Why do you need integrations to sell your software?

I’m the head of the platform at FreshBooks. Let me tell you, we spend a lot of time and energy attracting integration partners and then promoting their software to our customers. Some people have asked, “Why would any rational software company work so hard to sell other people’s software?”

Here we go again. That question reminds me of the Open API debate. Not that long ago, many software vendors did not have an Open API because they did not want to give away “their” data. I know that sounds ludicrous now we live in the future with flying cars here in 2010, but it was still such a revolutionary idea that FreshBooks and its partners launched The Small Business Web at SXSW Interactive 2009 to promote Open APIs for small business software.

Now Open APIs are the norm if you want to sell small business software on the Internet. However, not many companies understand why it’s in their best interests to strenuously promote their integration partners. Let me explain why we do this at FreshBooks.

It just comes down to simple economics. Early on we realized that a prospect who was using a single other web application for their small business was ten times cheaper to acquire. First, they were already sold on software-as-a-service the concept. Second, they were hungry to keep growing their business in the cloud. Think about it: no one wants to copy data from the cloud to their desktop and back by hand.

Simply put, people want end-to-end solutions. Our customers really, really want integrations. You might expect that such a strong desire translates to the bottom line. And you’d be right.

I hope you’re sitting down. We find that if our customers use any single integration, they are three times as likely to convert to paid.

That’s the straight up reason why we’re investing heavily in integrations. In fact, we’re hiring a development community manager if you want to come help us knock integrations out of the park.

Now, if you’re now thinking how you can get more sales out of your web app’s API, great! I have three things you can do right now.

In fact, the last point is so pressing, I’ll state it again! Please vote for our panel, “Friends with Business Benefits: How Integrations Sell Apps” at SXSW 2011. The panel deadline is Friday. (If you come to our panel, I’ll buy you a beer!)

The Small Business Web represents some of the most active companies pushing integrations right now. It’s a good place to ask questions, meet potential partners, and join co-marketing opportunities. Get going! Sales are waiting.

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  • http://blog.xero.com/2010/08/best-of-breed-v-all-in-one/ Rod Drury

    Great post Sunir,

    We completely agree. Also we see having best of breed applications working together creates even more value for customers and avoid that huge price leap as they graduate from small business level apps to low end ERP.

    Exciting times,


  • http://www.martinkelley.com Martin Kelley

    That’s a great stat. Have you looked to see if there’s a similar correlation with account retention?

  • http://www.freshbooks.com/our-team.php#sunir Sunir Shah

    Hey Martin,

    Good question. I don’t have a clean figure on churn yet, but early results suggest integrations has a positive impact. As time moves on a greater and greater percentage of our active accounts per cohort have used an integration at least once, so the data suggests that integrations are correlated with adoption and stickiness.

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  • http://webbroi.com Casey

    Love it. Integration and teamwork is a must. From the many products I use (Google everything, HootSuite, Mavenlink, Facebook, FreshBooks, etc.), it is a must to work cohesively with other products.

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  • Elan

    About nine months later, do you have any stats on how close rates / customer acquisition costs / churn rates change when a prospect already uses a software you are integrated with?

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