How We Acquired 60+ Enterprise Customers For Our Niche CRM

Tom Burton: 00:00:00

So the short story for lead smart technologies is we're A CRM, Customer Relationship Management and Customer Intelligence Platform specifically for a vertical market. That's called wholesale distribution.

Upendra Varma: 00:00:13

Hello everyone. Welcome to the B2B SaaS podcast. I'm your host Upendra Varma and today we have Tom Burton with us. Tom here is the co founder and CEO of a company called LeadSmart Technologies. Hey Tom, welcome to the show.

Tom Burton: 00:00:24

Welcome. Great to be here. Thank you.

Upendra Varma: 00:00:26

All right, Tom, so let's try to understand what lead smart tech does and you know, how, why customers pay you and

Tom Burton: 00:00:32

Yeah. So the short story for lead smart technologies is we're A CRM, Customer Relationship Management and Customer Intelligence Platform specifically for a vertical market. That's called wholesale distribution. So people that manufacture products, and then the companies that sell those manufacture project products, there's a bit of an ecosystem there, and we're focused entirely on that video on that vertical and everything in our product is aligned towards supporting those those customers.

Upendra Varma: 00:01:03

God, right. So just talk a bit about the history here. Right. So like, I mean, I know CRM is such an age old space, right? So how did you end up, you know, picking this particular vertical, right. And you know, just talk about that story there.

Tom Burton: 00:01:14

No, that's a, that's a great question. So my co founder in the company has spent 35 years in this industry. So he was a manufacturer. He was a manufacturer's rep, which are salespeople that work with manufacturers. He worked for a distributor. So he suffered through a lot of the challenges that we have been addressing with lead smart and. You know, the market has been pretty underserved with technology solutions. So they really haven't had solutions that are geared to that market that makes sense for them. So a lot of manual, you know, the, our biggest competitor, as we say, is Excel and email, right? That's what, what people use there. So he really saw an opportunity here. I have a longstanding tech background and built multiple software companies. He said, this is a bit of a blue ocean. We need to help this market. And so that's how we kind of jumped in and, and have been doing this for the last few years.

Upendra Varma: 00:02:06

God, right. And just talk about your customer base today. Right. So I'm understanding these are all, you know, wholesale distributors, but just give us a sense of how many total paying businesses do you have on your platform today?

Tom Burton: 00:02:17

Oh, we got quite a few and they range from manufacturers. So again, we have kind of three, you know, entities that exist in this ecosystem. You have manufacturers that are the companies that make industrial products, like the headphones you have on or our microphones or whatever. You have manufacturers reps that tend to work for different manufacturers and help to get their products to market. And then you have the actual distributor. Where in the B2B world, companies don't go necessarily to Best Buy to buy things. They go through a B2B distributor, whatever. So we have actually, uh, customers in all three of those different areas, um, and are growing pretty rapidly growing, you know, close to a hundred percent a year and probably will be much faster as we go forward. We're really seeing that, um, while the vertical has been underserved with technology, they're really understanding the importance of catching up quickly. And, you know, the whole AI thing and all of that has really caused them to have a bit of a wake up call and it's like, okay, we got to really move faster. And so it's great. We're happy to support that.

Upendra Varma: 00:03:20

Got it. So I'm saying, Tom, how, how many customers are we talking here? Is it 100, 000, 10, 000? Just, just

Tom Burton: 00:03:25

No, no, uh, 50, 60 currently.

Upendra Varma: 00:03:28

Got it. And, and what are these, like, are these enterprising deals? Are we talking about 10, 000 deals? 100, 000 deals? Like how big are these deals?

Tom Burton: 00:03:35

Yeah. So our average contact value right now reigns around 35, 000 of ARR average, but we're, we, we see that increasing. Again, as more and more companies get on board, a lot of these distributors are very large, very large sales teams, hundreds of people, you know, so lots of opportunity to increase that average contract value.

