Earlier today I was talking with an entrepreneur about how the marketing automation market today parallels the email marketing market of seven years ago. We were talking about some of the largest email marketing vendors and what decisions they made along the way to achieve their prominence. One of the vendors, ExactTarget, has an amazing success story, especially considering the relatively small amount of money raised in their first six years.
Here are some pieces of the theory as to how they were able to achieve such success:
- They had great market timing to be early but not too early
- Originally, the product started around $100/month, making it affordable for most businesses
- They employed relatively junior field sales reps in all the major markets who were able to sign up local companies as well as give it away to non-profits (like local technology associations) who would then have the ExactTarget logo at the bottom of every email blast
- The original low entry price forced ExactTarget to get good at customer acquisition, on-boarding, and product ease-of-use otherwise the business wouldn’t scale
- As employees of ExactTarget customers changed jobs they would help get ExactTarget implemented at their next employer creating a nice momentum effect
- Email marketing, charging based on number of emails sent or database size, provides significant head room to grow the size of an account (e.g. as a company like Groupon, which uses ExactTarget, started out paying a few thousand dollars a year in 2008 now pays millions of dollars annually)
- The product, marketing, and sales team became much more sophisticated allowing the company to move up market, and I’d guess that their average revenue per customer today is many times greater than what it was five years ago (moving up market is generally easier than moving down market)
Now, this is all theory, but ExactTarget has been an amazing success story regardless. Great timing, execution, and little luck goes a long ways.
What else? What do you think of this theory on the ExactTarget success story?