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May
17
SMB Accounting Software Packages Do it Right
May 17, 2005 | Anita Campbell
Three companies “own” the SMB market in the U.S. for accounting software packages.
Intuit’s Quicken (and QuickBooks and Quicken Online) products dominate overall, especially at the smaller end (under 20 employees). Best Software’s Peachtree has a foothold at the larger end of small business. And Microsoft dominates the midsize business market (500 - 1000 employees).
That’s according to a research report (link behind firewall) just issued by Yankee Group.
So how did they do it, achieve this position?
For the following discussion I want to focus on Intuit and the secret to its success in the SMB market. Quicken is one of the most recognizable product names to the SMB market. It’s a good case study for how to gain a major foothold in the small business market.
First, Intuit offers an excellent product strategy, from the small business owner’s perspective. Their products are good, yes, although not perfect. However, it’s the way they segment and price their products, distribute them and create an upgrade migration path that makes them so attractive to small businesses.
Intuit’s products scale well at the lower end. A very small business – even a no-employee bussiness – can start out with Intuit and will have product options as the business grows. The low-end products can be installed by the business owner without IT help (since very small businesses do not have dedicated IT staff).
Intuit’s entry-level products are easy to find in all the places where very small businesses shop, such as office supply stores. Then as the business grows, Intuit already has a relationship and can upsell. Intuit also makes it operationally simple and cost-effective to upgrade to new products, but doesn’t force small businesses to upgrade.
But Intuit has one other strategy they’ve executed particularly well. That is: Intuit acknowledges the role of critical service providers to small businesses – accountants – and works with them and not against them.
For a long time now Intuit has made it easy for small businesses to work with their accountants, either on a monthly basis to close the books or at tax time. Intuit has made the software a tool for accountants to more efficiently work with small business clients.
It is easy for a small business to burn a floppy disk or CD once a month to provide the records to the accountant. Better still, the small business can make their records available over the Internet to the accountant.
Intuit recognizes that very small businesses – especially those under 20 employees – typically do not have a CFO. Many of the smallest don’t even have a full-time bookkeeper or accounting clerk. The person handling the financial matters may well be the business owner or the business owner’s spouse.
However, small businesses often use an accountant once a month to close the books. Or at the very least the small business uses an accountant/tax preparer when tax time rolls around. Despite the limited intervention, the accountant’s role is critical to the business. Intuit recognizes that and has made it easier for the small business and the accountant to work together.
That, I’m convinced, is one of the secrets to their success in the SMB market.
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[…] Earler here at this blog I pointed out how Intuit has achieved such broad penetration in the SMB market in part because it has involved the accountants of small businesses. […]