Accelerating During a Depressed Economy

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With the heavy backdrop of economic doom and gloom everywhere I'd been finding it ever more strange that virtually every company I was dealing with in relation to the 2009 conference, was reporting accelerating business let alone flat or declining business.

In order to try and get a handle on why this was, I grabbed a handful of such people on my Skype buddy list and held a fairly impromptu Skype conference call on the topic last Wednesday.


You can download it as a 96kbps MP3 here (18 meg, 29 minutes).

Additionally the full transcript is below.

Lee: Good morning, today we're discussing accelerating in a depressed economy.  On the call (I was on the way to say "line", but that sounds terribly old-fashioned) we have Graham from Voicesage. Graham would you like to say hello?

Graham: Good afternoon to you, Lee, or good morning, depending on what part of the world you're in.

Lee: It's actually 6:10 p.m. here, but I thought I would say good morning, since we try to run in California time.  We also have Irv, from Ifbyphone. Irv are you here?

Irv: I am here, at 11:00 Chicago time, with about 2 feet of snow on the ground.

Lee: We have Rod; I remember everybody's name.  That's impressive.  [Laughs]  You're all friends, as well.  I'm doing quite good.  We have Rod, from Voxbone...

Rod: Hello, yeah, 6pm here.

Lee: We're in the same time zone.  We also have Jonathan, from Skype.

Jonathan: In sunny, warm, wonderful Califormia.

Lee: You're basking in the sun rays, daily, there.  That sounds good.  I think I'll give an introduction and say why we've all ended up on this call.  It's simply because we have this huge economic downturn, at least according to the news and looking at figures, and so on.  Yet, I'm kind of pleased to say that the companies I speak to, who are participating in eComm are actually doing very well. 

It sounds kind of corny; it's almost like saying, "Hey, if you're participating in eComm, you're going to do well," but I couldn't help but notice that whenever I spoke the last ten days with sponsors, they said, "Oh no, we're actually doing better, due to the downturn".  I couldn't help but notice this complete opposite trend to what's going on, with these communications innovators saying actually the downturn is accelerating business. 

The first company I spoke to was Voicesage.  Paul had shared a graph.  It was amazing growth.  Then I was on an interview with Irv, with Ifbyphone, and again, just before the interview, he told me how business has never been better.  I was out to dinner with Rod of Voxbone, on Sunday, a few days back.  He also said, "Oh, business has never been better."  I was then talking with Jonathan, who mentioned the Skype figures and again said that Skype was accelerating.  I thought, "Hey, let's have a call and see what the commonalities are, here". 

I just said, before the start of this call, to Paul at Voicesage, "You guys are the only non-sponsors, so I can't say it's because you're sponsoring eComm" [laughs].  Paul came back twenty minutes later and said, "Okay, we're sponsoring".  Now, I can say, "Hey, if you sponsor eComm, you accelerate in a depressed economy".  [Laughter]

Jonathan: I think, Lee, you've just defined a recession-proof sector, the sector of eComm sponsors.

Lee: I agree, and we need many more, so if you want to accelerate - okay, I'll leave the cheesy pitch out. 

Looking at the list here, I would like to begin getting a handle on why and how your businesses are accelerating in this environment.  Maybe I could begin with Graham at Voicesage, whom I've never had a chance to speak with, yet.  Could you give some bullet points as to what it is you're doing for this acceleration.

Graham: Other than being really, really nice people, everybody loves us, Lee.  I suppose you want the business answer.  I think it has to be, I suppose, over the last eighteen months to two years, we've noticed businesses, especially in the enterprise sector, are moving more and more towards software as a service to try and cut out cost of ownership, improve efficiencies, etc., I suppose no more so than in the communications context. 

The way we operate is, while we are a communications company, it has a specific focus on moving metrics within common business processes.  I suppose reducing lags, etc, making your agents more efficient, bringing in your money earlier, improving your renewal rates on insurance policies or something like that, and communicating in a more efficient and cheap manner.

