Sramana: What was in the association product portfolio?
Amith Nagarajan Associations are an interesting animal. They do a lot of different things, but in spite of that even the largest global associations are fairly small by commercial standards. Our largest customers today might have 200 million dollars of revenue which is considered small or medium in the business world.
Associations are also complex. A large business might have one or two lines of business whereas an association that are 10 or 20 million dollars in revenue might have 7 or 8 lines of revenue evenly distributed across. Associations are best known for having members. That means you have dues, membership fees and processes. They are also very well known for events which means you have speakers, conferences and attendees. Associations are very well known for being industry standards bodies. That means there is a lot of collaborative processes which requires unique software.
The software requirements for the association industry are very complex. We liked that because our platform acted like a force multiplier for us. It made this an ideal marketplace for us to compete because the complexities create a high barrier to entry for competitors.
Sramana: How did manage customer acquisition once you made the pivot into the association market?
Amith Nagarajan We did some networking and we gained our next two or three clients through our network. In the Spring of 1998 we decided to push on the gas pedal. We did not have a lot of money so we started cold calling. Associations are fairly open organizations so we could find Membership Managers, IT Directors and CFOs pretty easy. We have a fairly decent rate of success when it came to getting appointments.
At that time people generally had two options. They could have a custom system or they could attempt to modify a standard product. The challenge was that neither of those options were attractive. We were able to offer a packaged solution with a robust functional footprint but that was also flexible enough to meet any needs. Our product came with an upgrade-ability pledge which we still honor today. We allow a customer to modify the guts of the software without breaking the upgrade-ability path. That is one of the reasons that we have been so successful in retaining our customers.
That unique middle ground made us very attractive to enterprise associations. We quickly picked up 10 customers during that first year.
Sramana: What was the pricing model?
Amith Nagarajan At the point we entered the association market our average deal was in the 150,000 to 200,000 dollar range and was split evenly between software and services. What we figured out is that we were dramatically undercharging. We were about a third of the cost of what was out there. In the 1999 time frame we tripled our pricing. At that point we were the premium product but we had established some credibility because we had taken a number of large associations live with our product.