Sramana: You are more than just an email marketing company, and more than a marketing automation company. How do you pitch your product?
Raghu Raghavan: If you know what marketing automation is, then we just tell you that we offer marketing automation for everyone. If you understand the value proposition then the pricing is very simple. We charge by the number of people that you contact in a month. All of our contracts are month to month. In this day and age would you want a customer that is not happy with you to destroy you with a single tweet because they were locked into a one-year contract? We decided to bite the bullet and see what our churn is, which I thought would be around 15%. It turns out that our churn is 5% on an annual basis.
Sramana: Is your business today focused on taking companies off of rudimentary email marketing systems and moving them to the next level?
Raghu Raghavan: We have a lot of wins against Marketo. We tend not to verticalize because we don’t need to. We are metrics driven. For six quarters our sales cycle has been 25.7 days. We are just starting to sell on marketing has our pipeline bursting, so we know the business is out there. Our companies are mainstream companies, not just the elite companies. I have wide range of clients including a medical satisfaction survey company out of Indiana, an industrial equipment auctioneer in the UK, and a hazardous waste disposal company in the Midwest.
Sramana: Is there any particular size band for your companies?
Raghu Raghavan: It is driven by the marketing team. If that team has less than 10 people and they lack an IT guy to support them then they are an ideal customer.
Sramana: Do you focus on enterprise customers?
Raghu Raghavan: We do not, although we do have all of Seimens USA as a customer. We have been talking to a lot of enterprise customers to find out what they want their different departments sharing. They have told us that they want user rights management and they need departments to be separated while maintaining branding and corporate rules. That does not require an enterprise database. We have identified that and we are approaching that market from the bottom up.
Sramana: Your sweet spot is with the smaller companies. How much does your average customer spend with you?
Raghu Raghavan: I would say our average customer spends about a thousand dollars a month. We have customers paying more and that trend is moving north at 10% to 20% a quarter. We have 500 customers now.
Sramana: How do you view Eloqua and Marketo?
Raghu Raghavan: Eloqua is the high end marketing automation system for a centralized marketing department. It requires a lot of customization. They do not play well in SMB. Marketo is stuck in the middle. They came in as a SMB solution and moved up when they saw the weakness in Eloqua’s market position. When we look at Marketo we do not see them as a massive competitor in marketing automation. We see a much bigger market.
Sramana: Most SMB companies do not do this type of marketing.
Raghu Raghavan: We are constantly surprised by the number of dull companies with sophisticated marketing needs. It is not your full blown enterprise database solution.
Sramana: Do you teach the process?
Raghu Raghavan: Yes, we have a very candid limitation process. Everything is inside sales and support. We spend an hour walking them through the processes, but at the end of that we don’t know if they know how to do everything that they need to know how to do, so to address that we simply watch them and their product usage.
If by months 3 or 6 they are not using certain modules that they probably should be using then we will reach out. We have started running open training classes. We run those 3 or 4 times a week via webinars. That is very effective for us.