This interview was conducted on October 2012
Sreenivasan Ramakrishnan (Ramki as he is called), co-founder and former CEO of Marketics, an analytics company that was bought over by WNS Holdings in 2008, says his greatest achievement till date is that Tom Peters, the management guru, follows him on Twitter! There’s a reason why this seemingly insignificant detail is important to Ramki. He draws inspiration from the books he had read while attending college in Chennai. One such book titled The Pursuit of Wow! is written by Peters. “While in college, I hardly attended classes. But I did read a lot of books by practitioners rather than by academicians (the HBS variety!). Small is Beautiful by British economist E.F. Schumacher, NUTS! – a book on Southwest Airlines, Ricardo Semler’s Maverick and of course, Peters’ books were all inspirations. These books taught me that one could become a non-boring business leader igniting right brain qualities rather than left,” says Ramki.
Today, Ramki is well known as the entrepreneur whose team built and then exited Marketics. With no external funding, the company scaled up to revenues of US$10million with 300 employees before selling out to WNS Holdings. According to him, the company did really well on two fronts – delighting customers with process-oriented delivery and continuous growth thanks to its sales process. Ramki is also a firm believer in the thinking that the leadership team at a company should be hands-on when it comes to sales. Prior to founding Marketics, Ramki ran a company called Intercept, with the same set of co-founders, a venture that failed to take off during the dot-com recession inspite of fat VC funding.
In this edition’s Startup School, we gather lessons, specifically on sales, from Ramki’s experience of building Marketics and failing at Intercept.
Marketics primarily sold its services to Fortune 100 clients. How did you identify that this was your target market? Can you take me through the art of picking and choosing the right clients?
Before I answer your question, let me put down a few points that are critical to getting your sales strategy right. One, I have seen that entrepreneurs spend an enormous amount of time chasing the wrong set of clients. Two, the leadership team in your startup has to sell and sell like mad. If the CEO cannot get himself on an airplane (or a bus) to sell, let me tell you, your company is doomed. Three, as an entrepreneur, one should know who would consume your services in a steady state (i.e. on a continuous basis). It is extremely important to know and internalize whom not to sell or do work for.
At Marketics, we sold marketing analytics services to our clients. In other words, we analysed data and based on this data, made recommendations on the marketing front that helped measurably enhance client revenues. For this, we devised what we called the Analytics Maturity Model (AMM) to identify the right clients to work with.
While pitching to a client, we figured out if this company was ready to consume analytics services. For one, a prospective client should be a company that had a lot of data. I worked at P&G and I knew the company believed in analysing data. P&G was one of our first few clients. Gauging the AMM of a company wasn’t easy. It comes from spending time with people in your client organisation, asking the right questions and then making a judgment call. You’ve to brutally decide who you’ll not work with. It is very easy to get busy with projects with wrong clients but that is only illusion of progress.
“For your business, answer the question: who will consume my product or service on a continuous basis?”
Please take me through the process of closing a complex sale.
What is a complex sale? It is selling many things to many people in the same organization. I found the Miller Heiman sales methodology of ‘Conceptual Selling’ extremely useful and I used to practice it diligently.
While salespeople have typically been trained to focus on the selling process, from the customer’s perspective there is also a buying process that must be identified and understood. This buying process, in turn, has two components – one is admin and the other is conceptual i.e. how does the services we are selling add significant value to the organization? And how can you measure it?
At Marketics, we sold to a diverse set of clients across industries and the problems we were trying to solve for them were varied. In the early days, we closed deals with a few clients including P&G and Coca-Cola. After these initial incidental sales, we created a pipeline of prospective clients (shortlisted by AMM) gathered through referrals and contacts from trade shows we attended. We hired a sales person in the U.S. to help us wade through the culture of selling in the US market. This is quite important; there is genuine cultural sensitivity that cannot be trivialized in winning US customers.
After the initial meetings attended by our sales person (which helps pre-qualify strategic clients), we usually discuss how to solve a particular problem the client is facing. Now, for this meeting, I had to be present and maybe even a domain expert who understands the industry.
Let me explain with an example. One of our clients, a large retailer of office products, was trying to figure out which Dell laptop models to stock in which stores. To give you some perspective, there were 27 models of Dell laptops and some 3,000 branded stores; which store will have which models can be answered by analysis of data. In this meeting, we came up with a process to solve this problem. If sales folks alone had attended this meeting, it would have been a tragedy.
“After the first few deals are done, iron out a process to acquire new clients and close deals. Make sure you break down a complex task into a series of simple tasks. Understand the sales process, also understand the buying process.”
How do you sell a new concept to a customer?