I suppose, in the current downturn, of course, that's a focus companies have on their mind, right now.  Eighteen months ago, of course, companies were always looking at this, it comes into much sharper relief, I suppose, over the last six months, that they need to move quickly and sharply on improving their costs and indeed increasing their revenue, by any way and means possible, especially low risk means.

What does low risk mean?  Low risk means you need to be able to do something, just "pay-per-use", low capital expenditure, be able to dip in, dip out.  Try it; if it works for you, great, use it.  If it doesn't work for you, move on.  You haven't exposed yourself, shall we say, too much.

Lee: One of the things you've been doing is looking at data from communications interactions, to save money.

Somebody is making a lot of noise, here, with a microphone.  Who is the guilty party?  [Laughter]  Somebody is the guilty party, with the microphone.  Behave, children, with your microphones.  [Laughter]

Back to Graham, at Voicesage, you've been looking at data from communications interactions, to save money.  That sounds kind of fancy, but if we begin just explaining that, I think what you guys are doing is you notice that somebody is available more at 6:00 p.m. as opposed to 7:00 p.m., or you notice that they're more likely to answer a call if you text them first.  It's something along these lines that you're doing.  You're noticing patterns in data in order to be able to more likely reach people.  Can you expand upon that?

Graham: Sure, when you make any intervention in a process, to move some indicator, to make things better, you need to constantly monitor and change and improve.  In monitoring, changing, and improving, you are obviously looking at data.  There are two forms of data.  You have the data that occurs within the call, and then of course, within the interaction, whether that be text, email, or voice.  You also have the data that goes along with that customer, outside. 

What we do and specialize in, at the moment, is taking both those sets of data, squishing them together, and looking for correlations within that.  Sometimes, the correlations are very obvious, such as you said there; certain people, for certain processes, are best contacted at certain times.  Sometimes, they're not so obvious. 

For example, we had a company that the key thing they wanted to do was bring in their debts cheaper and quicker, instead of reminding people to pay their bills.  Part of the paying the bill process was transferring them back into a call center to actually collect the money.  What we noticed when we analyzed the data was they were getting a hell of a lot of people that were wanting to pay between 3:55 p.m. and 4:05 p.m.  We still don't know the reason why there is a peak at that point, but there is a peak at that point. 

One of the issues that these guys had was that they couldn't actually take all of those calls because they had a shift change at 4:00 p.m.  They were unaware that because they had a shift change there were a lot of people that wanted to engage in a process with them but they weren't allowing it because of their internal business processes.  They actually changed that.  That came as a direct result of simply looking at the data generated from the interactions that their customers were having with us, and us trying to collect money from them.

Lee: Are you able to share customers or is that kind of non-disclosed?

Graham: Unfortunately, a lot of our customers don't like to have their names mentioned because we are moving metrics for them, such as improving no-shows of deliveries, improving their debt, and all that sort of thing.  That's sort of very sensitive information in the industry.

Lee: Okay, what about types of company?

Graham: Types of company, I suppose the example I was giving there, a moment ago, was the 2nd largest catalogue company in the U.K.  They're collecting money from catalog sales, online sales, and that sort of thing. 

Lee: Are you able to share the kind of growth rates that you've had?

Graham: Absolutely, I think from January last year to January this year, in rounded figures, we have 1000% growth.  Over the last quarter, we're averaging month-on-month growth of between 20% and 25%. 

Lee: How has it been the last three months, when there has been the most painful backdrop, globally?

Graham: Actually, there is an upswing in that.  Again, I suppose we're good at analyzing data.  We can make a correlation between the two. 

Lee: That was when you sponsored eComm, then. 

Graham: Exactly, it's when our conversations first started with you.  [Laughter]  Again, it's that correlation.  December was our best month, ever, by far.  Even in our projections etc., everybody allows for a little downturn in December because businesses are closed for one to two weeks, and you don't expect much business.  But no - everybody was working, every single day, except Christmas Day, collecting money, reminding people to pay their bills, telling them about deliveries.  It was a huge upswing in December.  That has continued into this month, as well.

Lee: So, you're saving delivery companies money, as well.

Graham: Absolutely

Lee: Just briefly, how are you doing that?

