Infusionsoft Changes Business Model to Appeal to Wider Market





Infusionsoft, a Gilbert, Arizona company which provides automatic follow-up software to automate online marketing functions has changed its business model, eliminating its up-front set-up fees that it previously charged new customers.  The set-up fees ranged from $2,000 to $6,000.  The company also will offer a 15-day free trial of its product, something it hasn’t done before.

Infusionsoft free trial, 6-minute setup

They’ve also unveiled a new website (an easy-to-read white site to replace the black site they had before) that makes setting up an account fully self-serve.  The website refers to a “6 minute set-up” — much faster than their previous set-up which could have taken days and involved faxing in existing marketing information that needed to be manually input by Infusionsoft or outside contractors it hired.

Now, in addition to the immediate set-up, there’s a straight monthly fee model.  Monthly fees start at $199.

This announcement is a major shift in the company’s product.  Not only does it make their product more affordable and less risky for small businesses to try, but it also puts the customer more in control.  As a customer you can set up an account 24/7, on your terms, and don’t have to wait on anyone to input data for you.

According to Dave Lee, VP of Marketing, the company had to re-engineer and re-design the product to make it more self-serve.  It now features an online wizard that guides the customer through the setup process, along with a progress bar to show you how much of the setup you’ve completed.  The software is also more intelligent, with simplified data import options.  It recognizes data formats from major applications such as Salesforce.com, Act and Excel spreadsheets and automatically sets data up in the proper fields.

The new approach is the result of two years of software development work — they also had to change their own internal business processes, too.  To fund the redesign and re-engineering, in December 2008 Infusionsoft raised $7.9 million in venture capital funding — a real feat in an otherwise investment-unfriendly climate. Its investors are Mohr Davidow Ventures and vSpring Capital.

The Infusionsoft system helps small businesses stay in touch with customers and prospects to convert interest into sales and repeat sales.

The company has a bigger footprint in the small business market than I’d realized, with over 14,000 small business customers today. It has big growth plans, and now with new customers able to go online and set up their own accounts without a large investment up front, the company is positioned to accelerate its own growth.

However, changes in business models aren’t without risk.  According to Dave Lee, the company is expecting lower revenues in the short term due to elimination of the setup fees.  On the other hand, the company’s growth potential in the mid- to longer term is much larger now.  (Sometimes you have to be prepared to take a short term hit to grow in the long run.)

Infusionsoft has been my radio show sponsor for the past year and a half, and it’s been intriguing to watch their approach to marketing.  They have done some particularly creative things (such as their “double your sales” guarantee).  But then, that’s what the best small businesses do best — be creative.


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Anita Campbell Anita Campbell is the Founder, CEO and Publisher of Small Business Trends and has been following trends in small businesses since 2003. She is the owner of BizSugar, a social media site for small businesses.

17 Reactions
  1. Very interesting move by Infusionsoft. How do you think the competitors will react to this change?

    I like the new design of the web site. Have they done it in house or used an external web designer?

  2. This is SUCH and amazing opportunity for small business. I have a client that uses infusionsoft in conjunction with BOTH their web and direct marketing strategy. My favorite feature is the one where you pre-program the actual paper mailing that you want to send and upload that into Infusionsoft — then the system literally sends a mailing list and the files to your favorite printer to print and mail. This has freed up HOURS of administrative time that MORE than pays for the system! Infusionsoft ROCKS – and did I tell you the customer service is fantastic?

    I’m so psyched that this product and service will be available to more small businesses. I will give you one warning however.

    A system cannot replace the lack of a good strategy — it will only implement the strategy you developed. So don’t rush in without a plan.

  3. A noteworthy move – it may not really be cheapter since it’s still at $2,400 purchase decision for the small business owner. Also, the question of risk probably rests in the fine print of the contract terms. Is it really a 15 day window to try and decide whether to buy? If yes, how many business owners can realistically test a marketing campaign in 15 days against what they have previously been doing? Not many. They can check out the technology and the user interface – but the results – they need more than 15 days. So, can they cancel their subscription after 90 days or are they locked in for 12 months? So what does less risky really imply?

  4. Anita Campbell

    Hi Martin,

    That’s an interesting competition question. With so many companies already offering the kind of self-serve SaaS model that Infusionsoft moved to, I expect their offering is or will become the market standard to compete against.

    — Anita

  5. Anita Campbell

    Hi Ivana,

    that’s great to hear a firsthand testimonial from you — thanks for sharing.

    Hi Ian,

    According to the FAQs on the Infusionsoft website (http://www.infusionsoft.com/faqs#cancel) it’s a month-to-month service that can be canceled at any time.

    While it’s true that it’s $2400 or more annually, if it brings in enough new business then that expenditure is minor. When something helps you generate new business, I try not to measure it in terms of what I am spending as much as where I’ll end up in terms of revenues and profits when I look back later.

    — Anita

  6. Travis Campbell

    Anita-

    Thanks for bringing this up, it is worthwhile news for many small businesses who are looking to grow or improve their online marketing. I’ve had many clients who just could not swallow that upfront fee, now that the fee is removed, hopefully more will take advantage of this great opportunity. The capabilities Infusionsoft brings online marketers is quite impressive. It has changed my business.
    -Travis

  7. Anita,

    Thanks for your reply. I bet Clate Mask et al will write about it and send us a newsletter now and then! 😉

  8. RedHotFranchises

    Infusionsoft is one of the best CRM softwares in the playing field and is suitable for identifying your own current needs and predicting future needs, highly recommended for Small Businesses.

