Not every business has to have a sales team, but their power does have to be in building quality, connected relationships. On this episode of CEO Sales Strategies, Doug talks with Rand Fishkin, founder of Moz and SparkToro, about how he grew each to 7-and-8 figure businesses, with Moz growing to $1.5 million in revenue within a year and a half – all without a sales team. Doug and Rand also discuss the importance of building human-to-human, connected relationships online and offline, marketing tips, and more.
Rand Fishkin is the co-founder and CEO of audience research software startup, SparkToro. He’s dedicated his professional life to helping people do better marketing through his writing, videos, speaking, and his book, Lost and Founder. When Rand’s not working, he’s usually cooking a fancy meal for the love of his life, author Geraldine DeRuiter. If you bribe him with great pasta or fancy cocktails, he’ll happily pull back the curtain on big tech’s dark secrets.
Visit his website: www.sparktoro.com
Create a forever-free SparkToro account and run searches on your target audience at www.sparktoro.com
Rand, I want to welcome you to the show.
Thanks for having me, Doug. It’s good to be here.
I’m so grateful you are here because you built a company to $30 million without a sales team, essentially. A lot of people are going to wonder, “How the heck do you do that?” It was Peter Drucker that had a quote that said, “Marketing’s job is to make sales superfluous.” We know the customer so well. I don’t think he was talking about getting rid of salespeople but he was talking about, “Let’s turn them into order takers versus having them do all the lifting, and marketing’s job is to do that.” I’m very happy to jump into this because I know people are already going, “Let’s talk about this.” The question is, how did you do it, Rand? How did you go from $0 to $30 million without a sales team?
Ignorance is key. I did not know anything about sales when I started. This is my previous company we are talking about. This is also true for SparkToro but SparkToro has only about a $1 million run rate, and it has only been around for a while. Two different businesses but both of them were built without any salespeople, sales team or process. Both are entirely built on the back of marketing, which is something that I also knew nothing about.
I started Moz as a college dropout who became a web designer and worked with my mom, designing websites for local businesses in the Seattle area. Eventually, I learned this practice called search engine optimization, which is what Moz’s software did. I became the CEO of that company, led it for many years, stepped down, stuck around for a while. That business was built without a sales team because I didn’t know that you could build a sales team or how to build a sales team or any way to do that.
My approach, instead, was rather than trying and figure out sales, was to build a marketing engine based on several things. Obviously, Moz did search engine optimization well. It ranked for many keywords in Google that lots of people searched for. It had a content engine, so that when you clicked from those keywords in Google, those articles, videos, content, and landing pages that you found all helped serve a fairly long marketing cycle. “Here’s an introduction to the brand, here’s information, here’s content that is helpful and useful to people that they wanted to subscribe to.”
As they became subscribers, slowly over the course of months and years, we marketed the product to them as well. If you are trying to learn SEO, you probably want to do many of the things that you do with SEO in an automated fashion with software rather than manually yourself. That’s what Moz’s software did. SparkToro is extremely similar. This current company is basically all about audience research. If you want to understand your target customer, your audience, competitor’s audience, and the audience that you are trying to reach, people who follow a particular brand online or talk about something on the internet, SparkToro can give you that data.
Lots of people don’t understand, “Why do I need that data? How do I apply that data? When is it useful, and what is it useful for?” We have a content engine. It is not, however, built on search. It’s built much more on social media, podcasts, and PR and distribution like this. That has been equally successful. SparkToro’s revenue ramp-up rate is actually slightly faster than Moz’s ones in its first eighteen months.
I heard you say, “SparkToro was only doing $1.5 million in their first year.” I can hear people out there going, “What?”
It’s at $1.5 million in its first year and a half.
Sorry, an extra six months to get to $1.5 million. It’s a $1 million run rate first year. I know you as a modest person anyways, based on what we were talking about in previous conversations. There are a lot of companies out there that would go, “I would give my pinky finger to be at $1 million in my first year.”
We have had a very good run. A lot of that is down to a simple product, SparkToro. Moz was simple for its time. I would say that there are products that do it even better now, but SparkToro is something that’s easy to understand quickly if you are a sophisticated marketer, a product person or a CEO. You can look at the data in SparkToro, and with a single screenshot, get this, “I have always wanted to know that stuff. Here’s how I learn it.” If you have the problem of, “I need this information now,” it’s a very reasonable path to just sign right up.