When you are trying to solve a marketing problem, it always has two sides – the creative side (right brain) and the rational side (left brain). We explained to our clients that we’re not interfering with the right brain kind of work they do. Let us stick to the retail example. The marketing team is busy with pricing strategies, brand building and negotiating with suppliers. We convey to them that we’ll analyse the data for them. We tell them: you’ve ‘N’ number of stores in college towns; we’ll statistically help you with your product mix in these stores.
It requires people who’re trained in statistics and who are comfortable working with huge amounts to data. We’ll do the heavy lifting for the marketers. In the past, such questions were answered tactically at the store level. For example, the retailer will say, if the store is located in a college town, stock only the lower cost laptops. But statistically analysed, the answer could be something like, have a large number of lower cost laptops but one or two expensive ones with specific features, and so on. We come in to give a data-based perspective of things, arrived through massive data crunching, and marketers love it.
Once you start working on the project, ensure that you deliver delight to your customers as early as possible. This is extremely important. Bring to the table the value you are offering to them very clearly and early enough.
There’s one other very important aspect I’d like to point out. Leadership’s role is not over once the sale closes and the billing starts. There are several moments of doubt especially in the early days and the CEO needs to be constantly engaged with the client and take the flak. Passing the flak down the organization doesn’t help – it just brings down positive energy. Most problems that creep-up in business relationships aren’t rational – and leaders have to handle this at an emotional level. We experienced this with almost all our clients.
“Break down your value proposition to prospective clients. Once you’re in, delight them.”
The biggest sales meeting of all was probably the one you attended when you sold the company itself to WNS Holdings. What were you thinking on the negotiation table?
At the time we exited, Marketics was doing very well. Our profit-after-tax was close to 50 per cent, we were serving some of the world’s best clients and we had some of the best minds in the country delighting them.
From our perspective, we wanted to be dead sure on three counts: Will the deal benefit our employees? Will deal benefit our business and help achieve our goals? Will the deal benefit our clients? Basically, how can we take the business and our employees to the next level? By selling to WNS, we’ll get access to a large list of clients and a well-established sales force. Marketics would help WNS’ clients move up the value chain and thereby build loyalty and higher-per-hour billing rates. It was a win-win deal and it made sense.
On the negotiation table, we, of course, discussed valuation but the focus was more on what kind of future business we could win jointly as well as more challenging roles for our people. Additionally, a lot of our employees made non-trivial money during the exit.
“Our mission was always to delight our customers, have fun and get rich in the process. Even while selling the business, we focused on making sure our people did well in the transition and our clients are served as well.”
Your previous venture Intercept failed. What lessons did you learn from that experience?
There is a lot of unnecessary hype and romanticism about failure. Frankly, failure is hard, brutal and stressful.
Broadly, in places like Silicon Valley, failure is accepted and easily reconciled with. If a business is not working, people figure it out and say, ‘Okay, my business is not working. Let us look at something else.’ Generally, in India, we don’t give up and keep trying hard to succeed and hence, spend too much time in survival mode. That happened to us at Intercept. For over six months, we kept saying, we’ll make it work but we were just trying to survive. We ran hard to stay in the same place.
As Intercept was failing, we decided to look at the analytics space and the same set of people founded Marketics. We decided to focus on US clients and closed our first few clients. We were constantly on growth mode. I think an entrepreneur should take a strong call and say, if we’re on survival mode for over six months (for a services business, this time frame could be different than for a products business), then this business is not working. Of course, all this is just in hindsight.
“As a services company, if you’re on survival mode for over six months, you need to take a strong call and move on to something else.”
In reality, how do you get your employees to follow you on your mission of delighting customers?
It is actually a very simple model we followed. We said, we’d treat all our employees as mature, responsible adults (MRAs). We didn’t put it down in writing anywhere but all our employees knew it. The only non-negotiable point at Marketics was client delight. Delight is not to be confused with client satisfaction. That’s a metric and you can only get 10/10. Delight is an emotion felt, and invariably expressed, by the client.
Everyone is a client – your actual client, your immediate manager, your team member and someone who is waiting for inputs from you. For the CEO and HR, all employees are clients. I used to constantly think of delighting them.
Beyond client delight, everything was negotiable. We found it irrelevant to have rules and policies. There was no vacation policy – you could take as much leave as you wanted. We had one 3-day weekend every month so employees find quality time to pursue other interests. Our HR policy was to have no policy. We had one more rule – never to let people go. If you’re not able to hire the right person and train them well to do the job, it is your fault, not the employee’s.
Personally, I used to sit with everyone else, do my work of bringing in revenue and ensuring growth. That’s about it. I could sit in office and process wildlife images (Ramki is a wildlife photographer) or listen to Pink Floyd. As long as I did my job, nothing else matters. It was the same for all our people.
“Treat your employees as mature, responsible adults. That will unleash talent, trust and leadership. As long as they delight their clients with the work they do, nothing else matters.”
Since exiting Marketics, Ramki has been advising entrepreneurs and runs a wildlife conservation NGO, Conservation India