November 11, 2008

How fast-growing SaaS firm Volusion builds websites that work — and helped Obama win

by Adam Stone, Senior Writer, SoftwareCEO

One thing Kevin Sproles knows is how to move product through the web. The 25-year-old CEO heads up fast-growing Volusion, whose software helps people build e-commerce websites that work.

Among the company's 10,000 customers are Barack Obama's campaign. Yes, Volusion software powered Obama's websites that smashed all fundraising records — and helped him win the election.

Sproles was barely driving age (16?!) when he started making websites and then launched the company, but he's learned a few things along the way.

Among them: Keep customer service at home. Play hardball with the free demo. Move your best customer into your management team. Market using bulk e-mail.

Here are 11 tips from him on how to build success, one e-commerce storefront at a time.

Company Snapshot
Volusion
Basics
Founded:	1999
CEO:	Kevin Sproles
HQ:	Simi Valley, CA
Headcount:	80
Revenues
2004:	$ 0.43M
2007:	$ 8.6M
2008:	$17M (proj)
Major Clients
• Barak Obama • The Chicago Tribune • Michigan State U • Omni Hotels
Awards / Honors
• #103 on the 2008 Inc. 500 • Small Business Computing award for best e-commerce storefront (2007, 2008) • CODiE finalist for best e-commerce solution (2005, 2006, 2007) • CEO Sproles is an Entrepreneur of the Year finalist from Entrepreneur magazine, winner to be announced in December

Selling on the web tip #1: A big win boosts the whole team
Left or right, blue or red: Sproles knows a major client when he sees one.

For the past few months, one of Volusion's biggest customers was Barack Obama's campaign.

The campaign hired Tigereye Design to set up the shopping cart for the official Barack Obama store with Volusion's software. Hats, shirts, pins, signs: you could get it all. You could make a donation there, too.

And fair to say, it worked.

Obama raised $32 million in January 2008, a record for any candidate in a primary. His campaign fundraisers told TechCrunch that 88 percent of this was raised online through Obama's website.

And the donations just kept rolling in.

All told, Obama raised an estimated $600 million for his campaign, including $150 million in October alone.

And Sproles says his software didn't need any fancy tweaks to handle that volume of activity.

"They used the same customizable platform that everybody else uses," he says.

Politics notwithstanding, such a well-known mega-client always helps to energize a company.

"Everybody here was excited to have such a public client, whether they supported one political campaign or the other," says Sproles. "It's always exciting to get another huge client, one that kind of tests your limits from a unique perspective."

You can say that again. To have played such a critical role in helping Obama win his historic victory: That's the kind of stuff you tell your grandchildren.

Selling on the web tip #2: Give your customers everything they need; then give them some more
What does Volusion really do?

Its E-commerce Solution delivers everything a webmaster needs for an online storefront in a SaaS package, with no contract and no transaction fees.

So on the one hand, Volusion wants to provide a service that does everything for everyone. On the other hand, bigger customers have the option of getting a bit more than the standard "everything."

With no contract to sign, users pay starting at $29 a month. There is a single platform for small-business and enterprise users alike, and the basic features are the same.

"We wanted to provide an all-in-one solution. We wanted everything to be included, no matter if you're small or large, with one software, one platform," Sproles says.

Use of the software is billed by volume and the costs are relatively low. Even users who move millions of dollars of product through their sites every year pay only a few hundred dollars a month in fees to Volusion.

Beyond the basics, enterprise users have access to further professional services for integration, custom development, search marketing, and training. These are priced on a custom basis.

Let's call it "all-in-one, plus extras."

This model allows Volusion to deliver the basics consistently, without having to reinvent its product for each larger customer. Yet the company leaves open the possibility of reaping the incremental revenues that come with value-added services for its largest clients.

In other words, Volusion has found a way to give all its customers everything, and then give some of them even more.

A well-structured offering like this can please smaller users, accommodate larger ones, and still make everyone feel special.

Selling on the web tip #3: Get prospects anywhere you can
Where do Volusion's prospects come from? Anywhere they can get them.

First and foremost, there are search engine keywords like "shopping cart," "ecommerce software," and "ecommerce solutions." Sproles says he has secured high-positions for these terms on all the big search engines.

And yes, the day we checked all these terms, Volusion did pop up high in the paid search results in Google.

The company also buys ad space on related websites.

Sproles is a little cagey about which sites work best for his needs, but we have spotted his company's ads on sites like www.smallbiztechnology.com and www.seoshoppingcarts.com, places where vendors seeking e-commerce solutions might likely be reading.

Perhaps it will come as a surprise, though, to learn that Volusion also trolls for potential clients using e-mail marketing... of the bulk persuasion. Sometimes called spam.

