Intuit Getting Rid of Demandforce After $420+ Million Buy 3 Years Ago

I had been hearing rumors for some time that Demandforce was going to be sold. Small business financial software provider Intuit purchased the company for roughly $424 million in 2012. Now it’s being sold along with a couple of other Intuit products (thanks @localseoguide @rajnijjer).

Demandforce started as a CRM-lite tool for dentists that promised to pay for itself by preventing missed appointments. Over time it expanded to other verticals and to offer a range SMB-focused digital marketing services.

Now Demandforce, Quicken and QuickBase are being spun out by the company according to a new SEC filing. Intuit is retaining QuickBooks, TurboTax and scheduler Full Slate. The company explains that it will sharpen its focus by divesting these three businesses:

Intuit today announced its intent to divest Demandforce, QuickBase and Quicken to focus on and invest in businesses that strengthen the ecosystem and align with two strategic goals: to be the operating system behind small business success, and to do the nations’ taxes in the U.S. and Canada. “Divesting Demandforce, QuickBase and Quicken enables both Intuit and these businesses to focus on meeting the needs of their respective customers, while allowing Intuit to accelerate our ability to deliver on our objectives,” said Neil Williams, chief financial officer. “We are confident about finding the right outcome for each business.

Intuit has made several efforts to deliver marketing services to SMBs in the past, on top of or as a complement to its financial and accounting software. However these have largely been unsuccessful.

Last year however the company touted the progress and success of Demandforce, then “the fastest growing division of the company”:

Demandforce, acquired in May 2012, helps small businesses automate their online marketing and communications through a web-based application. The software enables users to connect with customers, create a strong online reputation and build upon local network marketing.

Its solution complements Intuit’s other small business offerings. One of the biggest opportunities with the acquisition was to reach Intuit’s existing customers. Its integration with QuickBooks, launched in November, is now the fastest growing division of the company with a 142 percent quarter-over-quarter increase in leads.

Given these remarks about growth and the fact that QuickBooks is being retained (and is used by millions of SMBs), it’s not entirely clear why Demandforce is being jettisoned. But as the PR suggests the split may allow each entity to focus on a more narrow range of services and markets.

Despite the fact that Intuit is unloading Demandforce that shouldn’t diminish what Demandforce represents in the market. It’s a kind of prototype for a new generation of SMB-oriented digital marketing services that could over time displace “more traditional” digital advertising. As I previously wrote, the company provides a SaaS platform that helps SMBs operate more efficiently and effectively. Its marketing services (e.g., email marketing, social campaigns) were developed on top of that core functionality and evolved over time.

Publishers and platforms that can offer a suite of services to help their customers run their businesses — client scheduling is an example — are going to be better positioned over the long term than those that simply offer “advertising.” Demandforce is an example; Square is another. It provides a core operational function (payment acceptance) and then a range of additional tools and services, including scheduling, lending and email marketing on top of that foundation.

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