  9. Anita–thanks so much for starting the discussion. Words cannot describe how excited I am about this shift. Our Dream at Infusionsoft is to “Revolutionize the way small businesses grow.” We know that when entrepreneurs and small businesses fix their follow up failures, they grow fast. In fact, we guarantee that if they use Infusionsoft to fix their follow up failure, they will double their sales.

    The frustration for me is that for the past two years (once we set in stone our Dream, Vision, Purpose and Mission), we had these lofty goals to revolutionize small business growth and provide our software to a million entrepreneurs. But the product complexities and big up-front fees made it impossible to accomplish that dream… at least not in my lifetime. 😉

    Which is why about 18 months ago, we raised venture capital so that we could REALLY begin to execute our Dream, Vision, Purpose and Mission. We’ve been working feverishly to get to this point. We’re finally able to make this shift and it thrills me.

    Here’s why:

    Entrepreneurs and small businesses generally do a terrible job of following up with prospects, customers and partners. They leave a ton of money and opportunity on the table as a result. They know it, but it’s tough to do anything about it. So, they trudge through life as a business owner, trying to grow their business, enduring a life of chaos and half-fulfilled expectations as an entrepreneur.

    That stinks! When they fix their follow-up failure, they double their sales. Life is a lot better.

    And that’s why I’m so excited. Because now WAY more entrepreneurs can use our Automatic Follow-up Software to fix their follow-up and double their sales.

    Obviously, I’m pretty passionate about this. I’m passionate about it because I’ve been there. I’ve lived the chaos myself. I’ve seen it in the lives of friends and family. I’ve seen it in the lives of tens of thousands of entrepreneurs. AND I’ve seen the solution.

    There’s a better way to grow a small business. Our automatic follow-up software, which combines CRM, EMail Marketing and eCommerce literally liberates and empowers entrepreneurs to accomplish their goals and live life on their terms. And that is the Purpose of Infusionsoft.

    We’re not perfect and we will keep tenaciously driving to improve our product and service. But I’m just stoked that we get to make this software available to more entrepreneurs who need it.

  10. A bold move that I believe will pay handsome dividends in the future. Not only will the subscription model increase the lifetime value of a customer (provided they have good retention) but eliminating the startup fee lowers the barrier to entry for thousands of new clients. And since users can cancel anytime, InfusionSoft is appropriately motivated to keep improving the product or risk losing clients.

  11. @Anita — Thanks for your perspective and letting your readers know about our recent changes. We’re in a very favorable position to win the hearts of new entrepreneurs and partner with them for their long-term, loyal success.

    @Martin — We have our own designer and Web developer (and no, you can’t have them) who redesigned our site in under three weeks. We know there might be a few minor things to improve on with the site, and we’re making those improvements now. Thanks for the compliments, I’ll pass them along. 🙂

    @Ian — Good question. There are no contracts, no nonsense. The risk is calculated and easier for people to understand; if they don’t like it, they can cancel it. You’re correct that a marketer may have a challenge in showing results in only two weeks of use. The idea is that a marketer can browse the system, start using it and see how much easier/effective it can be. When the app bills, one should be taking advantage of all the features and moving onward to grow their business. Again — No contracts. Even the Double Your Sales Guarantee had been modified to be much easier to qualify and available to all new customers.

    Thanks for the feedback everyone. It’s great to see we’re on the right track and growing and serving entrepreneurs.

    ~Joseph
    (@JoeManna on Twitter)

  12. Joseph,

    Thanks for the information. The site is looking good. I will follow you on Twitter later on. I have reached a “follow limit” again…

  13. Hi Anita,

    I was interviewed recently for an upcoming CRM magazine issue for a story ranking CRM vendors serving the SMB space. I received a list of the usual suspects – Salesforce.com, NetSuite, Zoho, and a few others. InfusionSoft was not on the list, but I wrote them in as one to watch.

    I did that because these guys make a quality product, and because they are all about assisting small business to grow. That was before the official announcement. This move proves they are extremely serious about the SMB market. Big startup fees and long implementations take many small companies out of the running for most any applications. This lowers a significant barrier of entry for companies needing more robust marketing automation functionality. It gives these businesses more options to choose from at a much lower price point. So this is all good news.

    Competing with the big boys for mindshare will continue to be an issue for InfusionSoft, but they are extremely passionate about what they do, and who they do it for. If they continue to act on the best interests of their customers, and provide best practices as well as good product, I believe they can find their place in one of the hottest segments of the CRM market.

    Thanks!

  14. Robert–I couldn’t agree with you more. Your comment is spot on. Part of the reason why I love this shift so much is that it perfectly aligns the incentives of Infusionsoft and our customers. Because there are no long-term contracts, we have to earn our customers’ business every month… and I think that’s a great thing for us and for our customers.

    Brent–thanks for the write-in! And thanks for your perspective. I am confident we WILL establish our place in the CRM market for entrepreneurs and small businesses… right at the top of that market. 😉 On a related note, I’ve been doing some research for a book I’m writing and it’s pretty amazing to see the growth in the number of businesses with fewer than five employees over the past 10 years. I’ll have to share it with you next time we talk.

  15. The 15 day trial is definitely interesting. It’s really very seldom these days to find service provider giving new customers 15 days trial. 15 days is quiet a long duration thinking you could already have 15 days cash flowing into your business.

  16. Infusion soft is really a very powerful system and we have used it now for last 2years for our company and 20 other clients of us.

    We have expertise in setting up Infusion accounts and sequences to help you start you business marketing needs. Email us anytime and we will help you get started with infusion soft.

    Regards
    Manoj Dhnaotiya
    Team Leader
    Gowebbaby

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