LucidEra’s Ken Rudin Talks About How to Reach Critical Mass
Posted by Bob Warfield on June 17, 2008
I recently caught up with CEO Ken Rudin over lunch to see what was new at LucidEra since we last chatted 7 months ago. It turns out quite a lot has happened, and Ken was very generous to share some of the news as well as a deep discussion of what went on behind the scenes to make it happen.
The big news is that he now feels like LucidEra has reached some sort of “critical mass.” What does he mean by that? Critical Mass means that the sales process feels different and it has gotten markedly easier. It’s not an end goal, and Ken would probably not agree that he is at “critical mass”. Rather, it is a meaningful and measurable step on the road to finding your product/market fit and best strategy to make winning easy. For LucidEra Critical Mass first became apparent at about 40 customers. This is a figure that is pretty similar to what others have mentioned. In fact, 40 customers is the point where Greg Gianforte of RightNow decided to hire a sales staff and his company started doubling every 90 days.
I asked Ken what it took to create the critical mass, and he gave me 4 answers: Total Focus on Customer Success, Best Practices, and Customer Marketing. Each one is a fascinating topic, so let’s delve into them.
Total Focus on Customer Success
Many companies claim to have a total focus on Customer Success, but it entails quite a lot. In some cases, making a customer successful can even turn out to be a money-losing proposition. For a relatively new startup, making money is not the objective. Instead, it is proving yourself and getting on the map so that the world can see what you’re capable of.
Rudin talks about his initial customers making comments like, “I got off the phone feeling like a princess.” Or, in another case, having a customer get off a support call with LucidEra and immediately contact the CEO and other executives to compliment the company on their superb customer support.
Rudin’s company approaches Total Customer Success in a number of ways. First, he has done the most critical thing by setting the agenda for the organization that this is the goal. That’s hard to do, especially for all levels. The sales people will like to think their goal is to make quota. Customer Service may simply want to close the tickets as fast as they can. Professional Services wants to sell services. But for LucidEra, the goal is none of those. Rather, it is to pull out all the stops towards making customers successful.
Towards that end, they use a combined SWAT team that meshes normal customer support with professional services to make sure customers are getting everything they need. They focus hard on developing Best Practices that can really change business outcomes for customers (more on Best Practices in a moment). They try to make sure customers see real value right from the very first moment.
Their trial is called a Pipeline Health Check. It’s goal is to hook up to your Salesforce.com data in 48 hours and present you with a Best Practices report on what you should be doing differently in sales to improve your results. As Rudin says, if customers aren’t talking about the result of the Health Check constantly in their staff meetings, something is wrong because there are some real actionable insights there.
This is part of delighting the customer with real value. It goes on to delighting the customer with the relationship. Customers often receive bottles of wine, or cookies baked in the shape of the company’s light bulb logo. Ken Rudin always sends a handwritten thank you note when the deal closes to every customer.
LucidEra’s salesforce, for their part, are incented not just on traditional measures for closing deals, but on measures having to do with the willingness of the customer to talk about their experiences with LucidEra. Obviously that will be difficult if the customer isn’t very pleased.
Obviously, this all reflects a very personalized and customer-centric approach to selling. I asked Ken what hadn’t worked and he mentioned web marketing, especially around search engines. Why not? “Because people don’t know what to Google for to find us,” he says. What LucidEra is doing is too new and unusual. So it takes a more personal touch. But it also takes Best Practices, which are something customers really sink their teeth into.
Best Practices involves not just telling a customer about product features and abstract benefits. Rather, Best Practices are a recipe that customers can follow to use the product to achieve real business results. So much of software is marketed around the promise that if features result in benefits, and if you want the benefits, you need a particular set of features. It doesn’t take long in a competitive market before the blizzard of features has become so fierce you can scarcely see the hand in front of your face.
I like Rudin’s Best Practices approach a lot better. It enters into the relationship right at the start, because the primary deliverable from the Pipeline Health Check is a set of Best Practices recommendations about how to improve sales at your company.
I was curious to learn how LucidEra developed their Best Practices. It’s been a real challenge at some companies I’ve worked for to get together Best Practices and make them available to customers. Rudin’s response was straightforward. Initially, they had some domain talent on board in the form of folks they’d hired from BI companies who had a lot of experience around Best Practices for Sales Analytics. That was followed by lots of ideas from customers. Some were direct suggestions, and others came into being as LucidEra analyzed customer data. Lastly, a lot of the company’s key differentiated product features resulted in Best Practices. After all, what good is a feature if it can’t?
These Best Practices are marketed through Webinars and other vehicles to produce leads. Visit a Webinar and learn enough about them to decide you need the Pipeline Health Check. That then leads to a sale in many cases.
The final ingredient in Ken Rudin’s critical mass plan for Lucid Era is what he calls “Customer Marketing”. LucidEra makes sure customers are mentioned constantly in every marketing communication. And it isn’t just the mention, they’re quoted, their names are given, and one generally gets the idea of who the community behind LucidEra really are.
Interestingly, LucidEra is quite successful at turning its own customers into ambassadors as well. Rudin tells the story of a CFO coffee held by Silicon Valley Bank as a networking event. Apparently one of his customers was there and proceeded to demo the application for a group of CFO’s.
In another example, LucidEra was presenting as part of sponsoring the Silicon Valley Salesforce.com Users Group. At the end, a customer stood up unbidden in the audience and told the crowd how great their experience with the product and company had been. You can imagine how powerful such things can be.
Getting a startup on the map is a necessary step to making winning easier. A company is not on the map until it has a significant number of highly satisfied customers who are willing to speak up about it. But getting customers to speak up is only a part of it. Having the maniacal focus and contact with these customers mobilizes a startup to do right. It is a product/market fit of sorts. I say of sorts because elements are not scalable indefinitely. However, having the deep conversations with these customers makes it easier to tell how to build the parts that will be scalable throughout the life of the company.
Ken Rudin is quick to point out he is not done. Critical Mass is my term for what he’s achieved. For his part, there is a lot more to do. Many more customers to sell, lots of learnings to put into practice, and a lot more to learn.
The current product does a good job managing the sales end of the pipeline. Next up is a product release aimed at the lead generation process. The reports available here sound intriguing. Imagine being able to track every stage of your pipeline, know what the close rate for deals in a stage might be, as well as the average time deals stay within a stage. Now you’re in a position to extrapolate by looking at the whole pipeline what revenue might come in at various times in the future as deals make their way through the pipeline.
Pretty cool stuff!