The friction to, “How do I understand this product? How do I use and apply it? How do I sign up for it?” It’s very simplistic. We do weird things at SparkToro. People email pretty much every day, Doug, maybe every other day and say, “Can I get a demo?” Casey, Amanda, and I have a standard reply, which is basically, “Sorry, we are a tiny team of three people. We don’t have the bandwidth for demos. However, here’s this video, these resources. Here’s how you can try it for free. Here’s how you can see the full results.” So far, that’s worked pretty darn well.
I have a weird admission. This is somewhat embarrassing. I’m sure everyone who’s reading, who’s a sophisticated salesperson, will be very surprised. I did demos for the first six months. Pretty much every week, I had 2 or 3 demos scheduled. It’s hard for me to even understand why this happened, Doug. 9 out of 10 people I gave a demo to did not sign up for the product. There were people signing up every day, so we were good at marketing, and I am apparently terrible at sales. I think this is another reason.
One of the things about salespeople, in general, is they are able to present. My guess is you would definitely be able to do a presentation, whether it was converting or not, that could be something for you and me to take a look at if you ever want to do demos down the line again. Here’s the point. You don’t have to. It’s so simplistic. When I took a look at SparkToro, I loved what you had on the website. It was like, “How to get previously impossible data about an online audience’s attributes, attitudes, behaviors, sources of influence.” I am constantly teaching companies in sales, “Know thy customer.”
We have a huge number of sales enablement and marketing teams that feed sales who use SparkToro for exactly this thing to help folks understand their audiences. The fascinating part to me about the marketing and sales balance is that if you have a selection bias issue, which is what SparkToro has and possibly Moz as well. Basically, people who in their enterprise function, this is B2B obviously, but are not used to being sold to. They are not used to having engagement with a salesperson. They are used to buying software, and subscription-based software and tools in low friction, purely online, no communication environment.
That’s who you are building for. That’s who SparkToro is building for. That’s who Moz is building for. You find that there’s a small number of people who don’t fit that profile and, therefore, aren’t familiar with your type of product and marketing-focused approach to sales rather than a sales team approach. When you get a mismatch, that’s when you get people who want the demo.
My suspicion is that’s the reason the 9 out of 10 people that I gave demos to were like, “Now I understand the product and thank you for walking me through it, but I don’t think it’s something we are going to buy.” Even at the end of the call, there’s no signup, and I never email them to pressure them to sign up because it’s just an online signup system.
There’s a difference between a demonstration or presentation and a relationship. Your key is you build such a strong relationship that you don’t need the demo or presentation. If you built your relationship first and then present it later, you might get a different opportunity because that’s what I have found happens in sales. A lot of times when I look at teams and evaluate companies, and I was joking with you a little bit earlier about the presentation thing but the reality is they are great presenters but they can’t build a relationship.
I wrote this path down, so please tell me if I’ve got this correct. What I’ve got was the way you built SparkToro because it’s got $1 million a year growth now. In the first six months after, you’ve already added another $500,000. Let’s say over ten years, that’s all that happens. You are a $10 million company . A lot of people would be happy as could be but you built a $30 million company without a team on this premise. Let me know if this is right – you go from connection to education, to a relationship, to building high, massive rapport, to an offer.
That could reasonably encompass the cycle. It was often a very slow multi-touch process so that education component might include dozens of visits to the website, a subscription to the video series, to the email newsletter and the blog, going to conferences and events, and seeing me present at those. It might be a year or 18 months, or 2 years before someone went from, “I know what Moz is,” to, “I went to the website, and I signed up for a free trial and put in my credit card.” It’s a long process.
It’s a $30 million gift at the end.
Technically, Moz, when I left, was around $50 million in revenue but when I ended my tenure as CEO, we were right around the $30 million to $35 million mark. Those numbers sound extraordinary. If you and I owned a business like that, we would be beyond thrilled because Moz’s margins were extremely high. Software as a service, very high margin business. On the flip side, pretty much a disappointment to its investors.
