magazine | July 31, 2015
Risky Business: When Profits are Down, Invest in Sales
When Offer, who specializes in turning around stagnating enterprises, took the helm at Sheffield, England-based Dialogue Group in 2013, he boldly expanded the sales force by 50 percent and trained it to sell to a different customer base. The key message of the new CEO to his struggling company: Don’t concentrate on the many uncertainties—converge around the market opportunity.
“Within the less-than-positive overall sales outlook for Dialogue, there were one or two obvious growth stories,” Offer recalls. “We decided to focus on one of them.”
If there are 5 things we need to focus on to be successful, then don’t talk to me about number six. For Offer, that narrowing of focus was a prerequisite for the decision to invest in sales and, ultimately, for the company’s success. “We could leverage the effect of every dollar spent in sales, rather than spreading it thinly over the mixed bag of products the company had developed over 20 years,” he notes. Founded in 1994, Dialogue was the oldest SMS, or text message, aggregator in the telecommunications industry, but it was not the leader.
“Competitors managed to get far, far bigger, even though they started far, far later in the game,” Offer says. “That tells you Dialogue has probably looked a couple of big opportunities in the face over the past 10 years and chosen not to pursue them.
The reason, says Offer, is that the company was run by “risk-averse techies, who instead of concentrating energies into one or two potential growth products, had the development team chasing after every new twist and turn in technology. So the product offering became diverse and scattered, and the sales effort unfocused.”
The surviving founder of the company wanted to scale the business he had built, but the privately held enterprise was unprofitable. Offer needed to unlock the potential growth area among its many product offerings, and then have his sales team concentrate exclusively on that.
In corporate overhauls, Offer’s motto is to keep the solution simple. To Offer, success often is generated by doing fewer things better and understanding where a company can best add value for the customer. That means looking for the “patch of blue sky” and going for it.
“The industry today is what it is,” Perry says. “Over the next three or four years, you’ve got a cloudy sky—some big black clouds in one corner, maybe some white clouds over here, and in between some little patches of blue sky. If you look into those blue patches, what you’ll find almost always is an entirely unexplored dimension of value within the current industry structure that can be tapped with incremental investment.”
To accomplish Offer’s goal, Dialogue would have to move quickly, boldly and with unswerving focus. “The fault of the human race in general is that we constantly overestimate our ability to execute,” Offer says. “If there are five things we need to focus on to be successful, then don’t talk to me about number six.”
Offer pushed the company to concentrate on just one type of text message—mission-critical, mobile-terminated texting. It’s a market that, Offer says, is projected to grow from $40 billion in 2013 to $80 billion by 2018. Dialogue is one of three providers handling messages like these.
Dialogue also would need to change its customer base. For most of its existence, the company had made money selling its services to other aggregators based on highly fluid spot contracts where everything turned on price. At times, this produced a healthy volume of traffic, but if customers could get the same service for a fraction of a cent cheaper somewhere else, they’d leave.
That meant redirecting Dialogue’s traditional focus on product development to a concentration on sales to mobile operators and beefing up the highly decentralized efforts. One of the first goals was to add four more full-time salespeople, increasing the team to an even dozen, but he also had to make sure his current eight were up to the task.
The new Dialogue sales team would have a whole new script that focused less on what each service did and more on the outcome the mobile operators wanted—to increase revenue.
Dialogue’s new strategy hinged on optimizing the monetization of each and every mobile-terminated message. The company would do it for no upfront fee, opting instead for a cut of the future revenues generated by finding revenue on tens of millions of messages per month that were slipping through the operator with no charge.
“That meant salespeople were going to be having a lot more sophisticated conversations with customers,” Offer says. “Our revenue would be tied to theirs, which is an interesting and attractive sales pitch.”
Relying on this market, Offer sees huge potential to double the size of the company over the next three to five years. He estimates that of more than 800 mobile phone operators in the world, maybe 220 have some solution in place to capture all the revenue they should be capturing but fewer than 100 have actually locked their networks tightly enough to solve the problem consistently.
“It’s a huge problem, but a huge opportunity at the same time,” Offer says. While the company had previously shied away from selling directly to larger enterprises, Offer realized that it was the only avenue that would lead to a sustainable, long-term business model.
“If you can convince large enterprises that you have sufficient reliable connectivity around the world to offer one-stop shopping, it becomes less likely that they will move traffic away,” Offer says, “You become more deeply embedded in their business, so they’re inclined to be more loyal.”
Offer had restructured sales before, but never starting from a clean slate. At this point, given the total overhaul he envisioned, Offer turned to sales and marketing consultants, Sales Benchmark Index (SBI), which he valued for their outside perspective and firsthand business expertise.
“They’ve seen a lot of these kinds of challenges and had to grapple with them in their own working lives,” Offer says. “It’s not just a consulting exercise. They’ve been responsible for cracking these kinds of problems. They’ve had to solve these kinds of problems in reality, not just on a bloody spreadsheet.”
SBI and Offer worked with the sales force to develop a much more sophisticated value proposition to present to mobile operators, with Dialogue offering a service that goes far beyond the simple price and reliability information the team used to use to present to customers.
“From beginning to end, it was going to be a much more complex process, and you needed folks with the intelligence to process the new approach,” he says.
The sales operation had also become highly decentralized because previously there had been so many products to sell. Until recently, there was literally no global head of sales. SBI helped the company move from being an enterprise driven by engineers and tech people to one propelled by market opportunity, finance and sales.
“We’ve stopped distracting ourselves by going to trade shows and trying to innovate on something someone else has done or asking ourselves, ‘Wouldn’t it be interesting to build that?’” Offer says. “The fact that there was zero monetization to be had on the back end of it was neither here nor there.”
Today, both Offer and Dialogue are starting to see the payoff from this new found business discipline. Over the past 18 months, the company has doubled in value, according to the CEO.
“We went from making essentially no money at all to making the best part of $320,000 a month. So the transformation has been significant. While many would call it radical, I would say the more you hedge your bets, the more compromised the results you will be able to achieve.”
Anatomy of a Makeover:
> SOUGHT a more focused growth opportunity that could last for several years.
> REWROTE the sales script and changed the business model to reflect new opportunities.
> EXPANDED Dialogue’s sales force, hiring new employees who were comfortable selling to mobile operators, the new target market.
> REVIEWED current sales staff for its ability to handle a more sophisticated sales methodology.
> TRAINED the existing sales staff to understand the new business model in order to achieve profitability and define the business value to customers.
In fiscal 2014, Offer met his goal to make a profit: Dialogue earned almost $2 million. This year, he’s looking to hit $3.5 million. Ultimately, Offer and the founder are hoping to sell the company in the next 18 months or so, probably to another business process outsourcing company, which is how he now sees Dialogue.
“Dialogue is staring a global opportunity in the face,” Offer concludes. “How on earth can it turn its back on that simply because of being scared of screwing things up along the way or that things may not happen as quickly as everyone would like? Well, you simply can’t.”
In this edition, we present practical advice from CEOs, heads of sales, marketing, finance and HR. We take a look at how to adjust the hiring profile, demand generation programs, forecast and pipeline management process, sales management coaching cadence, sales methodology and the big deal inspection process.