Upendra Varma: 00:03:55

Got it. Yeah. That makes a lot of sense. Right. I just want to move on to your go to market motion. Right. So like how you, how, like where you're finding all of these leads. I know you've got a vertical and you understand how your ideal customer looks like, but what are the channels that you're using to reach out to this potential leads? What's

Tom Burton: 00:04:09

so another good question. So, so a couple of things. So it's a little bit of a complex go to market motion. It's not like, oh, we went and hired a bunch of, you know, BDRs and we're starting to smile and dial. First of all, what we spent quite a bit of time is developing really strong relationships with buying groups and associations in that industry, because this industry is very relationship oriented. And they rely on the advice and opinion of their buying groups and the associations that they're part of to determine how they should navigate in the technological world. So, we have a pretty strong endorsed partnership with affiliated distributors, which is probably the largest buying group in the area partnership with net plus alliance. We have a partnership of, uh, with ISA, which is a large association in there. So we put, we spent some time to really build those relationships and build that credibility. Then our go to market is a bit traditional in a sense that, you know, we're using, you know, basically reaching out to companies, you know, doing traditional marketing demand, uh, you know, creating demand and so forth with them about what's there. But then we're now kind of, because there's this ecosystem, as I just talked about it, the manufacturers, the reps and the distributors, we're seeing a lot of referrals starting to happen. So a distributor buys our product and then they go to their manufacturer and say, Hey. It'd be great if you could also be on lead smart. So we're starting to see a bit of a flywheel effect occurring because of the ecosystem that exists here. And that was our part of our original strategy. It's taken longer to kind of see that momentum get going than we would have expected, but we're starting to see that happen. And then it's turbo charged by those relationships with the, with the buying groups and associations.

Upendra Varma: 00:05:54

Got it. So, so I'm just trying to understand this a bit more, right? I'm hearing two things here, referrals from your existing ones, right? And obviously your credibility with, with, with all of these partnerships, helping you to close those deals. But how exactly are you reaching them? Is it cold calling or is it cold emails? Like what's, what's really been

Tom Burton: 00:06:10

No, like we'll do a lot of, we do a lot of joint webinars with, um, with the buying groups and the associations. We do our own webinar and funny enough, we also, which may have been our, her best, our best Martian is we created a, our own live show and podcast. It's called around the horn and wholesale distribution. And we did, we started that about a year ago, my co founder and I, and we honestly didn't expect much out of it. We, we create a newsletter that we send out every Friday and then we basically. Go live and discuss it. And it's really taken off and we've reached a lot of prospects and built a lot of credibility that way. And, and, you know, again, that's creating demand and building trust. And, um, as a result of that, that's also been a really good way of reaching this, this market that again is built on relationships and credibility.

Upendra Varma: 00:07:00

Got it. Right. So now let's, let's move a bit bottom here. Right? So what, like talk about the sales cycle here, right? When somebody Things that. Okay. This looks an interesting product, right? How do you convert them to a paying customer? Right. What's the sales like look like,

Tom Burton: 00:07:12

yeah. So again, it kind of starts with that discovery call. And then we go in, I guess, I don't like to use the word demo, but it's more of sort of a multi step mini training, if you will, on what are the capabilities of, of the technology, because for a lot of these companies, they don't know what's possible. So we take them through that. Usually that's multiple two or three sessions that then, you know, leads to generally some followup questions and then a proposal and then obviously a close, probably the obvious question is how long does that take? Um, that can take anywhere from a year to a week. I mean, we've had everything and everything in between. So it really depends upon the company. You know, do they have an impending event or something that's really driving them to get going? So there's a lot of variables. So we know that some are going to take a long time. Some are going to happen shorter. So the key is just kind of have a good pipeline.

Upendra Varma: 00:08:03

And then the customers that we're talking about, right? Are these, you know, somebody who's, are you literally competing against Excel sheets, for example, or are you sort of, you know, replacing it with an existing CRM? Late? So what's, what's that look like?

Tom Burton: 00:08:15

Yeah. So, I mean, there are some companies that have some existing CRM, but I would say it's probably less than And a lot of the times it's like, I mean, it's, it could be going back to like act and goldmine, you know, some of these CRMs that from 25 years ago, um, or they have some old, you know, technology that they've built in house. But I would say that 75 to 80 percent of who we're talking to, they run their sales organization on spreadsheets. Or, you know, white Microsoft office or whatever the case may be. So, yeah, that's the, and the challenge is not so much that they're, that they like that technology is just to change, right. It's a change. It's different. You know, these are not high tech people per se. Um, so we have to focus a lot on the importance of how do we get adoption? How do we get people to use it and feel like they're getting value out of it? When these are not people that are just looking for the latest piece of technology.

