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How Digium Grew Pipeline by 400% in 12 Months

Sometimes soon after Predictable Revenue was published, David Skok, a partner at Matrix Ventures and author of the popular For Entrepreneurs blog (we highly recommend you should follow it) introduced me to the executives at Digium.  Why, you might ask?

David said he’d referred our Predictable Revenue book to his portfolio companies (actually before it was published, as he’d gotten hold of a draft), and that one, Digium, had redesigned their whole sales strategies after reading that draft of our book.

I’d never heard of or talked with Digium, so the fact they could get so much value from reading our book made me want to talk with them!

Digium®, Inc., the Asterisk® Company, created, owns and is the innovative force behind Asterisk, the world’s most popular open source telephony project.  Digium’s mission is to transform the way businesses acquire and operate their communications systems through the application of open source software. (<- Picture: Steve Harvey, VP WW Sales, Digium)

I was able to virtually ‘sit down’ with their executive team and talk about how they do what they do… Some points we covered:

  • Why you need to reframe your terms in simple english that customers understand (escape the Echo Chamber)
  • Why they moved from generalized salespeople doing it all to specialized salespeople (inbound/outbound/closing)
  • What Leslie (VP Marketing) did to better handle their big flow of inbound leads
  • Their challenges with implementing outbound sales (both 1) making the Cold Calling 2.0 referral process work; and 2) converting pre-qualified leads they buy into customers), plus my coaching for them ;-)
  • Their best, fewest key metrics they track in sales & marketing
  • How long it took them to make the switch from “Sales 1.0″ to “Sales 2.0″ (and how it’s an ongoing process)
  • Danny Windham (CEO): “This is not a game of high-level metrics…must drill into incredible attention to detail, to make the machine run”
  • Steve: The importance of ensuring feet-on-the-street managers coach more.
  • David (Sales & Marketing Ops): The importance of planning changes
  • Leslie: Why tracking lead source is so important
  • About their great Switchvox telephony product (sounds awesome)

Listen to or Download the Interview (listening time: 1 Hour 5 minutes)

To listen:

To download: Click here to download the interview…

Transcript

Aaron: David Skok, from the “For Entrepreneurs” blog, loved the Predictable Revenue book and sent it to his portfolio companies.  One company, Digium, read the book and changed their strategies and it made a huge impact on them, a 400% impact.  

Here is the outline of my interview with the Digium team where I learn what they did, what’s working and find out if there is anything that is not working with the Predictable Revenue framework and process.

Joining us from Digium are:

Dani Windham, CEO
Steve Harvey, VP of Sales
Leslie Conway, VP of Marketing
David Dutton, VP of Sales and Operations

One of the fatal mistakes that executives make, and that we talk about in the book, is when executives aren’t in complete alignment and communication about the overall strategy.  So it’s great to have you join us. Thank you all for being on this call.  

Can you tell us about what Digium does?

We build and sell unified communication systems and unified communication software to a wide variety of different company types.  We have a couple go-to-market strategies:

  1. We sell unified communication systems that are a turnkey product priced competitively and targeted for small and medium business customers.  
  2. We also sell a product that is targeted for software engines called, “Asterisk,” which is an open sourced software used to develop all different kinds of telephony and unified communication applications on top of it. We have users all over the world.   It can be a giant voicemail engine or many other unified communications products.

I know one challenge for companies that grow organically is a struggle to build outbound sales messaging.  The common challenge companies come up against is to describe what you do in “simple” English.  So who is your primary customer?  

The primary customer for our turnkey product is small and medium business users who are looking for advanced functionality in their telephony or a unified communication system with users for 400 seats and down.

This is just an example – I’m not a communications expert.  What does the term unified communications mean?  

Unified communication applies to unifying: texting, video conferencing, mobile app integration, Facebook and social media integration, and phone systems with business processes.  Maybe the jargon is getting in the way of the simplicity.

Aaron: Exactly!  By the way, every technology company is enamored with jargon and goes through this learning curve.  I generally know what “unified” means, and when you explain it in relation to a “phone system,” I get it.  But really, it sounds like a phone system with “extra cool stuff.”  As someone who is not a part of your echo-chamber at the office, nor in the telephony industry, just a regular person, it might make more sense to describe what you do like that.  You can expand your market reach and streamline sales when you explain what you do in simple language.

That was a little bit of a sample of how to think about reframing what you’re doing to reach new customers who don’t know you yet.  Let’s continue the interview and talk more about how you’ve grown.  

If you can take me back a little bit, when did you get a hold of the book?

Steve/Digium: I don’t have the exact date, about six to eight months ago.  It came to us through one of our board members who sent it to the CEO, and then he sent it to the Sales and Marketing team.  We became enamored with it. The book seemed like it was written for us.

Thank you.  That was exactly what we were trying to do. What were one or two of the challenges you were facing at that point?  And what did you do about them after reading the book?

