Nilesh Patel, Founder & CEO, LeadSquared

Anil Mascarenhas, IIFL | Mumbai | February 24, 2016 15:06 IST

“In a market already choked with old school CRMs for sales teams and marketing automation software for marketing teams, there is an urgent need for a software that brings both of these functions on the same page, in a clutter-free manner.”

Nilesh Patel, Founder & CEO, LeadSquared, is focused on the mission of making LeadSquared the software of choice for small business marketers world-wide. He brings his decade long experience in sales and marketing to the team. Previously, Nilesh was the founder of Proteans, a recognized leader in software product development services space.  He helped build the company from scratch to 350 people strong serving over 100 ISVs world-wide, before it was acquired by Symphony Teleca Corporation in 2010. Post-acquisition, Nilesh served as Vice-President of inside sales at Symphony before he decided to start LeadSquared. Nilesh has a degree in engineering from Delhi University, and before founding Proteans spent four years in IBM with their microprocessor test tools division.
 
LeadSquared.com plays a crucial role when it comes to strengthening the marketing and sales of any company. LeadSquared’s technology helps business setup a lead capture automation system that will bring down the lead leakage to zero. They can use lead distribution engine to ensure enquires are responded faster. LeadSquared is the second venture of the founding team. The first was an outsourced product development firm (Proteans) started in 2003. The venture was boot strapped and profitable from the start. Over the course of building the business one round of venture financing was raised and the business was taken to 10 million dollar in sales before being bought by Symphony Teleca in 2010.
 
Replying to Anil Mascarenhas of IIFL, Nilesh Patel says, “In a market already choked with old school CRMs for sales teams and marketing automation software for marketing teams, there is an urgent need for a software that brings both of these functions on the same page, in a clutter-free manner.”
 
What role has LeadSquared plays in marketing initiatives. Do you have any numbers to share?
Leadsquared is a customer acquisition platform for businesses that market and sell to customers, through online and offline mediums. It offers Zero lead leakage which captures leads from all online and offline sources and Lead prioritization which makes sales people focus on leads with high potential to close. Unlike old school CRM systems, it’s refreshingly easy to setup and use. It brings down setup and training time from months to hours. You can nurture your leads with drip marketing campaigns, using email and SMS to build mindshare with your audience and sell more to them. LeadSquared mobile app makes it easy for you track and manage the activities and performance of your field sales force
 
One of our clients is the fastest growing K12 education company in India. Using LeadSquared has helped it capture several million leads from all offline and online sources without any leakage. It has also increased their audience engagement by over 50%, helped them scale their sales team to 1000 members in a short span of time, and increased their sales closure rate per rep by over 100%.
 
What are the steps needed to prioritize leads? How does one arrive at leads which have a higher convertibility ratio?
Leads are prioritized on the basis of their ‘likelihood to buy’, or their chances of conversion. LeadSquared provides two parameters for lead prioritization – Quality Score and Engagement Score. A higher Quality Score indicates that the lead is closer to your ideal buyer persona. A higher Engagement Score indicates that the lead is currently (you can specify a time period to define currency) ‘active’ - which is judged by their responsiveness to your marketing campaigns.

Within LeadSquared, users can easily define rules for quality and engagement scoring, and once they do so, the scores are automatically calculated for each lead in the system. Users can sort and view leads based on different criterion for prioritization (such as, Lead Quality Score >=9).

We also have a feature called ‘Starred Leads’. Sales people can mark leads they need to follow-up with by starring them. This helps them quickly get a list of people they need to follow-up with.
 
Usually, what is the convertibility ratio in emailers,  SMS etc?
For software businesses like ours, emails have an average open rate of 20-40%, and landing pages have a conversion rate of 40-70%. Our travel clients report email open rates of 10-12%, whereas those in the hospitality business report a much higher open rate of 35-40%.

These ratios depend upon the industry and the effectiveness of the company’s marketing (subject lines, actual content, etc.), so it’s no surprise that they vary so much.
 
Who is your target audience?
Businesses that market and sell to consumers through offline, phone or online mediums are an ideal fit for LeadSquared. These businesses usually generate large volume of leads through multiple channels and close them via email interaction, inside sales or tele-marketing setup, or through their field sales team.  

Currently, LeadSquared is very popular in industries such as Financial Services, Education, Real Estate, Health & Wellness, Travel and Hospitality, and companies with large field sales teams.
 
What are the big opportunities and challenges in this business?
All businesses have to market and sell their products and services, so the opportunity for us is tremendous and global in nature. It is identified to be north of USD 20 billion globally. In our estimates the size of the market in India alone is over USD 500 million.
 
Smartphone penetration and lower data costs represent a huge opportunity to manage field sales team at no-brainer costs. Classic CRM systems are glorified excel sheets with poor user experience and huge upfront setup and training costs. There is a huge opportunity to create products that are fast to setup, easy to learn and relevant to the business use cases. That will bring lots of businesses, who would otherwise not use technology, to start using it because of low inertia to get started.
 
