Essentially, I told him it was time for us to part ways. I explained to him who our target customer is and that his company’s meteoric growth with Infusionsoft had resulted in him outgrowing our solution.

To me, this was a very natural email to write. It happens. Customers outgrow our solution. As I reflected on this email conversation and considered how much pressure we’ve received over the years to serve larger businesses, I realized that it’s very rare for a vendor to say “no” to a customer.

That’s a shame.  In the end, the customer gets hurt, the vendor gets hurt and growth is stunted when the vendor tries to serve a customer who isn’t the right fit. In order to optimize growth, an entrepreneur needs to know exactly who their target customer is and stay true to that customer. In short, need have discipline to say “no” to the wrong kind of customer, even if especially if that customer begs to pay you much more money than your average customer.

We have always maintained, somewhat stubbornly, that our solution is for entrepreneurs who want to grow fast using the power of the internet.  Our solution is for companies with fewer than 25 employees. By the time a customer gets up to 100 employees and/or about $10 million in annual revenue, they will need to graduate from our system to something else. It happens every once in a while. Some folks think we’re crazy for patting the customer on the back and helping them transition to a different system.  We know our business is stronger because of it (and theirs are too).

Additionally, we routinely turn away prospective customers that are too big. We know larger businesses will have needs and demands that, if delivered on, will pull us away from our target customer and weaken the solution we provide. Plus, our passion at Infusionsoft is not in serving the mid-market. We’re all about the little guy who wants to grow his or her business. Our sweet spot is a customer with 2 – 10 employees, generating $200K – $2M in annual revenue and doing email marketing. Sure, we have some customers who are smaller or larger, but about 60% fall within this sweet spot.

What’s your sweet spot?  And are you willing to stubbornly say no to a customer that falls too far outside of that sweet spot?  What are your boundaries?  If you don’t firmly set them, I guarantee you the boundaries will magically stretch to fit whoever wants to pay you some money for your solution.

Don’t let that happen. Stay true to your customer and you’ll grow your business the right way.

[Image credit: Victor Chapa on Flickr]

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As you probably already know, Infusionsoft is completely focused on helping entrepreneurs grow their ventures. I’ve written before about the challenges related to strategically capitalizing a growth-oriented small business. My first post for VentureBeat was 10 Lessons in Bootstrapping a Business, covering some of the most important things our company learned while growing from good clean sweat and hard earned cash. It seemed like a good idea to follow up with the next step that we took. A strategic approach to raising funds from venture capital firms can make all the difference in the world – and thinking about it early is key.

Venture capital isn’t right for every company – and for companies with a vision of staying “small” while growing big, VC may not be the right path at all. But for those companies who want to scale to really big proportions, VC can be a very important step in the process.

Perhaps my next post should be on that very decision – to VC or not to VC?

Read the rest of the story at VentureBeat’s Entrepreneur Corner.

[Image credit: VentureBeat]

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When it comes to acquiring new customers, most business owners go hunting instead of harvesting. And that’s a shame, because when you switch to “harvesting” mode, you’re working smart and scooping up sales left and right. You’re like the fisherman with the irresistible bait, drawing your prospects to you. You can spend your time closing deals on the phone with hot leads or go out on the golf course because you know your prospects will call you when they’re ready to move forward.

I wrote on this topic before, and can’t stress the importance of making the distinction between these two methods — it could be the thing that helps your business get to the next level.

Today, I published an article for Small Business Trends to help get the word out about this important topic. Small Business Trends is a great resource for entrepreneurs and small business owners — we are thrilled to work with their editor in the coming months, Anita Campbell, as she gears up to speak at this year’s InfusionCon!

I encourage you to read and share the article Hunting vs. Harvesting: Which Method Describes Your Customer Acquisition Strategy? If you have thoughts or comments, please share below!

–Clate

[Photo credit: Small Business Trends]

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It’s funny, that’s the feeling most people get when they come to Infusionsoft. People, when they see our offices and meet our employees say, “Hey there’s this Silicon Valley-esque company right here in Phoenix.” I totally appreciate the praise and the recognition of what we are growing… right here in little ol’ Gilbert, Arizona. We know what we have, but we haven’t really projected it out to the rest of the world.

I realized that we should be projecting this stuff when I went to Zappos. I met with Zappos CEO Tony Hseih, and took their company tour. Wow, was I blown away?! Here’s this company putting it out there, sharing their culture with the world and showing exactly how they do things—and that we should be doing the same thing. Zappos’ culture is very similar to what we’ve been creating, the same environment and culture but on a larger scale. Infusionsoft co-founder Scott Martineau also went and was equally blown away. And it inspired us to continue on our culture path, and do even more, and then share it with others.

Why aren’t more companies real like this? Why do so many think that just because you’re in business you can’t have fun and be casual, yet effective? Why do I sit with a new employee on Thursday, who says to me “this company and how it operates is really cool… but is this okay? Are we being serious enough? Is this professional? … or are we just playing and having fun?” I say, “No. We’re having fun with business.”

A snapshot of our developers.

