Intuit's new mid-market product, QuickBooks Enterprise Solutions, may or may not have the features users might want. It's probably not a killer application. Anyway, none of this may matter because all QES has to be is good enough.
That’s because Intuit has about 260,000 customers that use QuickBooks that the company says should be using a mid-market product. Similarly, Peachtree has about 151,000 customers that should have moved up to a stronger product and who will be candidates for the Peachtree product code-named Turbo, which the company is not yet ready to discuss publicly.
All these products have to be is good enough for end users who are already happy with QuickBooks or Peachtree products and who will upgrade in campaigns that are going to be a whole lot less expensive than campaigns aimed at finding new customers. In fact, Peachtree’s owner, Best Software, has a strategy built on upgrading Peachtree customers, a strategy that has provided a lot of business during the economic slowdown.
For Intuit, it’s also a matter of sensible strategy. At $2,500 retail for QES (which is sold direct), to convert each one percent of that base brings in $6.5 million in revenue in a saturated market. If Intuit could convert 20 percent, we’re talking around $130 million in revenue. And marketing costs are low because Intuit has names, addresses, telephone numbers, email, and trust of the customers it is pitching. You can do similar math on Peachtree, whose Internet-based survey showed two possible price points. Turbo should come in around the same general level as QES, I suspect.
Both Best and Intuit face a lot of different prospects than Microsoft, which is trying to sell Small Business Manager down market to customers who probably aren’t already using a Microsoft accounting product. Microsoft also has channel members who feel they lose money simply by demonstrating SBM. It’s a much harder way of expanding a market.
Peachtree’s distribution plans for Turbo are not known as yet, but Intuit is selling QES direct, and while a channel may be involved in recommending or implementing the product, Intuit says it does not plan to get VARs involved in selling. (I still think if QES can attract enough non-QuickBooks mid-market customers, they might change that view pretty quickly.)
Of course, if the upgrade strategy works. These companies don’t really need to face off because it’s going to take both Intuit and Peachtree time to conduct the campaign for their respective mid-market user bases. Howevr, with all those bucks on the table, just good enough may be quite good.