Enhance our metrics capability – we had a group of seasoned Managers who knew how to be successful.  But we didn’t have the tools in place to track our progress and measure if we were moving in the right direction.

Specialization of our sales roles – we had a lot of “generalists” in Sales and Marketing.  There weren’t enough defined positions. Your book talks about breaking down the sales and marketing process into an assembly line with extremely focused positions with many handoffs along the way.  The real issue becomes carefully managing the hand offs.  We developed compartmentalized, highly focused, job functions that were measurable.

Digium uses Salesforce.com , correct?

Yes, we have been a SalesForce customer forever, effectively.

What advice would you give other companies that are in the same situation that you were in eight months ago?  What have you done since then with the measurements and metrics?

We’ve completely reorganized the sales force into highly specialized positions with pay structures that are aligned to each of the deliverables of that part of the assembly line.  The team consists of a couple outbound development reps, a couple inbound reps, one person doing customer satisfaction/renewal business, and a group of account managers.  The management team very diligently manages the hand-offs.

From a marketing point of view, we’ve taken a similar approach by separating the incoming leads according to lead source.  Therefore the leads that need to be qualified will be given to the sales team – and the other leads are put into a “nuturing” bucket so they will turn into a lead down the road.  We also try to make sure we are scoring the leads so that we are spending our time in the most efficient way – on the hottest leads first.

Aaron: What are you using to score your leads?

Steve/Digium: We look at where the leads are coming from.  For example, we can have leads from a tradeshow or web form or marketing automation package by reviewing web activity and email viewing.  We have some leads that require immediate action within 2 hrs, others that are less urgent and also sent to sales, and others that are nurture leads.

How do you identify the hottest leads?

It’s clear when someone fills out a web form requesting a quote – we know that requires an immediate action.  We also have a standardized set of metrics we follow all the way down the sales funnel.  And we know that some of the campaigns generate a certain contact rate or certain amount of pipeline, therefore we can tweak the score according to those additional metrics.

Certain leads have a certain response time expectation.  We have built a service level agreement between our sales and marketing teams.  Certain leads are 2 hours, others are 4 hours.  We are constantly tweaking as we receive more data.  We measure our sales force with dashboards in SalesForce that are reviewed all the way up to the Board level.

What are a couple of your most important metrics?

  • How many raw leads
  • How many are defined as “we need to do something with”
  • What is the conversion rate from lead to opportunity via phone calls
  • What is the conversion rate of leads into closed business
  • Number of workable leads for sales to call on
  • Quality of those leads, number of “A leads” vs. “B leads”
  • Time it took to follow up on those leads
  • Best performing marketing campaigns
  • Lead sources to see which are converting the most
  • Which AEs are performing the best

What are the biggest lessons from this past year?

1.  Understanding which lead sources perform the best as well as which campaigns perform the best and being able to have the metrics to analyze all areas of the business to be the most effective.

2.  In switching from Sales 1.0 to Sales 2.0, it helps tremendously to create a flow chart of all the processes, document them, identify all of the people and how they will be compensated. Once you have the flow charts filled out with all of this information, you can get executive buy in and then start implementing the changes.

3.  I wished we had forced our sales managers to coach their teams more.  We have the capability with Switchbox to listen in on demos, etc.  And it is such a simple thing to do provide extra training that will ultimately make a big difference.

4.  Your book provided a blueprint helped us sort, categorize, qualify and ultimately close the incoming interest and build the outbound process.  And what’s been eye-opening is the process is not high-level metrics.  The thing that is surprising is the details are minute that make the system better.  You have to have an understanding of the big picture framework and equally as important to be successful, is to work it at a very detailed level.

What was the length of time it took to change from generalized sales people to specialized sales people?  How long did you think it would take vs. how long did it actually take?  

We’ve been at it for a year.  The first quarter of the year was planning, by third quarter we pulled the trigger, and have been tweaking ever since.  This is not a 6-month project.  This is a lifestyle.  You are never going to be done.  You will constantly have new metrics to review and consequently tweak your process down to the finest detail.

Perks of Switchvox (an add-on system to use with Salesforce.com)

  • Active or passive listening mode on your reps’ calls
  • Can barge into the call if necessary

Perks of Switchboard

  • Can see into the unified communication system, basically pull data based on the phone number
  • Can view Salesforce.com in panels, populate any relevant data about the client/lead
  • Can also build a panel on unknown lead with Google data

Aaron’s note:  One of the best things we did at SalesForce, was to have our managers sit in on calls and provide coaching to new hires.  It provided huge returns in training.  I’m a big believer in role-playing.  I know sometimes it can be a pain to sit on a call and coach, but it is a huge advantage for developing your people. 

How can I help you improve your outbound prospecting process?  What’s not working right now for you?  <

Converting pipeline from paid lead sources and outbound referral emails have not been as successful for us [yet].

Let’s look at the outbound problem first.  We can go step by step.  Who is your ideal customer in rough terms?

We’re trying to find customers who need a new phone system, i.e. a company that is moving into a new building.  Small and medium business customers with 400 employees and lower.

