I spent this morning at the inaugural meeting of the Momentum Summit at MIT. Based on today’s program, my guess is that there will be many more of them. Gail Goodman, CEO of Constant Contact was interviewed and gave some valuable insights about how the company became a 12 year overnight success. For those trivia buffs among you, the company started out as “Roving Software” with a seed angel investment from Paul Margolis. The company now has 375,000 customers paying an average of $37 per month. Gail had done some good work at my former client, Open Market but this was her first CEO gig. Here are some highlights:
· The company’s initial ‘free-trial’ to ‘paid subscription’ conversation rate started at a mere 4%. They experimented with several strategies but found a keen insight – if they called everyone who signed up for a free trial and offered to help the prospect use the product, conversation rates went north of 20%. They key was making it easier for people to use the product – not selling them. I have to admit that I was shocked to get a proactive support call from Constant Contact when I signed up for a free trial… and then I became a customer.
· She resisted the board advice to go “up market” and to add additional products as cross sell opportunities until the model was down tight. It’s surprising to me that they only have 4 products today. One is the recently acquired Nutshell social media product which they give away.
· I would expect the acquisition strategy to continue to accelerate. Gail seemed very cozy during the break with Bettina Hein of Pixability. Pixability does video marketing for small businesses which Constant Contact customers are screaming to get. www.pixability.com
You’ll likely see more detailed coverage of the event from Scott Kirsner’s blog. You can sign up for that here…
The Deloitte Bocce Party is tomorrow night. It’s held at their offices in Waltham and is going to be a blast.
All the best,
Eastward Capital Partners
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Eastward Capital Partners – providing $1 – 7 million venture debt, growth capital and equipment financing to venture-backed, emerging growth companies since 1994