Until the late 2010s, a midmarket business—one with at least $3 million in revenue and 10 to 250 employees—wasn’t the sort of customer that Intuit, which owns QuickBooks, went after, according to Sandeep Aujla, who became its CFO in 2023. But in 2017, Aujla, then the SVP of Intuit’s small business unit, began monthly deep dives into user data and uncovered a group of customers who had been quitting QuickBooks.
“We had exceptionally strong retention rates across the business,” Aujla told CFO Brew, “but we were seeing some customers who were…achieving great breakthrough success who were choosing to leave us and make a massive leap” to large enterprise resource planning platforms like NetSuite or Sage. “They were basically paying anywhere from 7x to 10x more,” he said, to make the move to the new platforms.
The group that Aujla had assembled for the deep dives started looking into why. At these 90-minute meetings with financial planning and analysis, data scientists, and the product team—“I used to call them, with great affection, my geek-out sessions,” Aujla said—“what we were realizing is there were just a few core functionalities that they were leaving for.”
Intuit then made a strategic decision to move into the middle market.
Michael Lopez, a change management consultant and former managing director at KPMG and EY, likened the move to large tech companies that expand on their core offerings. The largest platform companies, he said—Amazon, Google, Facebook, and Apple—succeed because “they’re able to rapidly apply [their core capabilities] to something new without having to reinvent everything. They can leverage something that they’re already good at and shift it a little bit to do something else that they also would be good at.”
Here’s how Intuit expanded its midmarket customer base, according to Aujla.
Growing pains. At the time, QuickBooks was set up for business owners managing a single entity. If they expanded to a new location, they’d have to manage their new books with a separate account. That made tasks like allocating costs, in Aujla’s words, “a pain in the rear.” A growing restaurateur would have to log in and out of multiple QuickBooks accounts to divide the costs of tomatoes among her locations.
Another growing pain was that as a business brought on more employees, there was no way for the owner to limit what data a QuickBooks user could see by their role. “They [could] look at everything,” he said, including pay.
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Seeking such features, Aujla said, once-solid QuickBooks customers paying $75 per month were departing for upmarket ERPs that cost upward of $20,000 annually. Even if a former customer had five licenses, they’d have been paying Intuit under $5,000 per year, or less than a quarter of the ERP they left for, according to Aujla.
“We saw this massive opportunity on where we were, where the market was, and this untapped [segment] for us to go after,” Aujla said. Their pitch to the general manager and the chief product officer: These businesses aren’t so large, with such complex needs, that they’re ready for a big platform, and “they’re willing to pay a decent bit more to upgrade” to QuickBooks Online Advanced.
Shift work. Getting senior executives on board wasn’t the hard part. For the midmarket transition, “the economics were very easy to highlight,” Aujla said. The real work was getting staff and customers to think of QuickBooks and Intuit in a slightly different way.
Customers had come to know QuickBooks as a product for small businesses and the self-employed, and Intuit staff knew how to sell software to those small businesses. Aujla said customers and staff underwent another shift with the September launch of Intuit Enterprise Suite, which combines QuickBooks and Mailchimp.
“It’s not hard” to train staff on how to sell a platform when they’ve gotten used to selling discrete products, Aujla said. “It just takes time to drive that evolution.” Intuit is making the same effort with customers, Aujla said. The company’s newly hired chief marketing officer has also been tasked with getting the message out there: It’s not just accounting software; it’s a platform company now.
There are early signs the midmarket transition is not so mid. In the quarter ending in October, revenue from Intuit’s midmarket products—QuickBooks Online Advanced and the just-launched Intuit Enterprise Suite—grew 42%, more than twice the rate of the broader online revenues, Aujla said.
“We have proven to ourselves that we have [a] product that is resonating with customers,” he said, “and [they’re] paying us a meaningful upcharge.” Next? Keep doing that, and more of it. “It now all comes down to execution at scale,” Aujla said.