Graham: Around logistics, one of the key problems of people delivering to your door is making sure you are going to be there to accept the delivery.  They always add into their cost the fact that, on average, they're probably going to have to attempt 1.5 deliveries for every delivery.  It's a huge cost if someone is delivering a refrigerator to your door, you're not there to accept the refrigerator, they have to bring it back to their depot and deliver it the following day or at another date. 

What we do is allow them, in real time, from their systems, when a delivery is scheduled in their system, to communicate with the recipient; confirm they're going to be in at the estimated time of delivery, confirm they're going to be able to accept the delivery, confirm we have the right address, and only when those three things are confirmed will your refrigerator, your T.V., the new suit you've ordered, or whatever, actually be loaded onto the truck.  You're drastically improving the amount of times the person is actually at the door. 

The metric we actually got on that, I think one particular company, which was the largest white goods provider in Europe, they had a no show delivery rate or 4.7%, so 4.7% of deliveries couldn't be made, which is a huge expense.  We reduced that to naught.

Lee: I would agree with you.  We should do an interview some time, because they're meant to be fifteen minutes, unless you want to go on for an hour.  I loved your brief answer.  It means you're a good candidate for an eComm interview, later on.  [Laughter]

Again, I really like that because it was quite clear the efficiency that you are helping drive there.  I see the innovation there.  Again, it's an area that seems logical and I'm amazed that others are not in that space, that I'm aware of. 

Moving on, if we can see if Irv is still with us.  If Irv is still here, from IfByPhone, could you tell me how your growth has been?

Irv: Absolutely, Lee, our growth has been exceptionally robust.  Each month, over the past year, has been dramatically better than the prior month, with very similar numbers.  We've been growing at over 20% month-over-month.  That may in fact accelerate this quarter because January and February look like they will be exceptionally strong. 

Lee: What is it you're doing?  Are you helping white good delivery [sarcasm]?

Irv: Our business proposition is a bit different, because we do not sell to large enterprises.  We sell to thousands of small and mid-sized companies, companies that range from maybe a $1 million a year revenue, to a couple hundred million dollars of revenue.  In that sector, which employs more people around the world, in fact, than all of the so-called Fortune 500-style companies combined, you find an interesting dynamic. 

The dynamic is that the owners absolutely do not want to lay off people, even though the economy is terrible.  If you go to them with a proposition that allows them to use their in-house employees, maybe not their call center, but their in-house employees more effectively, they're delighted.  Those employees are more effective.  They keep their jobs and everyone is happy.

We use telephony in the cloud, or hosted IVR technology, in order to do exactly that.  Because all of our IVR technology, or cloud telephony, is configures or provisioned from a very easy to use Web portal, this allows a business without specialized expertise to apply these types of technologies.  That's been very successful for us.

Lee: Okay, can you tell me what it is that you're doing with the IVR technology, to save money?

Irv: I'll give you a very practical, yet very simple example.  Batteries Plus is a franchise-based business in the United States and Canada that has hundreds of retail stores that sell only batteries.  If you need a battery for anything, you go into Batteries Plus or you go to their website and you can purchase a battery. 

In many, many cases, people need a battery right away so they want to go to a store.  Batteries Plus was finding that they were fielding hundreds and hundreds of phone calls to stores asking for routine information such as "What are your hours of operation; which is the closest store to my address...?"  We automated that process for them. 

In fact, they automated it themselves by going to our website, provisioning a toll-free number, putting in a IVR on the front end that asked a couple of very simple questions to determine whether the customer was looking for information about batteries.  In that case, the call was transferred to a central call center corporate.  Were they looking for the closest location, in which a geo-coded application automatically provided them with the closest location and driving information.  If they were looking for store hours of operation, same geo-code process except in this case we retrieved the hours of operation.

They found a dramatic increase in the productivity of their in-store personnel because now those personnel could concentrate on spending time with customers in the store.  The side effect of that is they sell more batteries.  They helped their individual franchise operations be more successful; they were more responsive to their customers, and it was all done with a service that runs month-to-month, with no capital expenditure and was up and running an a very short period of time.

