Sramana Mitra: How do you price?
Chris Farrell: We price based on activity. For an active user or somebody who uses our expense report system actively in a given month, we charge $9 per month.
Sramana Mitra: How big are your deal sizes given the segment that you’re going after is the top end of the QuickBooks customer base? What is an average monthly deal size?
Chris Farrell: Average monthly deal size is around $300 to $400 per company.
Sramana Mitra: In terms of selling into the influencer base, is this more of a telesales kind of a relationship?
Chris Farrell: There’re actually a couple of parts to that. We really started with QuickBooks and that was back in the early days of the company. Over the last year or so, we found our way into much larger organizations with a much broader range of ERP systems that we support. That’s been good in terms of raising our average revenue per client.
In terms of the sales strategy, we are working almost entirely on an in-bound basis. We aren’t doing any cold-calling. We don’t do any kind of mass marketing, if you will. We are promoting ourselves through two primary channels. One is the accounting channel initiatives that we have. That is led by our Vice President of Business Development. We also have the web channel, which is handled by our Vice President of Marketing.
Sramana Mitra: Break that down for me. Business development relationships would be accounting channels. Does that mean that you are marketing to these QuickBooks pro advisors?
Chris Farrell: The QuickBooks pro advisors were established there and that has essentially been running. What we’re doing now is the next step of our go-to-market strategy, which is to appeal to the CPAs who we believe are the next level influencers. We are targeting specific CPA organizations across the United States through business development initiatives. We believe that that approach has a reach of one to many and is highly leverageable. Going back to the capital-efficient and bootstrapped model, we’re always looking for leverage points to get to the next wave of growth.
Sramana Mitra: What does that involve? In-person discussions or you can do the deals by phone?
Chris Farrell: The initial contact is typically conducted in person across a variety of means. We travel directly to the accounting firms and meet them in person. Oftentimes, we meet them at industry events. Once we have the CPA firm on board, what will happen next is they will begin trials with their customer base and if things go well, they continue to recommend us. Those deals are closed on the phone.
Sramana Mitra: In terms of the marketing side of it, the web-based customer acquisition strategy, is that Google AdWords?
Chris Farrell: We don’t pay for any AdWords this time. We believe that our strategy is related to our SEO performance. Philosophically, there are many different ways for a company to go to market. When we looked at the market and at Concur and other participants in the space, what we noticed was that there wasn’t much education. There were a lot of people promoting or selling their solutions on a self-promotional basis, but there was very little educational content out there.
One of the areas where we wanted to differentiate ourselves was to really be a resource for the accounting community. For example, if somebody had a question about IRS guidelines, we wanted to be the go-to-source for that. Accountants want to be educated rather than being sold to. We really carved our marketing budget around adding value instead of self-promotion. Instead of diverting money to Google AdWords, we put it into content and we focus on the long game, which was to use a growing content library to improve our Google natural search results.