By Kevin Brown
The CEO and cofounder of LeadSmart reflects on the founding story of the SaaS company that is trying to turn a red ocean into a blue sea.
“What, another CRM software? Are you out of your mind?” That is the first thought that ran through my mind when we began discussing developing a CRM-based lead management system for a sales and marketing consulting client we were working with. This conversation started when two of my good friends and business associates (one of whom has been a partner with Salesforce for many years) began outlining the idea of building a specialized CRM solution on the Lightning Development platform — one that could manage, automate, and track relationships with internal sales teams and third-party channel partners like reps, agents, brokers, VARs, dealers, and distributors.
That sounded good as a custom client project. But when the discussion turned to commercializing this into a SaaS product and business, I said, “No way! There is no bigger red ocean than the CRM space. This is crazy!”
However, as we continued exploring the market in more detail, we realized that no one had created a solution incorporating CRM capabilities, marketing automation capabilities, and channel management/collaboration into a single solution that was designed specifically for companies that make a large percentage of their sales through third-party partners. So, maybe there was a bit of a blue ocean after all.
Long story short, we decided to begin developing the software while getting constant feedback from our consulting clients on exactly what features and functionality would provide the biggest impact to their business. After almost 12 months of development, we had a “version 1.0” product that we were ready to commercialize as a SaaS offering.
So, the next question was, “OK, how do we navigate through this crowded market, get attention, and start getting sales and customers? And how do we do all of this without raising capital from external investors?”
We had to differentiate ourselves and find a market segment where our solution would not be another “me too” CRM. As we began to architect out the problem, we realized we had to offer more than just CRM and the tool we envisioned to manage partner relationships. Clients needed a third leg to our solution: marketing automation, because most companies needed to take leads and turn them into “sales-ready” leads before sending them on to their channel partners.
I love a quote from Mark Benioff where he says, “Companies are looking for solutions and outcomes, not more software.” That is exactly the mantra we wanted to produce by helping companies get outcomes, not just another spin on the same old features. What I learned in over 25 years in the manufacturing and distribution world was the following:
- Most companies struggle with adoption and user satisfaction of CRM and similar tools and frankly don’t use them much at all or properly. Garbage in and garbage out.
- Companies struggle with marketing automation. Many SMBs consider marketing automation an email campaign with Constant Contact. And when they learn about full-featured marketing automation, they get one of two reactions: sticker shock or feature shock. Companies simply need a solution to do real marketing automation that is manageable by a smaller team or by nonexperts.
- Over 70 percent of companies sell through some type of third-party sales channel, and those companies share the same problem: lack of visibility and accountability with what their channel partners are doing with sales leads. The world is experiencing what we see as a “Black Hole Lead Crisis.” For example, companies spend a lot of money on a trade show, send out a follow-up email and spreadsheet to their channel sales partner, and most likely never hear about those trade show leads again.
"The best products come from being built to solve a problem the builder has experienced, not one that they think people might buy."
Why does experience matter? The best products come from being built to solve a problem the builder has experienced, not one that they think people might buy. At LeadSmart our team consists of me; our CEO, who for almost 30 years has been a product distributor, manufacturer rep for a third-party channel partner, a product manufacturer, and advisor to companies struggling with sales and marketing challenges; our COO, Tom Burton, a computer scientist by training, who has worked in the tech field for nearly 30 years and has raised venture capital and exited multiple companies; and our other cofounder, Steve Snapp, a 20+-year veteran of the CRM world who brings the technical expertise and vast experience of helping hundreds of companies solve critical business challenges. We have lived the problems LeadSmart solves day to day, have lived the challenge of maximizing return on software costs, and have lived the “Black Hole Lead Crisis.”
Teams are critical, and experience is priceless, especially our experience struggling with the same problems our users have. That is what allowed us to build a solution with our expertise in the DNA of the product.
We have all read the stories about startups that failed because of a power struggle or misalignment. This almost always has to do with personality problems and poor communication. At LeadSmart we are truly fortunate for our team. In fact, our team met to brainstorm business ideas nearly five years before the birth of LeadSmart, knowing there was a human fit that just needed to find the product fit. How so? My cofounder Tom and I have been friends since kindergarten and have been involved in multiple projects together. Steve, my other cofounder, and I have been business associates and friends for over 15 years, having worked on many CRM implementations and related projects.
Teams like this are hard to find. The value a team like this offers our users is the real-world experience we all bring to the development of our solution, allowing us to build a SaaS product that generates true business results.
TO PARTNER OR NOT
After developing our product and selling it to a handful of companies, we had to decide on our go-to-market strategy. We’d originally felt that manufacturing companies would be our niche. Then we started to look at working with VARs and resellers and realized we’d need to manage that relationship just like a manufacturer would need to manage a relationship with reps and distributors. It was an “ah-ha” moment: Let’s build out an international network of VARs, resellers, plus referral partners who can help us spread the word about LeadSmart! We’ll use our product in partnership with our channel partners to manage our relationships and familiarize them with our product. Now we sell to technology companies and other SaaS companies, manufacturing, medical, and many other industries.
WHERE ARE WE TODAY, AND WHAT DOES TOMORROW LOOK LIKE?'
While it’s too early to truly tell what the future holds, we believe strongly in our product. We are growing month-over-month sales and our channel partner network. We’re learning from other SaaS companies, industry peers, and our reseller network. The future looks bright as we look to turn a red ocean into a blue sea.
KEVIN BROWN has a proven 20+ year track record of success in growing products, services, market share, sales volume, and profits. He is the CEO and cofounder of LeadSmart Technologies, a CRM, marketing automation, and partner collaboration suite for SMBs.