We, at Freshworks, are stepping into our ninth year, and we crossed $100 million in Annual Recurring Revenue this year.
We’re now looking at how fast we should grow from here.
We have two choices. Like most other tech startups who hit $100 million revenue, we can grow at around 33% (graph below). Or, we can really stand out and be above the yellow line, be in the top 20 percentile and grow at >66%.
What is the difference? Companies which were above the yellow line had double the valuation of companies which had median growth.
Source: How fast tech startups grow. https://techcrunch.com/2013/08/24/how-fast-should-you-be-growing/
With tailwinds as Freshworks’ disruptive business model and an underserved long tail global SMB market, it’s our game to lose if we don’t stay above the yellow line. What is not obvious is how we will do it.
As I enter my fourth year of leading the Digital Marketing team here, I can tell you that it is neither simple nor straightforward. That is what makes it both fun and nerve-racking!
World-class products need High-Performance Marketing
Freshworks has been breaking all records with its twin growth engines of unique pull-driven SMB sales model and a growing mid-market presence. From a single product company, we have evolved into a suite of world-class customer engagement products. The driver of this growth strategy is the high-octane sales team that believes in “Always Be Closing”.
My team’s goal is to feed this sales engine with enough potential buyers (or leads) in every region across the globe. Lead targets are arrived at for each geography based on their respective revenue targets. It is not as simple as it sounds. Markets in different regions behave differently depending on buying patterns, competitive landscape, and company profiles. We try to capture such nuances by linking them to metrics like revenue per lead, and customer conversion rates, and analyze them before we arrive at the lead target for each region.
Once we have the lead targets, our campaign managers do what they do best—use multiple digital marketing platforms to create interest among potential customers and put Freshworks’ products on the top of their consideration set. Do all our marketing campaigns succeed? Some do, some don’t. But where we fail, we don’t fret. It only means we have more opportunities for growth in the future.
Focus on good leads
Not just any lead, I want good leads! “Always be Closing” doesn’t just require leads. It requires “Glengarry Leads”. Our sales teams have a very high threshold for the quality of a lead. And unlike Alec Baldwin, we are committed to giving the best quality leads.
This is easier said than done. So we split the problem into two. The first question we answer is not “what is a good lead” but “what is not a bad lead”. Campaign managers measure leads that are not spam, not suspicious bot signups, and not someone who has already signed up. They look for leads from a region where our sales teams can sell easily, and where the coordinates of the lead are clear and reachable. Campaign managers use this data as a feedback mechanism to optimize campaigns to acquire more good leads than bad leads.
Once we have sufficiently answered the first question, we move on to the second and slightly more tricky one: Which leads give us revenue?
We measure the revenue generated directly and indirectly by each campaign, or simply as the industry calls it, ‘Marketing Attribution’. We go beyond the readily available off-the-shelf attribution models, and tie the effectiveness of campaigns to how many times they appear in the path of a potential customer before they sign up and how much revenue they bring. Over time, campaigns which generate leads but no revenue will have no place in our funnel. With these levels of synergy, we could be amongst the very few companies in the world where sales and marketing work hand-in-glove!
Accurate prediction yields growth
If a torpedo has to hit a moving object, the present location of the object is not enough. It should be able to predict where the object would be with reasonable accuracy. Executing a hyper-growth marketing plan in our ninth year is quite similar. We need to know not only the current performance metrics but also how the metrics look a month or a quarter from now.
To do this more effectively and consistently we have built an organization that goes beyond just campaign managers. A full-time data scientist helps our team predict leads using past data. Machine Learning (ML) algorithms are used to make sense of reams of data and provide intel and insights required to tune our campaigns to perfection. There is an AI-powered system that is built (patent pending) to detect anomalies in the campaign’s performance at the earliest. Just like the torpedo homing system, our ML model tells the campaign managers whether their campaigns are headed in the right direction or not.
Experiment, Innovate, and Iterate
We all have dreams, and to fulfil them, we need to achieve scale to scale success.
Scale will never be achieved by investing in proportion to the revenue. Scale is achieved by small incremental innovations piling up to a bigger momentum. These are the magic moments we strive and live for in our everyday marketing life. Here are a few examples of how we scaled through innovation:
- Second-degree connections: Affiliates/Partners are the best way to reach potential customers that you can’t reach yourself. They love extra money, and we love the extra leads.
- People-first SEO: We wanted to take users to the pages which answer their queries best. Based on behavioral data, we redesigned our website structure to reflect the parent/child keyword relations of the Google knowledge graph.
- Losing the bidding battle but winning the RoI War: So what if we are not in the best ranking positions in paid-search. We intentionally dropped positions, saved a ton of money, and invested them areas of a better RoI.
You get the drift. Innovation has been the key to our scale and will continue to be in 2019.
Of all the steps we take, this is what I consider the most important. It’s every marketer’s dream to have an unlimited budget, but it is a dream come true for every marketer to paint their own picture on a canvas that has no boundaries. With a strong understanding of RoI-payback, Return on Ad Spend or any such metric, my team is empowered to take bold decisions. As a company, it is in our core value system to take smart risks, and any decision is usually reversible.
After three years of heading this department, I wouldn’t be exaggerating if I said that this team here is empowered to take all decisions related to campaigns, fail fast but ensure to learn from it, and most importantly, celebrate success.