Moz was purchased by a private equity company but I’m not allowed to disclose the purchase price. I don’t think its investors would be like, “Great job.” They were disappointed. I was disappointed. I don’t think anybody in that company was thrilled with the performance. This is so weird. If SparkToro gets to $2 million a year, my cofounder and I are going to be beyond thrilled. That’s a resounding success. Absolutely outstanding. Plenty good for accomplishing its goals and more, it’s just such a different scale of what’s required based on how you raise money and what the incentives are.
Moz was valued based on its growth rate, not its total revenue, margin or profit contributions. SparkToro, growth is not what we are focused on. It’s profitability, long-term survival, the happiness of the team. We practice this chill work thing where we try to keep our work hours to a relative minimum and our happiness to a relative maximum rather than the other way around.
We are speaking with Rand Fishkin of SparkToro, it’s www.SparkToro.com. I highly recommend you to go visit the website, and you will be surprised by what you see there, especially for the investment structure. It’s something that everyone in selling needs to know more about the behavior of their folks. It’s just the way it is, especially in 2022, after the pandemic has shifted everything. In the old days, we had to do what were called focus groups.
Which still have value. I don’t think that SparkToro’s approach to data can fully replace a market research survey or one-to-one conversations with customers and potential customers. I still see incredible value in that. I try to talk to SparkToro customers at least several times a week. That’s hugely important, but you cannot get data like, “What percent of our audience do we want to listen to these 100 podcasts?” That’s data that you cannot reasonably get through either a survey or an interview.
What you want is passively collected data that has been anonymized and aggregated from their iTunes, Twitter, Facebook, and LinkedIn profiles. That’s what SparkToro does. There’s value in all of these kinds of data but it’s cool to be able to offer something that hasn’t previously existed and certainly not been popularized in the audience research world. To your point, the pandemic shifted so much human activity online, even activity that wasn’t online before. It’s not like 2019 was a low participation on social media year but 2020 to 2021 accelerated that, obviously.
Knowing information about our potential buyers allows us to have different conversations. I used to do focus groups way back when. We would spend tens of thousands of dollars on focus groups, sometimes even more but your service does that for a fraction of the cost. Before we got on this interview, the thing I said to you was, “I noticed your wife had a viral blog article that went big time.” When I said that, your eyes lit up, so it’s a rapport-building point.
There is a big difference between, “I have something that I think can solve the business problems that I want to sell you,” and, “I care about you first and foremost as a human being. If you buy something from me, that’s great, but if you don’t, so what? We are friends now.”
My assumption is that for years to come if we find ourselves in the same city, we can grab a coffee or a drink together. We can chat about the hilarious restaurant experience that Geraldine’s blog post talked about and the weird three-page response of, “What is a horse,” from the chef. The power of building real relationships with real people in real ways that shows a depth of care about somebody is it is both a great way to market and sell. Also, far more important and valuable to me than marketing and selling.
It’s the ultimate in communication, human-to-human contact on a personal level. I trademarked Humanized Communication years ago. People told me I was crazy. I’m like, “No, it’s all about relationships.” There are, admittedly, much better salespeople out there than I am. An old mentor of mine told me, “It’s really easy to judge a salesperson. How are they doing with their numbers?” That’s ultimate judgment. I’m not trying to be braggadocious, but any company I have ever worked for or even in the industry I’m in, when you look at the sales numbers that I generate, they are much higher than the average.
It’s because of what we are talking about – building relationships and being a master prospector or a master marketer. A master marketer or master prospector will always outsell the master closer. I have been doing this for over 40 years. I’m showing my age a little bit but the reality is you are building massive rapport with people through time. Marketo did a study, and it showed that 66% or 62% of leads that come in online will close but it takes up to a year to close them.
This seems to be true in the marketing universe as well. For example, SparkToro has about 150 or 200 people who sign up for the free version every weekday, which is amazing. It’s super cool. People who go to the website have heard about it on a podcast, seen a webinar about it, heard about it from a friend or saw something on Twitter or LinkedIn. They go to SparkToro and start searching for some audience they are interested in, they sign up and check out the free results.
Obviously, lots of them don’t come back but we’re at a very healthy number. Somewhere in the 20% to 30% range use a bunch of searches every month to come back again. Many of those people will, within a year to 18 months, sign up for a paid account at some point. That speaks to exactly what you are talking about.