Upendra Varma: 00:09:11

Yeah. So, so I believe you also have to solve this problem of educating the people themselves, like, Hey, you need a tool as opposed to them already understanding that. Okay. Here's a tool we need. Right. So it's like, is it more about education in your case? Okay. You showing them, because I mean, they're going to resist it. Right. So it's, it's going to change a lot of things here. Switching would have been much easier.

Tom Burton: 00:09:30

Yeah, no. And that's where the podcast and the show has really helped, you know, it's a safe way for people to get educated and the webinars and, you know, not just up. Right. There's a lot of industry people right now, the associations, the buying groups, a lot of their focus is helping to educate these companies because they got to move, right. They're going to be irrelevant if they don't really start moving. So, but yeah, it's, it's a lot of education and then getting them comfortable that this isn't going to be really disruptive. And isn't going to set them backwards, but move them forward.

Upendra Varma: 00:10:02

It's a talk about, you know, your retention as such, right? I mean, it's been a couple of years at least, right? And I see you've got a bunch of customers, right? Do you see any churn? And how are you able to sort of expand an account that you've landed? Just talk about those.

Tom Burton: 00:10:13

So we're really excited and proud. We had no churn last year, so we've had no churn really in a year and a half. Um, and there's two reasons for that. One is. We very, very, we spend a lot of time on that onboarding and the client success so that we get the adoption and we start to see return on investment. And I'll give you an example. We have, you know, 1 customer that came on earlier this year and has seen a 25 percent increase in sales. That they believe is mostly attributable to moving on is the way they say it is. It's a sales team, same sales team as we had before doing a lot of the same stuff, but having a lot of more capabilities than what they did before. So, you know, it doesn't take much for people to kind of go, wow. All right. How did we live without this? And then, you know, we take care of them and that's the other really nice thing about this market is because they're not ultra techie, they're very loyal, right? They're not looking to switch to the next shiny object or the next. You know, cool thing that comes out. So once they come in, they're very loyal. And if you're loyal back to them, they'll, you know, we've had, we have customers now that have been on four years going on five years, that kind of stuff. So I don't see churn being a big, big issue for us. Um, in fact, I see our net revenue retention is going to be very high compared to the industry because it's a very loyal, uh, you know, and it's not an easy thing that they're going to want to replace every week.

Upendra Varma: 00:11:39

So do you have folks in your team, right? Customer success team who are specifically focused on, you know, getting the customers, you know, you derive value and increase the NRR, like net revenue retention.

Tom Burton: 00:11:49

Yeah. So we have a client, we do pretty much that happens through client success. So once the customer, you know, comes on board, we have a, we, we take them through what we call a smart start, which is the onboarding. But one of the things that's quite unique with us, it's not like when we're done, it's like, okay, we'll call support or send us an email. If you have a problem, we continue to support them. As a consultant, we call it our concierge program. So they can, you know, reach out and schedule time and say, Hey, we want to build some new reports or we want to do something new and we'll do that. We provide that at no extra cost as them parting, starting to be there. So that's our client success. And oftentimes that leads to them going, Hey, we want to add more users or more capabilities, or there's another division or, you know, whatever the case may be, and because they're succeeding, right. It's like success is the only way to really. You know, drive the NRR game.

Upendra Varma: 00:12:41

Got it. All right. So Tom, I just want to want you to sort of recall your zero to one journey, right? So how did you get those first five customers, right? So where did you find them? How did you knew them, right? How did you manage to convert them? Just talk about that story. Thank you.

Tom Burton: 00:12:54

the first five customers really came because of my co founders, uh, relationships in the industry. So he reached out to people that he knew had worked with before. Right. So I will call them sort of like the friends and family. Type of customer. Um, but what was good about, again, people are well connected. And so we use those as a platform to kind of springboard to get to the next layer and the next layer. But yeah, I would say the most of them came from the friends and family relationship that my co founder had Kevin.

Upendra Varma: 00:13:25

Talk about your team, right? So how many folks do you have, do you have on your team and what do they do?