Lee: Turning from Irv to Rod at Voxbone, can you tell me how business has been for you?  In fact, if it's okay, can you mention growth figures?

Rod: Since January of last year and this year, in comparison, we grew about 70% in the whole year.  Now every quarter, we are adding about 15% growth on a quarterly basis [Rod later reported he meant to say monthly not quarterly]. 

Lee: How much, on a quarterly basis?

Rod: Fifteen percent, on a quarterly basis. [Rod later reported he was meaning monthly]

Lee: Okay, and has that slowed with the global economy, at all?

Rod: No, actually, as you mentioned, it's started accelerating since Q4, last year.  The reason we see for that are multiple reasons, I think.  One of the reasons is because when you look at services like the ones that have been mentioned by Ifbyphone, just now, and the one that was mentioned by Voicesage, all these services are cloud-based, Internet-based services.  At some point, they need to reach the PSTN.  Most of them actually need a telephone number to be activated.  The bigger they get, the bigger we get.  That's already one reason.  It's not necessarily because of us, but because of our customers that have services that are interesting, and we grow with them.

If you look at the way numbers were used in the past, where you had a telephone number that was just linked to a physical location, that's all you can do with it.  The cost to dial such a number is pretty expensive.  What we've done is to just completely take away the geographical link.  Now a number is just a software-based identifier that people can use to call you on.  It's very flexible.  You can just build up a service. 

First of all, that service can be completely Internet based.  You can just use telephone numbers from Voxbone to make it reachable from traditional phone networks, from mobile phones and so on.  Basically, you can be a company and have a virtual presence in a lot of countries.  From day one, you can start a service provider, in forty-five countries.  I think that's one major reason why we've grown, expecially now. 

The way I can explain that, apart from the other reasons, is because VoIP has become very mature.  That's quite recent, I would say.  We saw a lot of discussion about VoIP being just dead, being whatever you call it.  I think that's also a sign that says VoIP is mature, meaning that VoIP is reliable, sometimes more reliable than the TDM, the old telecoms world.  It's more flexible.  Sometimes the quality is as good, or sometimes even better.  There are multiple reasons that tell me, "Okay, today VoIP is very mature".  Everybody is moving to that technology.  If you have a company that is using VoIP at its core, I think you are at a good position, today.

Lee: What is it that Voxbone is doing?  As far as I understand, what Voxbone is doing is they're allowing what used to be hard-wire telephone numbers, telephone numbers were hardwired to geographic locations.  I think what Voxbone is doing is making them software based.  Numbers are not tied to a geography so you can have a virtual presence around the planet.  I guess what you're doing is allowing people to have virtual offices.  I'm assuming that this is part of the key to why you're seeing growth, particularly when the economy is fairly down.  Would you agree with that?

Rod: Yes, that's clearly a reason, but that's one argument for the business, meaning you are a business, you have customers all over the world.  Instead of having to call them or having to pay expensive ways to be reached by these customers, you can just have local numbers in a lot of countries and people can call you cheaply.  That's one reason.           

I don't think that's the only one.  You can also use numbers in many other ways to enable - I would say there are many mobile VoIP providers, as an example, that use numbers to enable their service.  It's not just businesses.  It's also service providers that have emerged and that use Voxbone behind the scenes to enable their service, in fact, to bridge the mobile part with the Internet.  As you can imagine, all these VoIP solutions are growing quickly and since we enable them, that's another way to get traction.

Lee: Okay, thank you for that, Rod.  If we finally turn to Jonathan of Skype, I believe that the other day Skype released figures, which were very good.  I've not had a chance to see them, yet.  I know others have been pouring over these numbers on the Web.  Could you briefly cover those figures?

Jonathan: Sure, no problem, as commentary - I joked about this being a sector.  Obviously, there is no whole sector that is totally recession proof.  It's just amazing, in these times; last week, there was one day in the week where seventy thousand jobs were lost, in the U.S., on a one-day tally.  It's amazing if you're a good-sized company in this environment and you can just hold your own, you can escape the layoffs and so on.  It's even more rare to see real acceleration going on. 