Moz was very similar. It was somewhere around 100 credit card free trials a day. SparkToro doesn’t require a credit card to sign up, so it’s a little different, which is why the number is higher. With Moz, it was around 15% to 20% of those folks turned into subscribers. In the first three months, the churn was quite high. After that, it got very low.
The reason behind that is you created what I continuously preach – massive, relevant, and communicative follow-up with a human being.
It’s a difficult thing to do at scale. We have found that it’s very challenging to have that email and sign-up and communication flow in a way that’s not too intrusive but is helpful and timely, and the right quantity and style of communication, the right message, education. All those things are huge areas of impact. Over time, we will continue to refine that series and cycle. That’s essentially how we do sales.
I would say you are doing sales, not to one-up you on that statement by any means but the reality is this is what I preach to people every single day when I’m talking with them. You must build a relationship. A close is nothing more than building the proper relationship prior to asking one question, “Would you like to move forward and do this at this time?” It’s really that simple but what I witnessed you do like a master, you said it was ignorance.
It’s who you are, and you created this system of creating continuous connection. Now you are getting 200 connections a weekday, which then goes into a relevant education process for these people. This is going to build the relationship, which is now getting people to go, “I like Rand and his company. I like him, and I now respect and trust them.” That’s the key. You’ve got to get them to the trust level and now, “I will start consuming. It’s time for me to actually go forward with this thing.” They are making the decision on their own. That is the best close in the world.
In a lot of ways, the way that I think about marketing to SparkToro’s customers and before then, at my previous company Moz, my job is to communicate what we do, how we do it, why we do it, and who we are. We give folks the time and space to experience the pain point that our product solves. We have to rely on the fact that we have built this relationship with them so that they think of us first, remember us, remember that they like, trust and go buy from us when they have that problem.
When I have struggled, especially with folks who don’t get value out of the product or don’t have a great experience with it, it’s much less often that it’s a product problem fit. It’s often a problem timing fit that basically they signed up because they felt like they really liked me, the product idea or the content. They sign up and go, “I don’t really have this pain point. I’m not using this. I’m not using it because I don’t have the problem that it solves.” We have to wait for that problem to appear. A lot of products are like that. Almost all products are like that.
The difference is you are not forcing this upon people, and you never had to build from $0 to $30 million. You are allowing them to come to their own decision, “This is good for me.” I understand what your presentation challenge was before. Why do people want a presentation? It’s because they don’t understand. I preach, teach, and drive this home, and people will go, “You’ve got to always do a presentation.” Not if you build the relationship the right way.
There are 4 or 5 people every day who are coming to SparkToro and signing up for the paid version with no demo. The one person every other day or so, who’s saying, “I need a demo,” it’s a selection bias issue. They are the ones who don’t quite get the product, and that’s why they have asked for the demo.
Without question, because they are searching for something and hoping the demo fills in whatever they are looking for. I’m saying this because I have closed multi-six figure deals without a presentation and people go, “How did you do that?” It’s what you are doing. It’s a very similar process. The reason I’m bringing this up is that people always think, “We’ve got to do a presentation.” The problem is they are doing a presentation too early in the cycle.
When they do a presentation too early in the cycle, all that person has now is, “I will compare X presentation to another person’s presentation to another person’s presentation,” and the relationship hasn’t been built. Think about it. When people try to date and get in a relationship, they send cards and gifts and call the person out of the blue. They talk about relevant information in their life. They are trying to help them, etc.
When it comes to sales, most people like, “I’m selling to whatever CEO. It’s the title I will sell to.” No, it’s a person. Everybody lean in because this is the key that he [Rand] did to get to $30 million, and then they took it to $50 million. What you have done masterfully was you follow the process that we talked about in the beginning. You created a connection, built education and a relationship. You created rapport through the process just through doing all of that with continuous follow-up, and then the offer was easy. It’s like the offer presents itself every single day, so the offer is saying, “Do you want this?”
It’s being present when the problem presents itself.
The reason I wanted to talk about this was that one of the number one pain points that people come to here, and I get emails and things for, is, “My sales team is driving me nuts. They are not doing what I want.” What you have done is you have basically done what Peter Drucker said, “Understand and know your clients so well that if you want a sales team, it’s fine, but if you don’t want one, we will make it superfluous. We will make it almost unnecessary.” That is a lot of entrepreneurs’ dreams. They just want that. You have a book, too. I wanted to make sure I mention that because the book is really good.