Sproles buys up lists of web designers, HTML coders, and other likely candidates. Then he sends out e-mails plugging the web site, touting the simplicity and low cost of the service, and establishing Volusion's place as an industry leader.

He won't say where he gets the lists, or how much he spends on this component of his marketing plan. But he will say this: It's worth looking into.

"The benefit is the ability to track it very clearly. If they click on that link, you know the conversion rate very clearly, whereas with television and magazines it is very difficult to track that conversion rate," he says.

And he says if you're going to dabble in mass e-mailing, buy the lists that matter most, and only those lists.

"When we help our merchants with their e-mail marketing, we suggest lists that are relevant to their industry. For example, if you sell socks, your best list is going to be a shoe retailer, shoe manufacturer, or else shoe enthusiast communities such as blogs and forums," he says.

If you're selling website development tools, buy a list of website developers.

Sounds obvious, but there are lots of lists out there, all making noise. Tops among Google advertisers in this niche are:

• www.OrangeSpotMG.com
• www.listrak.com
• www.MailingLists.BuyerZone.com.

These and other firms will offer to build a list, slice and dice it by a vast range of criteria, and even design and deliver your e-mail message. Just remember: Caveat emptor.

Selling on the web tip #4: Get results from your free trial
Once a serious prospect comes in, it takes Volusion about 14 days to close a deal.

Sproles can say this with some confidence, since that's how long his free trial runs for. After that, your freebie runs out and you lose whatever work you did with the trial.

For most prospects, the sales cycle begins with a five-minute presentation on the Volusion site that walks a prospect through setting up an online store.

It emphasizes point-and-click simplicity and the customizable nature of the finished results. It's all content, with no jargon and no dazzle. Developed by Sproles and COO Clay Olivier, the video consists of a series of ordinary people (not actors) standing and talking in front of a white background.

While viewing the video, visitors can open a window to chat live with a consultant, or click to open a fully-functional model store that shows what Volusion can deliver.

Click one more time, and they can download the trial version.

From there, customers can start using the demo to actually build their online storefronts. And if they don't begin paying the monthly fee at the end of 14 days, they lose all the work they put into their project so far.

"It is full-featured, so they start to configure their store," Sproles says. "Then we start to send them notifications and start giving them calls toward the end of that 14-day period."

Many SaaS firms give a longer free trial, like 30 days. Perhaps they should re-consider. Fourteen seems to work fine for Volusion.

Selling on the web tip #5: To sell software online, your website needs credibility
Sproles builds e-commerce sites for a living. And if you're selling software online, he says, you better have one thing in mind: credibility.

"Somebody needs to trust you. They need to trust that you are a legitimate show if they are going to give you their credit card," he Sproles.

To some degree, this is communicated through functionality.

In a Volusion storefront, for instance, a user can move a mouse over a product image and get a big, clear, expanded picture. That might not seem like much, but it communicates depth and professionalism.

Appearance plays a similar role.

"Having the shopping cart with the same user interface as the rest of the site, that's really important. If you have the same user interface throughout the site, all the way through to checkout, and it all looks completely unified, then you have established your brand."

In short, keep it together. Don't let the seams show.

Your storefront is the outfit you wear in the world's eyes. If it looks patchy, visitors will doubt your ability as a software vendor.

Selling on the web tip #6: As the company grows, adjust your sales comp plan
After a SaaS prospects signs up, how do you compensate your people for the sale?

Do you pay one big lump for each deal closed? Or give them an initial commission, plus a trickle of further payments for as long as the customer stays?

At Volusion, it's been a bit of both.

"At first, with a small sales force, compensation was nothing fancy," says Sproles. "Our previous sales model was focused on the initial sale, and as such the commission payout was earned entirely on that initial sale."

As the company grew, it got a little fancier.

The company opted for a commission model that would encourage a more lasting bond.

"Our continued success, especially in the enterprise market, spurred us to change our compensation structure... The initial sale is only the beginning of the relationship. In our new model, a consultant's goals, and consequently commissions, will be based upon the results obtained in the ongoing relationship," he says.

What counts as a result?

"Continued loyalty and purchases of additional products and services, as well as ongoing satisfaction. Consultants will now receive a smaller upfront commission, with the opportunity to earn more based on successfully growing the relationship."

Bottom line: To keep earning, sales people will need to keep selling. Fair enough.

Lesson learned? As the company changes, the pay plan can adapt as well.

Selling on the web tip #7: To keep customers happy, invest in customer support
Sproles doesn't want to ship customer support overseas.

You just can't get the same quality of service in Bangalore, he feels. Instead, calls are received in-house, and issues escalated in house. It's a big commitment: About 20 of the 80 employees work in support.

The key to success lies in training, Sproles says. If you're going to promise 24/7 support — as Volusion does — the people answering the phones need to be on the ball. After all, every minute an online storefront is down costs your customers money.