In order to do this, you have to let employees be themselves and let them have fun and relax the protocol a bit. And trust that creative employees are going to go make great things happen without being programmed like monkeys on every little thing. We are totally proud of our culture, and I have always said it’s our number one asset. And I don’t say it to be cheesy. It’s true. There are a whole bunch of things we do to enable it and make that culture happen. But the result of that stuff is a fun and energetic company. And I would love to see many more companies that follow this approach in Arizona.

It’s about entrepreneurship in the organization. Entrepreneurship comes in many forms. It’s not just about starting your own company. We want entrepreneurial people inside Infusionsoft. It’s one thing to say that, it’s another to actually enable people to be entrepreneurial inside a company. There is a lot of stuff you have to let go of to enable it; for instance, making employees punch a time clock, or having super-strict, confining policies. You have to let people apply their ideas and be creative.

It’s why people leave companies, because their ideas and thoughts don’t get appreciated.

Everyone has ideas and creative thought, but most companies squash it. I used to think people who were creative were just artistic. But that’s not the case at all. We get passionate about our ideas, and creating results. And it’s why people start companies—to make something of their ideas and take them out to the market to put results out there. If we can help foster people inside the company to take their ideas and create results, the same thing can happen.

Francine snapped a photo of our gameplan.

Enlightened leaders allow the creativity to happen inside the company and they don’t squash it with rules, and policies. They put people into very small teams to further stimulate creativity, ownership and communication. And when you say you can have entrepreneurs within a company that’s only true if you are willing to let go of structure or efficiency or creativity. You can’t have all that at the same time. You have to be willing to let go of some of the structure and efficiency if you want to see creativity thrive.

There is no reason why we shouldn’t have a whole bunch of Silicon Valley-like companies in Arizona. We have decided we are going to do tours at Infusionsoft and open up the company for people to see what we are doing here. We think there is a creative, energetic, entrepreneurial way to run a company that people are attracted to. And by the way, it’s not just young people that are attracted to this. It’s all kinds of talented people that are attracted to this because they want to put their ideas to work in a business.

Early on in my career, I had the opportunity to put my ideas to work at a small company. At the time, I called it “innovation” because I didn’t consider myself a “creative” person. I thought you had to be a traditional artist to be creative. And when they stopped letting me innovate, that was the point I decided to leave that company. Most managers stamp out creativity and innovation. We try to encourage it. Infusionsoft co-founder Scott Martineau is especially great at making sure this happens.

Obviously you need some guidelines in place. I’m not suggesting you throw structure or any framework away. But inviting and allowing people to do stuff, to act on ideas, and not look to management to always have the answer makes more sense than anything else.  Management’s job is to create the big picture vision, provide guidelines and milestones along the way to that vision… and then do everything possible to enable people to make the vision a reality.

Oh, and one more thing… I always get the question, aren’t you creating competition by creating a entrepreneurial culture? There is a little bit of that. But it’s not nearly the threat that people think it is. The fire and the enthusiasm you get is worth it. People come in and learn and get better, and are ready to do that down the road. We came to grips with fact that we were totally ok teaching our employees about entrepreneurship and exposing ourselves to a little “flight risk.” And we continue to believe that. Because we have seen the benefits of people who are engaged and ignited in what they are doing. And they see how hard it is to run their own business, so they see what it’s all about. And when people do leave, we applaud them. Go create something entrepreneurial! It’s all part of a beautiful ecosystem of entrepreneurship.

Thanks for shining a light on this, Francine, because you are helping others see the importance of culture. We’ve got something at Infusionsoft that’s pretty awesome, and more people should come out and see it. I’d like to think that at some point Infusionsoft, sort of like Zappos, becomes a destination for people in the Valley when they hear about a cool technology company, whether that’s a resident, a visiting company, a customer, people say, “Have you heard of Infusionsoft? This is a place you’ve got to check out.”

–Clate

[Photo credit, The Stealthmode Blog]

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Something happened during my first week that I think is very enlightening for small business owners.

I was looking through the expenses for the prior month. I saw rent, phone, internet connection and some miscellaneous items. All of these monthly office-related expenses amounted to a couple grand. Then I saw the payroll items, including salaries for Scott, Eric, Joseph and some guy named “Mark.”

This was a surprise to me. I knew who Scott, Eric and Joseph were. They were my new partners, all of whom were taking home $2k or $3k per month (welcome to entrepreneurship!), the bare minimum to survive. And yet, this Mark guy was taking home $5K per month — and I had never seen him in the office. I saw the blood, sweat and tears from Scott, Eric and Joseph every day. And I was now a part of this hard-working, under-compensated partnership. As I looked over the expenses, I was feeling like Mark needed to at least show up to the office — where the heck was he?

I went over to the guys and asked who Mark is and why is he making more money than each of us. They said, “Oh, that’s our marketing budget.”

From the very beginning of this business, we have invested in marketing. Not just when cash was flowing. Not just when we needed a shot in the arm. And not just when the market was booming. We set the money aside every month, before paying ourselves or any other expenses, and put the marketing budget to work for us. And that disciplined practice has been the single most important ingredient in the growth of our business over the years.

I can laugh now at some of the dumb ways we invested those marketing dollars. We made a lot of mistakes. But we found a lot of successes. I learned that if you don’t invest in marketing, it’s a slow (nearly impossible) road to success.

Do you have a “Mark” on your payroll?

[Photo adapted from Looking Glass on Flickr]

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