about facilitating business growth. We look at our software as a tool to put in place best practice for customer interaction. The customer touch points which we’ve focused on so far are the lowest hanging fruit for customer interaction.
That means we’ve focused a lot on retention marketing, but we’re constantly updating the list of things that we include for our businesses. That might include third-party touchpoints like on consumer networks. It’s a high-profile place to relate to customers. Or, maybe it’s email marketing, surveys and reviews. These are all services where a business can improve the way they interact with customers. There’s really no limit to where we will want to go.
That’s where the flow from the back-office really matters. Whether it’s Intuit’s back-office product, or the hundreds of other system, which existing in very specific verticals. That’s where all the customer data lives, and accessing those data is critical to making this all work.
So if accessing the data is a must, what’s the value in partnering versus owning the back-office system?
There’s some value to owning, but there are also negatives. The value to owning is that you can go very deep in synchronizing and structuring the data; you can support new workflows; you can optimize the linkages you do, and make the marketing integrations very deep and robust. But owning also forces your prospective customer to adopt a new back-end system. We don’t want a dentist, for instance, to change out everything they do. We just want use their data. For us, point-of-sale is better left to the specialist.
Steven Jacobs is Street Fight’s deputy editor.