Multicultural Associates delivers in-house training sessions about once a week. Additional regular training comes from designated trainers within the company, including upper-level technical staff.

The coursework focuses on two key areas: the technical ins and outs of the product, and customer service skills.

"The training classes that we provide to our technical support reps focus on providing excellent customer service," he says.

That includes "how to ensure the customer's needs are clearly addressed, and how to make sure that the customer walks away from the call impressed with the representative's attentiveness, eagerness to assist, and ability to resolve the issues."

Each rep has at least one call monitored and scored each week, and reps who excel can receive bonus pay from a monthly incentive program.

Call-center success factors include getting all the details of an issue, identifying the problem quickly and accurately, and keeping good records.

Volusion may focus on one or another factor in any given week, and will give a dollar prize for those who excel at that factor, along with a grand prize at month's end.

Everyone says they're dedicated to customer service. But to walk the walk, you have to invest in it.

Selling on the web tip #8: A good customer might make a good exec
Early in the life of Volusion, young Sproles happened upon a customer named Clay Olivier down in Austin, Texas. It was a relationship that would change the course of the company.

Sproles started Volusion at 16 years old. And in the beginning, he did everything, from taking the orders to working the help desk.

"I was speaking to all of our customers, and that was fine," he says. "I definitely didn't have any interest in finding an investor or anything like that. I was the typical entrepreneur, thinking I could do everything myself."

Back to Olivier, who was using Volusion to sell natural soap and eco-friendly shampoo online.

He approached Sproles about a partnership, and it just made sense.

"His experience in sales and marketing was far superior to anything I had, fresh out of high school," Sproles says.

The company couldn't afford to hire Olivier outright. By bringing him on as COO and business partner, Sproles was able to get the expertise he needed, without giving up the degree of control a VC investment would have required.

Best of all, the company was able to tap the insights of an actual end user.

"Having somebody who could sell our software based on his own experience using it, he knows exactly the mindset that our customers have," Sproles says.

Keep an open mind. If you encounter a great natural partner, don't let age, lack of money, or anything else stop you from putting it together.

Selling on the web tip #9: When the time comes, hire key middle managers
For most of the lifespan of the company, the CEO and COO did all the heavy lifting.

But as the company grew, they needed help. Like most growing firms, Volusion has began hiring a new layer of middle management.

Here's who they hired in recent months, and why:

• Director of sales Justin Jackson came on board to tighten up the sales process and ensure that no lead goes unanswered.
  
• Director of engineering George McKenzie is there to take a fast-growing department and make it even more productive.
  
• Product manager Palak Shah is taking over research, designing more formal feedback channels through polls, forums, and research by industry segment and customer size.
  

This is still a work in progress. But Volusion is following the same path as most other growing firms.

When growth threatens to outstrip your organization's capacity, hire in the key positions: sales, engineering, and product management.

For Sproles, at least, these are areas where a strategic layer of management can make a difference.

Selling on the web tip #10: Need a focus group on new tech? Ask your own people
When a massive new direction in technology erupts, build software to make the most of the moment — fast.

That's what Volusion did with its Social Store Builder. This was released in June 2008 to allow customers to easily move products from their online stores into MySpace and Facebook, turning the social space into a virtual storefront.

Volusion got in fast, because Sproles tapped a valuable resource within his own staff: social networkers themselves.

Sproles held brainstorming sessions with anyone on his staff who has a personal knowledge of social networking. They talked about their own use of these sites, the behaviors of the typical social networker, and how they could build something useful for their customers.

Looking for direction? Find your own staff who may already know the way.

Once the concept of the social store builder emerged, Sproles picked up the APIs from MySpace and Facebook. But it was still slow going.

"The Facebook and MySpace APIs were brand-new, and there were bugs we had to work around," Sproles says.

Total development time was about three months. And that still got Volusion to market well ahead of the curve.

Selling on the web tip #11: Share the wealth to do some good in the world
Volusion has an extensive philanthropy plan, overseen by the director of HR and managed by the HR staff.

The company works through the non-profit World Vision, using that group's expertise to pass out $100,000 in 2007 to entrepreneurs, farmers, and families in Africa.

While there are many charitable organizations ready to distribute corporate gifts, Sproles says World Vision is both reputable and diverse.

There's no set budget for Volusion's giving. Top brass make the call, based on what they think the firm can afford.

"I feel strongly that everyone should do something. We are very fortunate to be in the position that we are in," Sproles says.

Volusion also gives away 10 free stores every month to non-profit companies.

About the author: Adam Stone is an award-winning journalist who follows trends in software, wireless, government IT, and general business. With more than 20 years experience, Stone writes about entrepreneurs, HR, business financing, and industry verticals for numerous business publications.