From Pioneer in Internet Sales to a Giant Leap in Mass Adoption, SmartDraw Charts New Strategy in Graphics Software

6/22/10Follow @bvbigelow

Paul Stannard says communicating visually by using charts, graphs, and other information graphics is six times as effective as communicating by text alone. A picture is worth a thousand words, right? Yet even with the widespread availability of sophisticated software like Autodesk’s AutoCad, Adobe Illustrator, and CorelDraw to create diagrams and info-graphics, Stannard maintains that less than 3 percent of business communications include visual aids such as organization charts, flow charts, or project management planning timelines.

Why?

Stannard says it’s just too hard. He contends that even Microsoft Office Visio targets more technically oriented customers—and he says telling an office manager that one graphics software program is easier to use than another is like saying an F-18 is easier to fly than an F-16.

With such complexities in mind, Stannard has charted an ambitious new strategy for exponential growth at the San Diego company, which has instead shown slow-but-steady growth as a niche developer of graphic design software for ordinary people. Stannard has long believed the company had the potential to hit $100 million in annual sales by tapping into “the 95 percent of business software users” who do not use a graphic design or diagramming program of any kind. “If you ask me,” he says, “I’d say that our main competitor is pencil and paper.”

Annotated SmartDraw Screen Shot

Annotated SmartDraw Screen Shot

A key part of his strategy focused on developing an improved version of SmartDraw’s program that was simpler and more engaging for customers to use.To make professional-quality graphics easy to create, SmartDraw VP uses what the company calls a “visual processor” that automatically formats charts and diagrams in the same way that a word processor automatically formats documents. The computer program automates the process of creating 70 different types of business visuals, including flow charts, mind maps, Gantt charts, and floor plans. SmartDraw also developed its software to work with Microsoft Office and Adobe PDF, so users can easily add their graphics to Word documents and PowerPoint presentations, and share them with other users by using PDF attachments.

In launching SmartDraw VP earlier this month, the privately held software developer hopes to significantly expand its revenue beyond the $14.5 million in annual sales the company hit in 2008, before sales receded last year during the recession. Stannard, a chemist-turned-programmer, founded the company in 1994. The following year, he began selling SmartDraw exclusively from a commercial website he created. Today, Stannard says the company has 35 employees, with no investors, no debt, and no outside funding.

“SmartDraw was conceived as an Internet marketing company,” Stannard says. From the beginning, he focused his program on the broad market of infrequent users and do-it-yourselfers, and avoided the market for graphic designers, architects, and other full-time professionals.

“Our growth has been driven by Internet marketing processes,” Stannard says, including a system that tracks online visitors and the actions they take on the SmartDraw website. He tells me that SmartDraw’s website gets about 90,000 visits per day, and about 12,000 visitors download a trial program that demonstrates how the graphics software works. About 200 of those convert to sales, with the SmartDraw program selling for close to $200 a copy.

When I first met Stannard five years ago, the company’s annual sales were roughly half what they are now. But at that time, Stannard told me he thought it was possible to increase the company’s revenue to $100 million by 2010. But the exponential sales growth he envisioned never materialized, and by 2006 Stannard says the company was intensively studying its customers’ purchasing patterns.

Creating a Flow Chart

Creating a Flow Chart

In studying SmartDraw’s online sales, Stannard says 90 percent of the company’s software sales were completely automated and required no human interaction or involvement.

“Our average order size was 1.1 units,” Stannard says. In other words, the company was great at selling one copy of its software to one person—one at a time. Stannard says an internal debate he had in 2006 with Dan Hoffman, SmartDraw’s Vice President of Marketing, “about whether we were really competing with Visio” led SmartDraw to conduct an online market survey that showed only 14 percent of SmartDraw’s trial users “had even heard of Visio.”

The outcome of their research was to develop a new version of SmartDraw, and as Hoffman tells me, “It had to be different than anything else that had been done.”

With the introduction of SmartDraw VP, Stannard says the company also overhauled its sales strategy by expanding its sales team. To encourage companies to place bigger orders for 100 copies or more, the company is inserting a sales person in what was once an automated process to offer free customized training for customers who make bulk purchases.

“Our goal is to get mass adoption with a customer,” Stannard says. “Instead of selling to one user, we want to sell to every desktop.”

Getting mass adoption for SmartDraw VP, Hoffman says, “is what I call, ‘One small click for man—one giant leap for visual processing.”

Bruce V. Bigelow is the editor of Xconomy San Diego. You can e-mail him at bbigelow@xconomy.com or call (619) 669-8788 Follow @bvbigelow

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