The number that explains Constant Contact's success | Hacker News Reader

The number that explains Constant Contact's success

chrisyeh.blogspot.com

55 pointschrisyeh15 comments

This is even more impressive when one considers the typical lifespan of a small business; 44% don't make it to 48 months[1]. I wonder if Constant Contact manages to attract more successful businesses, or if businesses that seek out and engage in such marketing opportunities are just more successful.

[1] - www.nbcnews.com/id/16872553/

If they are finding their customers at chamber of conference gatherings (or at least targeting chamber of commerce members), perhaps one could see if businesses that see the value in belonging to a chamber of commerce (and the marketing and networking benefits of such) have a higher success rate? And/or perhaps businesses that join chambers tend to have been successful long enough to get over the early failures and are profitable enough to afford the chamber fees. To me, targeting chamber businesses seems like a great way to find an ideal target customer base assuming the thoughts I poised above.

This is eye-opening:

"Goodman credits the company's success to--get this--in person seminars through Chambers of Commerce across the country."

The problem is most startups targeting SMBs have neither of the following - the numbers just aren't there and they have no idea how to get there:

"If you're a SaaS startup targeting the SMB market, you'd better either have an awesome freemium offering, or you'd better have a average customer lifetime of around 45 months."

It's not really eye opening. People here tend to believe that startups should only be marketed online. When reality is just the opposite. With so much online marketing going on these days it's easier to go offline and get customers that way. In the age of online mrketing those who master the offine variant will be king.

2004 - "There's no software priced between $1000 and $75,000. I'll tell you why. The minute you charge more than $1000 you need to get serious corporate signoffs." http://www.joelonsoftware.com/articles/CamelsandRubberDuckie...

It amazing how the payment/delivery medium sets prices in software. There are a lot of SASS products where a substantial number of customers pay that much. Apple's App store opening the $1 end of the spectrum is another great example.

Definitely. SaaS can be ridiculously profitable if you provide enough value that customers stay with you for a long time. I wouldn't have paid "$100 for life" when I signed up to Basecamp, but I picked the (old) $12/mo plan. Considering I've been happily using it for 6 years, I've spent close to a thousand dollars already. Pretty crazy.

Maybe I'm crazy, but when I see people offering a service for a fixed lifetime subscription, I buy the hell out of it. Like guaranteees on car batteries and mufflers, it's usually a bad deal for the person providing it, with the proviso that you remember to use it.

Consider this -- if they're offering it and they've been in business more than 15 minutes, it must be to their advantage and not yours. It's like electronic extended warranties and service plans -- retailers offer them because they're money machines.

This is true, but for most startups the 'advantage' is that cash now is much more valuable than cash later (since it can be plowed back into growth).

It's not that it's more profitable for us to strike sweetheart lifetime deals (it's actually less profitable overall), but by having the money up-front we can grow more quickly.

My $0.02

Not necessarily. Sometimes they just need the cash now. Think about the famous American Airlines lifetime tickets: http://articles.latimes.com/2012/may/05/business/la-fi-0506-...

S/minutes/months/. Early on the prices might be at-current-cost or even a slight loss (to gain traction) and then creep later on.

I'm surprised they are still in business. I had to add them to my email server blocklists due to the sheer volume of spam. It was typically being added to mailing lists that had nothing to do with me.

They are actually pretty good at making sure businesses don't get blocked. I have my own opinions on the company, but they are widely respected by companies in their space. As far as a "general purpose" email marketing company, they are probably the best at what they do. I would definitely work with industry-specific marketing companies over constant contact if that option is available, but I wouldn't fault a business for choosing CC instead.

My conclusion from the numbers provided by the OP are that CC is still in business because they actually know the cost to acquire a customer and that customer's life-time value. It also helps that the life-time value is higher than the acquisition cost (by quite a bit).

I have recently started seeing a decent number of Constant Contact TV commercials which I thought was interesting.

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