I think this is my own personal view, but I think there has been these constants in recessions and downturns in the past.  There are sort of three categories in my mind, that people start to consolidate their situation, companies do the same thing.  They start regrouping and are looking for efficiencies.  The other thing  is there is a pretty swift migration to value. 

I read an AP headline, yesterday, that said "The Wealthy are Turning Stealthy" and that "throwing your money around is so pre-recession".  There were a bunch of examples of companies that are also doing well in this environment, like VMware, where they have cost-efficient server infrastructures.  Virtualizing servers is popular in this kind of economy.  On the consumer side, Net books are selling like hot cakes.  It's the most pronounced shift I think we've seen in the personal computing space in a very long time, the almost immediate rise of net books. 

The third thing is this desire to escape from reality or to go looking for comfort and familiarity.  Some funny examples there are McDonalds is doing well.  Hooters is doing well.  Getting served comfort food with good-looking young women is a popular pastime.  Network gaming is booming.  NetFlix is seeing acceleration in their business.  They offer a convenient way to save money on your cable bill, maybe, but also to escape the reality around you. 

If you have a model that provides more than one of these things, that's even better.  If you are in the business of offering migration to value and efficiencies and you let people derive comfort in these bad times, you're probably recession proof or partially. 

Lee: We need efficiency and Hooters combined.  [Laughter]

Jonathan: If you can find a bunch of businesses that combine those factors, you really have a good formula in this market.

Lee: [Laughs] We'll make that a theme of 2009, driving communications towards efficiency and comfort, through pretty looking women, etc. 

Do you have the Skype numbers at hand, at all?

Jonathan: Sure, with all that as a prelude, the numbers are really compelling.  In the year-over-year growth with respect to users, our registered user numbers, we're approaching this law of big numbers.  We're growing very rapidly, Q408 was on the order of 47%, still very rapid growth.  Q4 is usually a little bit seasonally slow for us.  That was pretty astounding.  The bigger and more pronounced numbers are around Skype minutes and SkypeOut minutes, versus last quarter for example, at 63% percent with SkypeOut minutes.  Skype minutes, we had 72% growth in Q4.  On SkypOut...

Lee: What do you think is driving these minutes?  Is it businesses using Skype, for a change, in order to save money, for example?

Jonathan: We're seeing two things.  One is just consumer migration to value; people want to avoid long distance, but we also see in the consumer space a network effect around your friends being there, the quality being great, it being convenient and easy.  We have a large constituency of people where it is the convenience, free, and easy factor. 

On the business side, Gartner, for example, recently said they kind of backed off their position that Skype is dangerous, evil, and will introduce Trojans into your network, and so on.  We hear; we have a bunch of case studies and we hear more and more from corporate IT, these commandments to their workforce saying, "When you're travelling, when you're making long distance calls, when you're going to be faced with insane roaming charges, please try to use Skype.  It works, it's easy, you can download it, it's free".  We are seeing acceleration in that sector, as well.

Lee: Okay, that's fantastic.  Again, I appreciate the time the four of you have given me this morning.  It's very good to be hearing the opposite of the news we're being swamped with.  Again, to be honest, it's daily the companies I'm speaking with are telling me they're moving forwards in a positive way.  Again, I feel astounded that I get this type of news and yet if you switch on the television you get the opposite kind of news.  I guess it's because on a more macro level communications is the backbone of an economy.  Any communication innovators are obviously going to benefit from such a downturn.  I personally think it's going to feed very well and accelerate communications innovation as a whole.  Things have been too stagnant for too long.  I feel that the downturn is going to propel the ones who are innovating.  I think we've had four of them on the call, today. 

I would like to thank you, Jonathan. 

Jonathan: Thank you.

Lee: Thank you, Graham.

Graham: You're very welcome, Lee.

Lee: Thank you, Irv.

Irv: Thank you, Lee, for coordinating this.

Lee: Thank you Rod, over in Belgium.

Rod: Thanks, Lee.

Lee: Have a great day, and I hope things keep propelling forwards.  Thank you all, again.


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This page contains a single entry by Lee S Dryburgh published on February 2, 2009 4:27 PM.

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