It’s been a long time since most software came in an actual shrink-wrapped box. Intuit’s (INTU) TurboTax is one of the holdouts from that bygone era.
Over the next few weeks countless Americans will march, as they have for years, to their local Best Buy (BBY), Costco (COST), or Target (TGT) to purchase the latest version of TurboTax. They will then go home and began their miserable, annual ritual of doing their own taxes. The software is, for the most part, easy to use and inexpensive and good enough for people with typical returns.
Over the past couple of years, Intuit has made an aggressive shift away from boxed products and bulky downloads toward cloud computing. You can visit the TurboTax website and start a return in a Web browser. This service automatically saves your place as you go along, so you don’t need to do the entire return in one sitting. And it works much the same as its more traditional counterparts.
Intuit’s really clever moments, though, have come through its manipulation of the cloud model to run psychological experiments. For example, you no longer pay upfront for TurboTax. Instead, you just start the return online and pay at the end when you file. This obviously encourages people to try the software and invest their time in the return instead of forcing them to question early whether TurboTax is worth the investment.
What’s more, Intuit has started letting people ask its army of tax pros an unlimited number of free questions as they go through their returns. “With one or two clicks, you can make a call or chat, and, if you allow it, we can share your screen and see the return,” says Dan Maurer, the head of Intuit’s consumer business. And, truth be told, “A lot of people don’t call,” Maurer says. It’s just that the comfort of knowing someone is available for free encourages people to give TurboTax a try.
In the U.S., about 145 million tax returns get filed by people using software for 35 million of those returns, while the majority of people turn to an accountant, who in turn uses software. “There are 20 million customers that still have the most simple returns who are going to tax stores or pros,” says Maurer. And those are the folks that Intuit wants to target next.
Intuit now has a SnapTax app that lets you file a return from a smartphone. It’s aimed at people who do not own a home and who basically have only a W-2 to deal with for income. Using the app, you take a photo of the W-2 and then answer a handful of questions about your marital status and the like. “We have reviews where people say they filed from their bathtubs,” says Scott Cook, Intuit’s founder and chairman of its executive committee.