An interview with Lesley Young, who was the VP of worldwide Sales for MySQL, and then head of sales for the MySQL division within Oracle. Few products are as well known as the ubiquitous MySQL database. The company behind the database was also one of the great success stories in the Open Source world, and ended being acquired by Sun (now Oracle) for approx. $1 billion. Making money in Open Source businesses is a lot harder than it may appear on the outside. Lesley tells the story of how she and Zack Urlocker, running marketing partnered to solve the sales and marketing challenges that the company faced when trying to monetize MySQL.
- 1 Tell us a bit about the MySQL business model
- 2 What were the sales and marketing challenges when you first arrived at the company?
- 3 How did the sales funnel look?
- 4 What were the first steps you took to tackle these?
- 5 What did you learn from these first efforts?
- 6 How did you improve?
- 7 What did you find were the key metrics to help you manage the funnel?
- 8 What lessons do you have from this experience that you feel would be useful to pass along to other Open Source companies, or to other SaaS or subscription revenue companies?
Tell us a bit about the MySQL business model
MySQL had worldwide awareness, and broad adoption across SMB and Large enterprises that drove a high volume of website visitors and downloads. However, while we had a big, broad market to focus on, Open source is a commoditization play relying on low average selling prices (ASP). To build a profitable business we couldn’t have a field sales organization selling a $50K or less average sale value. The math did not work. It became clear that combining an automated inbound Demand-to-Close process with high volume over the phone selling was a much more profitable model. Once the model was agreed upon, my focus, with significant support and partnership from marketing, was to build Integrated Marketing and inside sales machine to accomplish the following:
- Build a cost effective, high margin software sales channel
- Leverage online marketing technologies to drive demand
- Remove noise from the process
- Automate measurable demand to close (D2C) process
- Route sales leads to live resource at appropriate point in process
- Execute a high volume of monthly transactional sales
A smaller traditional Enterprise Sales team in North America and Europe addressed major accounts and the Telco vertical.
What were the sales and marketing challenges when you first arrived at the company?
- Worldwide awareness drove a high volume of website visitors and downloads (50,000 a day) but identifying potential buyers was like trying to find a needle in a haystack.
- There was a big chasm between sales and marketing about the definition of a lead
- All downloads and visitors were created equal and there was no methodology to filter forever free users from potential buyers
- My SQL lacked the sales processes, sales tools, metrics, and alignment with marketing required to improve lead conversion, pipeline development and measurement of marketing ROI.
How did the sales funnel look?
- The top of the Sales pipeline was brimming with raw leads unfortunately it took herculean efforts to uncover the potential buyers. Less than 1% of the raw leads were converting to customers
- The Lead to Opportunity conversion rate of 1 opportunity to 571 leads
- There were not enough forecasted opportunities
- There were no clear sales indicators, and no sales route to move a free user to a paying customer
What were the first steps you took to tackle these?
- We partnered with marketing to build a closed-loop marketing and sales process called “Demand-to-Close (D2C)”. The D2C process is used to describe and track the activity from outbound campaign to the tracking of visitors and return visitors through landing pages on the website, scoring those appropriately, and then feeding that information to the sales development team or inside sales organization for closure
- Implemented outbound call-to-action Marketing programs to all downloads so we could start to capture potential buyers and segment forever free into separate nurture paths based on response behavior.
- Implemented lead scoring to understand what actions and campaign responses likely buyers completed. This gave us measurable clues as to which leads and lead sources the sales team converted to closes.
- Used measurable lead scoring “clues” to build multi-touch nurturing programs for leads not “sales ready”.
- Improved inquiry inbound routing and segmentation based on capture of inquiry demographics and activity and dispositioned inquiries to the appropriate next follow up activity.
What did you learn from these first efforts?
- Architect the website to help capture and segment interested audiences; free user, trial user, or potential buyer.
- It is critical to build an integrated sales and marketing D2C machine to deliver “sales ready” leads using lead routing, scoring and conversion analytics methodology
- Continually iterate the D2C machine plumbing to measure conversion rates across the process. It was tedious and time-consuming, but the knowledge gained enabled us identify gaps in the quality of the D2C funnel and was the most significant contributor to improving conversion rates
- Participation in the process by both sales and marketing questioning / understanding the trends enables us to jointly come up with solutions and plans.
How did you improve?
- Decreased sales response times to assigned leads coming from marketing
- Increased Lead to Opportunity conversion rates from 6:1 to 3:1
- Nurturing leads lead to an average deal size increase of 18%.
What did you find were the key metrics to help you manage the funnel?
- Lead Volume – Track and measure by campaign, by salesperson, by geography
- Lead Conversion - Track and measure funnel stage-to-stage, so you can do trending and comparisons of conversion rates from raw lead to inquiry, inquiry to contact, contact to opportunity, opportunity to close/buy — by geography, lead source or other criteria.
- D2C Contribution – Track and measure bookings/revenue contribution from marketing programs by source, geo, sales rep.
- Contribution 25%
- $ Per lead = $115
What lessons do you have from this experience that you feel would be useful to pass along to other Open Source companies, or to other SaaS or subscription revenue companies?
- Build a cross functional team with constituents from sales and marketing to gain alignment on what and how marketing activities support sales execution. Understand which visitors, downloads, trials, and leads the sales team touches. “A tightly integrated marketing and sales around the shared task of demand creation close between two and seven times the number of deals of those that do not”-Sirius Decisions
- Implement an automated process to capture key visitor, download, trial, and lead data and continue to augment the data each time an activity takes place. Use the data to segment, route, and disposition leads to the appropriate marketing or sales follow up action. Disposition based on activity ensures focus and reduces cost of sale because sales resources are used on only the most qualified sales opportunities, buyers who are ready to buy.
- Establish a set of Demand to Close (D2C) conversion rate metrics that drive the company to profitability for your business. Track success of marketing activities and sales against those conversion rates quarterly. Agree which metrics need to be managed and measured by marketing, which metrics need to be managed and measured by sales, and where there is overlap, jointly measure both the marketing team and sales team to make sure the interlock is there, and everybody is working in concert toward shared goals.
- Continually test, and determine what works, what doesn’t work. Encourage feedback from the marketing and sales teams in the trenches. Make changes, track, and do it again.
- Present metrics in Monthly joint Sales & Marketing meeting. Debriefing on volume and conversion metrics helps identify gaps and trends in the business and gives a view into future months bookings health so that sales and marketing can modify /adjust plans.