In this market there are a lot of players and it is a challenge to get your value proposition across even if it is differentiated. It gets crucial for businesses to pick markets and segments where they can get the attention of their prospects at a cost that make sense.
For most SaaS businesses that are able to win customers, the other challenge is to retain the customers. This business should be viewed from a services point of view vs the classic belief of selling the product and move on. The cost of retaining a customer is far lower than getting a new one.  
 
Product is key to the SaaS business. It is always a challenge to keep the product simple and still meet the requirements and use cases of businesses from variety of industries.
 
What is Lead scoring all about? What kind of analytics do you offer?
LeadSquared offers three kinds of scoring to help businesses prioritize their leads:-

One is the Lead Quality Score. This is based on the closeness of the lead to the ‘ideal buyer persona’ of the business. It is a static measure of the lead’s likelihood to buy. You can define the rules for Lead Quality Score on the basis of various lead attributes, such as job title, age, etc. For example a company that sells loans will assign higher quality to leads in income group of 50 lacs vs the one in 5 lac.
 
Another is the Lead Score, which indicates how engaged a lead has been with your company throughout its lifetime. You can define rules for scoring, such as +2 for opening an email, +4 for clicking on a link in the email, +10 for signing up for free trial, etc. It is a dynamic measure and changes constantly in accordance with lead behaviour.
 
The Engagement Score indicates how engaged a lead is with your company, currently. The only difference between the Lead Score and Lead Engagement Score is that the former takes into account all the activities of the lead since day 1, whereas the latter takes into account only those activities of the lead that fall within a specified time period.
 
All of these scores can be used for prioritizing leads with high likelihood to buy, as well as for various marketing insights (such as identifying leads that need more engagement).
 
Could you comment on your financials?
LeadSquared is seeing a very high rate of adaption. At this time, we have over 400 customers. Our revenue is growing over 3 times year-on-year and we are confident about repeating this performance in the coming few years. Venture capital firms whom we have met lately have told us that only a few Indian SaaS players have been able to achieve the kind of revenue scale we have today, and yet manage to sustain the growth curve.
 
What is the vision for your company?
Our vision is to make a simple and easy-to-use software, that drives customer acquisition for sales and marketing teams.
 
In a market already choked with old school CRMs for sales teams and marketing automation software for marketing teams, there is an urgent need for a software that brings both of these functions on the same page, in a clutter-free manner. That’s what we’re trying to achieve with LeadSquared, and that’s why we call it a full-blown ‘customer acquisition platform’.
 
Share some interesting anecdotes about how lead conversion has benefitted a particular industry or client?
I’ll share with you the story of Deltin Group, a client of ours. Deltin is one of India’s largest trading and hospitality company, and has a bouquet of hotels and casinos in Goa and Daman. They switched from a popular old school CRM to LeadSquared in August 2014, and since then, they’ve realized the following benefits:
  • 10% increase in sales conversion
  • Zero lead leakage across all channels including live chat
  • They get a consistent 35+% email open rate and a very high click through rate from low single digital percentage email open rates
  • Measure and drive lead engagement from low double digit to as high as 94%
What are your growth plans? How would they be funded?
Our plan is to continue to build upon our success in India, by increasing sales and marketing investment. We’re also seeing natural traction for our product from the US and the UK, so this year, we’ll be scaling up our efforts in these two geographies as well.
 
Our cash flow is healthy right now. We are in the process of closing a fund-raising round that will help us fund our growth for the next 1-2 years.
 
What is the shareholding pattern of the company? Any plans to sell stake or do an IPO?
A significant majority of the shares is owned by the promoters. The rest is held by the individual investors who have contributed to our past private fund raising rounds, as well as by employees by the way of stock options. LeadSquared is in a very early stage of growth right now. Capital at the right price and terms is always welcome to fund our growth.
 
What were your ambitions in childhood?
Honestly, I didn’t even know the meaning of the word ‘ambition’ back then. My parents stay in a village near Indore, Madhya Pradesh. My school was in Indore, and I stayed with my grandmother. Most early days in school, all I wanted was to get the chance to go back to our village and do farming! After Class 10th, I felt the drive to get into a good engineering college. This ambition was later fulfilled when I was lucky to get a place in the Delhi Institute of Technology (now NSIT Delhi).
 
What is your advice to start-ups? Share some important lessons you learnt with your previous stint in Symphony Teleca.
Start-ups should raise money and that does not mean going to a VC. Cash is the lifeline of the business, so it is better to hoard it as much as you can.
 
Reach the stage of product market fit as soon as possible.
 
Founders should always be selling – make it a regular routine to reach out to potential customers through email, phone, face to face or any other relevant forum.
 
Do not make selling through partners your main focus; if you cannot sell, your partners won’t be able to sell either.
 

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