Dealmakers: Growth Hacking with Sales Automation Technology
As consumers fragment across the web, mobile, social, and apps, sales prospects have fragmented with them. We tend to think of fragmentation as a major hurdle, but it means opportunities as well — to leverage content, data, and analytics to create an efficient, effective lead pipeline.
Investors are turning their attention to this opportunity, pouring money into and acquiring companies that facilitate sales and marketing automation at the local level. Marketing automation that integrates with CRM and auto-dialers and is easily scored and translated into action-based analytics is capturing investment dollars in 2015. According to VentureBeat’s Q3 Marketing Tech Funding Landscape, “Backbone tech (in some cases, marketing automation platforms themselves) is also up for a second consecutive quarter, solidifying this as a real trend to watch and account for.”
Growth Hacking Investments
What distinguishes the tech, sales, and marketing automation companies receiving investment dollars this year is that they uniquely embrace the concept of “growth hacking.” Coined by Aaron Ginn, the term growth hacker or growth hacking describes how marketers leverage data and unique applications of traditional marketing practices to create a growth pipeline for their business.
SalesLoft CEO Kyle Porter, who raised $10.15 million in Series A funding earlier this year, described growth hacking as building lists of “the right prospects and communicating with them though a cadence of phone, email, and social media touches on a daily accountable rhythm.” SalesLoft recognizes prospects can quickly tune out if the messaging is too frequent or becomes irrelevant. SalesLoft is highly rated among SMBs, according to G2 Crowd, which should lead to continued adoption.
Yesware has taken what it classifies and “not new technology” and layered automation into data entry, content creation, lead scoring, salesperson notification, and process feedback. The platform, which syncs with Salesforce, Microsoft Dynamics, Gmail, Outlook, and other day-to-day tools, raised $13.3 million in Series C funding from Foundry Group, Google Ventures, and others. Yesware continues to grow market share (700,000 users according to its site) and draw funding support because of its focus on tight integrations with widely adopted business tools.
And, just this past week, Constant Contact was acquired by Endurance International Group Holdings in a cash deal valued at $1.1 billion. The companies said the value represents a multiple of 12 times Constant Contact’s 2015 estimated adjusted EBITDA, and a per-share premium of 23 percent over its October 30 closing price of $26.10. The deal includes $32 million in cash and $1.085 billion in debt financing, led by Goldman Sachs & Co.
Marketing and sales automation may be un-sexy, backbone technology. However, its value in the marketplace has been borne out by the number of transactions and funding events.
The Human Element vs. Big Data
Marketing and sales automation software is only as good as the sales team’s discipline to use it. To that end, relative newcomers like LeadGenius are mixing tech, analytics, and human intelligence to drive adoption of their platform. The investor community is on board with LeadGenius’ unique approach, funding a $6 million Series A round a year ago. “While CRMs have begun making sales processes more intelligent,” said CTO Prayag Narula in describing LeadGenius’ approach, “we apply a layer of human intelligence with our virtual workforce, bridging the gap between prospecting and selling in a way that purely automated tools can’t deliver.”
Tech features like power dials have long been in use for outbound sales efforts as a way to make the human element more efficient. The current crop of marketing and sales automation tech integrates all the touchpoints with potential customers starting with CRM platforms, then pairs content marketing with outreach methodology that drips the right message to the right prospects.
What makes the current players interesting and appealing to investors are two components of their business models. The first is installed base. That KPI is still king when it comes to evaluating tech. Endurance International Group Holdings listed Constant Contact’s five million users as a key value of the acquisition.
Second is the application of analytics and data to further automate and drive conversions on these platforms. InsideSales acquired predictive sales company C9 Inc., earlier this year. Several companies had been courting C9 because of its predictive analytics and impressive roster of users, including LinkedIn and ZenDesk. This acquisition came on the heels of InsideSales’s $60.65 million Series D raise in March 2015, in a round led by Salesforce and Microsoft.
What the Big Fish Eat
Salesforce, Microsoft, and Endurance International Group Holdings are just some of the big players in this space with money to invest. The desired features investors are seeking include a focus on mining consumer behaviors, testing new outreach approaches, and applying this knowledge to the next marketing campaign.
- HubSpot, post-IPO, acquired ReKindle earlier this year to combine its interpersonal connection software with HubSpot’s Sidekick contact management tool for salespeople.
- Infusionsoft has money in the bank to expand its offering, thanks to its 2015 $55 million Series D round, led by Bain Ventures.
- Marketo acquired mobile app publisher Vessel in May. Vessel enables marketers to deliver experimental, targeted, and personalized content in their native apps without pushing app store updates.
- Act-On, with $72 million raised over five rounds, needs to grow its installed base. An acquisition may be the most expedient way to get more SMBs on its platform.
The latest crop of sales automation firms could very well extend their reach into loyalty marketing. There’s a natural connection with sales and marketing automation tools that use predictive data to reach potential customers at the right time in their decision-making process. Tying the end-to-end relationship with existing and potential customers seems like a logical next step for these tech companies that are horizontally expanding their services in search of additional efficiencies based on a single view of both current and future customers. The convergence of automation and loyalty is where I’m betting real growth hacking could happen in 2016.
Dealmakers: Sales and Marketing Automation
$1.1B acquisition by Endurance International Group Holdings
$1.1M in seed funding
VC: Sovereign’s Capital
Angel: Alston Gardner, Bruce Boehm, Robbie Allen
$13.3M Series C
VC: Foundry Group, Battery Ventures, Golden Venture Partners, Google Ventures
Undisclosed acquisition by InsideSales.com
Undisclosed acquisition by Marketo
$2.3M in seed funding
VC: Version One Ventures, Stage One Capital
Angels: Ellen Levy, Mark Sugarman, Mike Maples Jr., Sarah Imbach
$10.15 Series A
VC: Emergence Capital Partners, Storm Ventures
Angel: Jason Green
$60.65M Series D
Strategic: Salesforce Ventures, Microsoft
VC: HWVP, KPCB, Polaris Partners, USVP, Zetta Venture Partners
$15M Series B
VC: Andreessen Horowitz, Founder Collective, JSV, Launch Fund
Accelerator: 500 Startups
Angel: Eric Ries, Esther Dyson, Scott Banister
$6M Series A
VC: Sierra Ventures, Kapor Capital, FundersClub, Fuel Capital, Bee Partners, Scrum Ventures, CRCM
Angel: Alexis Ohanian, Garry Tan, Aaron Harris, Sam Altman, Scott Bannister
Accelerator: 500 Startups
$55M Series D
VC: Bain Capital Ventures, Allure Ventures, Arthur Ventures, Goldman Sachs, Signal Peak Ventures
Charity Huff is an active member of the local media industry, contributing in an advisory capacity through public speaking and her entrepreneurial ventures, including Tru Measure, a metrics-driven, technology services company that captures consumer engagement generated from media and advertising. She can be reached on Twitter @charityhuff.