One of the most popular sessions at last year’s Tech Adoption Summit event in San Francisco featured Tolithia Kornweibel, head of marketing at Gusto, giving a talk about how the upstart SaaS company has staked out a promising niche in providing small businesses with cloud tools for handling payroll and HR.
San Francisco-based Gusto currently has about 60,000 customers and in terms of market, is still dwarfed by the big three — Paychex, ADP, and Intuit — which together own about 45% of the payroll market. Gusto has made a strategic decision to target businesses with fewer than 100 employees — the classic SMB definition. She says her available market is about 5.5 million U.S. SMBs.
Gusto goes at it with a sense of mission that matches the small businesses they serve, Tolithia said. She cited data showing the majority business owners it serves, “Would still run their businesses if they won the lottery.”
One theme from Tolitha’s talk mirrored one of the founding themes of the Tech Adoption Index — leveling the playing field between enterprise and SMB for what good software makes possible. That’s one of the big promises of the cloud and SaaS and it’s a key focus at Gusto.
“One of the things we really care about is providing opportunities for small businesses to create great places to work,” she said. “And to level the playing field with enterprise companies for whom the industry has created lots of solutions to help empower employees, to engage and reward them. Things that have typically been unavailable, inefficiently delivered or too expensive for small businesses.”
Tolithia also addressed how SMBs want all-in-one solutions for payroll and HR related services, but they do not want to completely outsource these functions. In fact, many very small SMBs have a resource assigned to handle HR, but they need help from experts, which is a key element of what Gusto offers.
“Even though they have a DIY mindset, customer service could not be more important,” she said.
She also addressed the explosion in competition in the cloud HR space, sharing a chart showing little room between the various payroll and HR solutions.
“What differentiates one brand from another? So far, nothing,” Tolithia said.
With everyone fighting on the same plane, it’s important to go to market efficiently and effectively. Gusto has put its emphasis on “generating awareness and engagement among small-business audience that is getting value from us so they eventually choose us.”
As a result, Gusto has pushed aside an influencer approach (even though 1/3 of their business is from accountant referrals) and has not gone too deep into SEO.
Instead, Gusto has built a content marketing strategy that is about “reaching customers where they are and democratizing the value that Gusto has built into the product and giving it away for free.” As a result, Tolithia said about 2/3 of Gusto’s customer acquisition is organic.
You can check out Gusto’s Resources section to get a sense of the content they create for SMBs.
Finally, we talked about these and other themes with Tolithia when we interviewed her for our Above the Cloud podcast back in August. You can listen here.