You want to get as specific as you can in defining your ideal customer. Do they use Salesforce.com?  What part of the country?  Are they centralized or decentralized?  

Centralized is a little better than decentralized.  We excel nicely if there is a central site or two and then some remote users as well.

You can have several ideal customers.  General metrics are nice, but you want to get as specific you can.  It’s about who is ideal, instead of who could buy your product.  You’re looking for the highest revenue potential with the highest likelihood of closing.  This is the first place to look to see if you can refine your ideal customer profile (ICP) further.

The second place to look is what kind of database are you using?  Did you buy your list?

We did use Jigsaw.  We targeted by company size and vertical markets that we were successful with in the past.  And we targeted C-level and executive level and IT manager or IT executive.

In general, who is the recommender and who is the buyer?

Depending on how large the company is, the recommender and buyer can be the IT person.  And then sometimes it has to go up to the C-level.

Looking at who you’re targeting, who are you sending the emails to?

President, CEO, VP of IT

Do you remember what the email template said?

Directly to CEO or President, we are looking for the person in your organization that would be responsible for x, y, z.

One of the main tricks of what we do is find a way to describe what you do in a non-jargon way for people who don’t understand your industry.  It’s about having the person who receives the email, not only understand what we do, but be able to forward us on to the right person.

Hearing what you are saying, we haven’t tried going after Head of Sales using the angle of our coaching capabilities of our product.

Yes, this is where you are looking for your foot in the door.  It could be with the phone systems approach or sales productivity approach.  There are a lot of ways you can describe what you do that will resonate with different people.  Be open to anything.  The reason people come to you to buy is different than the way that you go out to them to sell.

One thing that you’ve said that has really resonated is looking at our jargon.  How many people know what a unified communication system is – or even less, a UCS?  Maybe we need to try going back to the basics to see what kind of results we can get that way.

Here’s a tip, the best way to figure out your messaging is to try out some mapping calls.

  1. Call into a company; ask for the Presidents office, you want to talk to their executive assistant (or an office manager or receptionist if the former doesn’t exist)
  2. You say, “Hey did I catch you at a bad time?  I’m looking for some help finding the right person to talk to, I’m a little lost.”
  3. They say, “How can I help you?”
  4. And you go into what you do in a very human non-jargony way.
  5. Say “please” a lot.

If you’re nice about it, authentic as a ‘lost lamb’ and vulnerable, people will want to help you.  If you use that “salesy” voice, people will try to get you off the phone fast.

(Note: here is a blog post with more detail on Mapping Calls)

This will help you figure out your “simple english” messaging quickly.

Another tip: try sending emails to the peers of the target executive: VP of HR, VP of Sales, Director of Sales.  Sometimes it’s easier to go sideways for the referral, than to go straight to the person.

Try out those recommendations and let me know how they go for you.  I think they will provide a lot of learning.

On the paid lead sources, some industries they work great and others, not so great.  They create a lead and pass it on to 3-4 vendors like yourself.  However the lead doesn’t know anything about what you do, what differentiates you.  The lead is most likely going to go with the lowest price or treat you like call and fodder- which is I’m going to line the features up against everyone else and who ever has the most features wins.

The problem can be you have a phone system with really cool features – that doesn’t match what your competitors do.  You need a little bit of time to build trust and rapport in your expertise.  The goal is for you to communicate to them that you are not just a phone system.  You can actually help them improve their business with your knowledge.

What differentiates you from your competitors?

Ease of use and ease of process integration.  For example, we integrate phone technology with credit checking technology to determine if this is a call that would make sense for a salesperson to pursue. So many companies can waste sales energy on leads that are not a good fit.  Our technology helps determine that this customer has credit prior to making the call.

This is a perfect example where you can look to condense your response into a sound bite.  Imagine that you have someone who is in the sales cycle and they are trying to make a decision between you and three other companies.  They probably don’t have a lot of attention span.  You want a sound bite that will register with them.

I was thinking maybe it’s more of a “sales productivity system.”  This sound bite may be something that you haven’t thought of before.

In my opinion, paid leads are basically a waste of time. Unless you can drill down to figure out a way that you win all of the time, like companies with 1-10 employees.  You have to figure out a way to make those leads profitable.

One thing that can make a difference is to make a video speaking in very simple terms communicating who you are and what you value.

I guess it all comes down to messaging: experimentation and fine-tuning.

We’ve had a lot of success with applying the book’s process.  We’ve seen our pipeline grow 400%.  We’ve also seen our visibility grow 250% since implementing the strategies.  Thank you, Aaron, we will take your recommendations and continue to tweak and fine-tune the process.

Thank you for participating today.  For those that are reading this, we aren’t sponsored by Digium.  I just thought they were an interesting company and wanted to interview them.  I wasn’t aware of capabilities of the Switchvox product – and think it’s great.  Anything that helps you coach more, it’s the best kind of training to help new hires ramp up.

For more about Digium, check out: