In mid-2007 I first wrote about Infusionsoft, a new "CRM" company that launched to target small businesses. What piqued my interest was the fact that Pat Sullivan was involved on the board. He is the pioneer behind ACT! and still has the passion for small businesses.

My concluding comments:

I think Sullivan's involvement is a positive sign that there is a real opportunity in the small business CRM market in general, and for Infusion Software in particular. It will be interesting to watch what happens in the months ahead. If VCs pump in some funding, look out!

Well, VCs did pump in some funding. First Mohr Davidow Ventures, which CEO Clate Mask says shared his vision to focus on small businesses and resist the temptation to move up-market. Then more recently in a 2nd round in 2009, vSpring Capital.

So what's happened in the past couple of years? Well, Mask says they've stayed true to their small business focus, with 97% of their 5,000 customers having less than 25 employees. In fact, 80% have less than 10 employees. Mask goes so far to say they won't do deals with companies greater than 100 employees and he's pretty "militant" about enforcing that guideline.

As they've expanded their customer base, Infusionsoft has moved beyond early adopter "direct response marketers" and now target any small business that wants to use the Internet and email marketing. Mask says he still surprised that 50% of small businesses that don't have a web site. I suspect that will rapidly change with Intuit and others offering easy ways to launch a web site.

From a marketing standpoint, they've struggled to find a good positioning that avoids the confusion about what "CRM" means. Yes, they have some SFA capabilities like you'd find in Salesforce.com and many other solutions. But the design point is really around email marketing. So now they've settled on "Email Marketing 2.0" to describe what they do. Although "2.0" is showing its age, in this case it works as a differentiator from email-only point solutions. However, some may confuse it with "Web 2.0" which is really not the thrust of the solution at this stage.

Some changes of note include:

• Business model has shifted to 100% subscription. Previously they asked for an upfront fee plus a subscription fee. I'm pleased to see this, because it helps align the vendor and the customer. No adoption means churn so the vendor is motivated to help the customer succeed.
• Ease-of-use improvements to help small business owners/marketers create good looking HTML emails without knowing what HTML actual means.
• Outlook integration so users can operate Infusionsoft without leaving Outlook. And coming later this year, iPhone and Blackberry integration. Again, smart moves that address critical ease of use for small businesses. Didn't ask about Gmail, but I suspect that's pretty popular with small businesses so hopefully they're thinking about that.
• Easy import from other email marketing vendors. Now this is the most important feature, in my view. Because I believe small businesses suffer from the same "point solution hell" as larger enterprises. It's only after feeling that pain does an integrated solution become more appealing. So Infusionsoft makes it easy for users to switch from popular email marketing solutions like Constant Contact, Aweber, 1ShoppingCart and more. Nice.

What's missing? Well, social media marketing is an obvious hole. Mask says they're looking at adding Twitter and Facebook integration later this year. I think this is hugely important otherwise "social" will become yet another silo to manage.

By all accounts the Infusionsoft all-small-business-all-the-time strategy is working. Mask says they expect to double their customer base to 10K customers/25K users this year and reach cash flow positive. Somewhere, investors are cheering.

Having run a small business myself the past 15 years and used many point solutions, I think the integrated digital marketing solution makes a lot of sense. And, as I've said before, I think it's cool that Infusionsoft has stayed focused on small businesses. That's exceedingly rare given the pressure from most investors to cater to larger enterprises. Bravo!

Further Reading:

• Infusionsoft Unveils Email Marketing 2.0 to Revolutionize Small Business Growth
• Pat Sullivan Is Back To Shake Up Small Business CRM
• Infusiastic About Small Business e-CRM