Tom Burton: 00:13:29

Yeah. So, uh, there's probably close to 20, 25 people on the team. Um, depending upon, you know, some different, we have some different contractors we work with. Uh, I would say, you know, client success is probably a third of the team that's there. We have an engineering team as well. Um, we're a bit unique is that we're built, our product is built on the Salesforce cloud platform. So rather than building on AWS or some other cloud platform, we worked out an arrangement with Salesforce that allows us to build on their platform. Everybody buys from us. They don't buy anything from Salesforce, but, um, it gives us really a really, really top notch, you know, high performing cloud platform for us to build, build on top of, which is, you know, arguably the most secure and the most high performance cloud platform in the world. So we have an engineering team. Sales, I would say we're probably broken down pretty much 40% sales and marketing, four 40%, uh, client success, and then 20% engineering. And obviously some, you know, g and a and stuff like that in there.

Upendra Varma: 00:14:37

Got it. Uh, that makes a lot of sense, right? So, and like, I'm assuming you must have raised funds to build your company so far. It's have you raised any external funding so far?

Tom Burton: 00:14:45

Well, we've, well, we ha we, me, myself, and my partner have invested a fair amount into it. Um, we have inve, we have raised some small amounts of, uh, convertible debt, literally less than a hundred thousand dollars. So small amounts.

Upendra Varma: 00:15:00

it's bootstrap then, right? I mean, if you're putting in your

Tom Burton: 00:15:02

Yeah. It's bootstrapped. It's bootstrapped. And we're looking now because we're getting to that point where, you know, in the early stages, right. Investors all like, well, talk to me when you get to a million ARR, talk to me, you know, and we're like, you know, we can fight this or we can just kind of literally bootstrap our way to that point and then get a place where we're at a foundation where we can get quality, high quality investors kind of picking shoes. We're getting to that point right now. Um, we've also used revenue based financing. So we've worked with, you know, companies that, uh, lighter capital that help you basically, you know, offset your revenue because we have good, strong, recurring revenue with that. It's, it doesn't necessarily, um, you know, cause you to take, to take it big time growth, but it helps, you know, add more cashflow, the equation and give you more

Upendra Varma: 00:15:51

So, so Tom, why race? No. I mean, if you've already, you know, bootstrap managed to bootstrap and build, you know, build such a good company so far, right? So why not just keep on doing that forever? What's the vision here?

Tom Burton: 00:16:00

Yeah, there's a, there's a huge market. So in the U S alone, there's over 300, 000 distributors and 200, 000 manufacturers. I mean, and the majority of these companies do not have any sort of technology that we do. So there's a gigantic market and we're literally just scratching the surface of that. And so, you know, our vision is my co founder Kevin says his vision is. Right. There is no serious talk of CRM and customer intelligence and these companies without lead smart coming to the, and I think that's a really, really good vision and goal that we should be shooting for because we are. I believe we are the leader right now in this industry of having that industry specific solution. And that can really help them drive sales. So, yeah, we're going to have to, if we're going to really get to that next level, we're going to need more capital than what we're, we're doing on

Upendra Varma: 00:16:54

And then how does the competitive landscape look like in this particular niche?

Tom Burton: 00:16:58

Yeah. So, I mean, there's, you know, what we call the more traditional CRM vendors, there's the Salesforce and Microsoft dynamics and those types of things, but we rarely see them, actually. We rarely see them there. There's a couple of other vertical solutions that have been around for a while. So they're a bit older technology, if you will. We see some of those, but, um, no, it's not, it's not a hyper competitive red ocean that you see potentially in other CRMs, you know, where you're, where you have, you know, pipe drive and HubSpot and Salesforce and monday. com and all of these people vying for that business, because the needs for this business or this vertical are very specific and those sort of. One size fits all CRMs don't really work well for them. So.

Upendra Varma: 00:17:44

Makes sense.

Tom Burton: 00:17:44

I do expect more competition coming in here, right? Anytime there's an opportunity, there's going to be more competition.

Upendra Varma: 00:17:50

They're going to follow you. Definitely.

Tom Burton: 00:17:51

That's right.

Upendra Varma: 00:17:52

All right, Tom. Thanks for taking the time to talk to me. Hope you scale your company to much, much greater heights.

Tom Burton: 00:17:58

No, great questions. Thank you.