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The 1M/1M Incubation Radar 2011: Happy Grasshopper, Safety Harbor, Florida

Posted on Wednesday, Jun 29th 2011

Staying in touch with past and present customers is important. In today’s business environment, this means that having an effective email marketing campaign is equally important. Enter Happy Grasshopper, today’s Incubation Radar company. Happy Grasshopper is the easiest way to keep in touch with your sphere, according to founder, Dan Stewart. Its team of writers create timely, interesting email messages that actually get read and responded to. The team loads a new message into a customer’s account every three weeks for him to edit and approve before it is sent. Full reporting on deliverability and open rates is also provided in real time. For the first quarter of 2011, the company’s open rate was 198.2% higher than that of Constant Contact for the real estate market segment.

Stewart founded a CRM company in 2007. He sold the customers to his lead developer in 2010 and started focusing his attention on developing Happy Grasshopper. Interestingly, one of the customers of that CRM company, who taught marketing classes to real estate agents and brokers, gave his students advice that guided some early decisions in the development of Happy Grasshopper. The customer advised his students to stop sending “boring email, like marketing reports and newsletters,” and recommended that they send “fun, relationship-building, conversation-starting messages” instead. Stewart recognized that creating message content was a major pain point for the end user and Happy Grasshopper is a solution to that problem.

A serial entrepreneur, Stewart is also a multiple Inc. 500|5000 honoree. He founded Happy Grasshopper as a side venture in October 2010. In March 2011, the company was formally incorporated. When the company was founded, there were five distinct options (keep-in-touch services, canned content services, sponsored tools, CRM marketing tools with integrated drip services, and DIY email marketing tools) available to sales professionals who wanted to stay connected to their contacts. Happy Grasshopper believes it has an advantage over these tools in four areas: ease of use, reach, pricing, and content.

Happy Grasshopper is easy to use. Many tools can effectively be used to keep in touch, but they are often complicated, provide too many options and lead users in the wrong direction.

Reach is Happy Grasshopper’s largest competitive advantage over every competitor in the keep-in-touch marketplace because the messages the company delivers aren’t about real estate, says Stewart. That eliminates the need to group, plan out different campaigns or update statuses. “It is a one-size-fits-all solution.”

Pricing is another advantage because the company prices its services well below many of its competitors. While priced evenly with other email marketing tools, the content and automation that Happy Grasshopper provide come at no extra charge.

Happy Grasshopper takes a different approach to content from its competitors by providing friendly, engaging content that yields higher read and response rates than other systems on the market, as opposed to industry related marketing content.

  • DIY email marketing tools – Provide templates and let the user send mass messages to her database. Providers include Constant Contact, Mail Chimp, iContact, Mad Mimi, Emma, aweber, Exact Target, and Vertical Response.
  • Canned content services – Provide users with industry specific articles that they can redistribute in email or newsletter form. Some providers send them for their customers, some simply provide the content. Providers include ToolsforRealEstate.com, readytogonewsletters.com, enewslettersolutions.com, and reamark.com
  • Sponsored tools – Providers such as Lowes, NAR, and CAR offer systems that will send real estate related messages to the user’s database. These messages contain the branding of the realtor who is sending them as well as branding of the sponsoring organization.  These tools are often free, but provide few to no customization options to the user.
  • CRM tools with integrated drip services – Providers include: ixactcontact.com, netrealintouch.net, sharperagent.com, topproducer.com
  • Keep-in-touch services – A wide variety of products are available that provide keep-in-touch services.  The tools include Send Out Cards, stayintouchsystem.com, and kitmarketing.com

The clear contrast that Happy Grasshopper offers is rather than requiring their customers to become expert email marketers, the company’s team of writers do all the work for them for as little as $9 a month. The team writes, schedules and sends every message. All customers have to do is approve them and make any desired additions or changes before they are sent. Companies like Constant Contact and iContact, for instance, teach subscribers how to create and manage email marketing campaigns. As a result, each provider presents its customers with a staggering amount of choices. Since many real estate agents and Realtors don’t feel comfortable drafting their own messages and sending content on a regular basis, they don’t always get real value from DIY email marketing systems.

DIY email marketing system users can choose from hundreds of existing templates or they can create their own. They can view multiple examples of many different types of messaging and they can educate themselves with extensive libraries of how-to videos. Additionally, the platforms require users to determine not only what they send, but when and how frequently to send. It’s not surprising that many customers are overwhelmed by all the choices.

“What we’ve learned is that many small-business people don’t have a clear idea of what they want from their email marketing,” said Stewart. “Instead, they have a general idea that email can be an inexpensive way to market their businesses, but don’t really know what results to expect.  They often start enthusiastically and work very hard on their first few sends, before falling into what Gartner calls the ‘valley of disillusionment’ – due to low open rates and high unsubscribes.”

Happy Grasshopper is currently 100% focused on the real estate vertical. Other top segments include insurance and financial sales.

The U.S. Bureau of Labor Statistics reports that in 2008, there were 517, 800 people in the U.S. working as real estate brokers and sales agents. Multiply that by a rate of $228 per user per year for a total available market of more than $118 million.

When adding two additional top target segments, insurance and financial sales, the market expands to almost $290 million. The total number of people employed in sales roles within the U.S. is 14,500,000, representing a total available market of $3.3 billion.

Happy Grasshopper has been generating revenue since its second month of operation, and revenues are, roughly, doubling every month. “[That] is really easy to do when you start at zero,” said Stewart.

MRC for June should be almost $4,000. Initially, the company launched with a totally free account option that was limited to 50 contacts.  That option was replaced with a $9-a-month-for-100-contacts plan in mid-May, and revenue growth has accelerated.

Happy Grasshopper is an entirely bootstrapped company. Stewart, along with long-time colleague and cofounder of Geo-Logical, Inc., Chad Dudeck, funded Happy Grasshopper with profits from Geo-Logical, which has about $10 million in revenue.

Endorsements like those from Beaverton, Oregon, real estate agent Todd Clark, as well as being featured in Realtor magazine’s “Cool Tools” section helped Happy Grasshopper to acquire hundreds of new customers. The company continues to attract new customers through press coverage, blogging efforts, channel partnerships and its affiliate program. The company’s website receives 50,000 page views per month. It has 1,500 users and 197 paying customers. Customers get three plan options: $9 a month for 100 contacts, $19 a month for 500, and $29 a month for up to 2,000 contacts. The $19 a month Basic plan is the most popular, says Stewart.

To achieve growth goals, the founders will need to raise more capital than Stewart and Dudeck can provide on their own. One growth strategy that is set to begin in late July 2011 is a referral plan that the founders modeled after Dropbox’s successful plan. Each time a user refers Happy Grasshopper to a new customer, that customer will receive one free month of service.

The founders have no clearcut exit strategy in mind at this time. The team remains committed to working together and adding value to Happy Grasshopper.

Recommended Reading:
Deal Radar 2009:  Silverpop

This segment is a part in the series : The 1M/1M Incubation Radar 2011

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