Lost and Founder. That is very much talking about the Moz journey from $0 to $50 million and those years as CEO and then stepping down. The experience has many painful stories in there, and many great ones but people have described it as not pulling punches.
My wife read it first because we were flying a lot together at the time. Every airline, she’s got her tablet that she’s reading this on, and then pushing it in front of me, “Look at this.” I’m reading this and I’m going, “This is pretty smart. This is really smart. It’s the real deal.” Folks, go buy the book. It’s the real deal.
It comes at it from a very no punches held, honest and truthful manner. It’s non-subjective. It’s objective. It comes from, “I screwed up here. This is how you don’t have to. I won here. Here’s how you can win.” It’s a great book. I enjoyed reading it, and I’m not a reader. I’m an audio guy. Most of the time, reading doesn’t appeal to me.
I had a fascinating time doing the audio version of the book. That’s a whole different skillset. After 4 days of 8 hours of reading, your voice gets very tired.
I appreciate you being on here. I know people got a lot out of this, and I know this is making people scratch their heads a little bit because they are going, “How the heck?” It’s because they are not used to it but the reality is you built massive relationships and had strong marketing and prospecting going on throughout the process. That is the key to being a top performer.
We had a number of other advantages. The price point is a big one. Moz‘s highest tier was at $400, $500 a month. SparkToro, it’s $300 a month. We are talking about relatively inexpensive price products, the kind of thing you put on a credit card. We also had audiences that were used to buying products without sales. That helps, too. If I were going after a sector and at a price point with a product where sales were the default, I’m not sure that I would try to build a company in this fashion. There are absolutely lessons that folks can take away from the processes that we use, just as I am very confident that we could learn and I could learn a tremendous amount from how successful salespeople and sales teams are built.
It’s a continuous customer experience. You’ve got the front end of that experience really dialed in. I will challenge you all out there that are reading. Any salesperson and anybody selling, if you don’t think this is a great thing, just send me hate mail. The reality is that it is a queued-up, well-qualified lead, and that’s what all salespeople want. They want to have the conversation to convert.
You are already finding out, “Do they have needs?” They are already finding out everything that the salesperson needs to know. That’s what I love so much about SparkToro. It gives these communication points. It makes someone different if they know this information. You are doing the whole front end for the sales team. What I do with companies and people who want to be at the top 1% of selling is I come in and say, “You have to align your marketing and sales customer service operations. It all has to be one experience for the client.”
That’s what you are doing all upfront, so you didn’t need the sales team. If you were in an industry that you did need the sales team, you are heaven-sent for those people on what you are doing because they are looking for those types of leads. This is always the contentious relationship between sales and marketing because salespeople go, “I can do this without marketing,” because they have never had the experience that you provided for your clients.
When they get that experience, it’s like, “This is amazing.” I’m doing a campaign for a client. I will have to run it again but the last look was almost a 67% close rate of every lead coming through. That’s huge. We do a good job on the back end. Don’t get me wrong. I have very skilled people but it’s how they are setting the lead-up and setting it.
You’ve got to be getting the right folks at the top of the funnel there to make sense. SparkToro’s conversion rate is around 2.5%. It’s much lower, more than an order of magnitude.
The thing is, Rand, you were selling a $3,600 to $6,000 product annually. For most people, buying that type of product, even online, it’s not going to happen for most companies without even a conversation. We are seeing now online where they will spend $150,000 on a used Lamborghini or something. You’ve got Carvana, you’ve got all the car companies going out there and are playing havoc with the automobile industry at this point. It’s like, “I don’t have to deal with going in there, and putting a little office and having all these little games being played with me. I can just go up there. $40,000? No problem.” You are done. They drop it off at your house and pick up your other car or whatever.
I definitely feel like some of the car sales on the consumer side, that experience, which is something that nearly every American at least has felt and dealt with, has almost poisoned the well against sales in a lot of B2C and even B2B. People have this historic negative association with sales because often, the only sales that they have dealt with are the bad kind. You have to ameliorate this bad reputation and try and create a new experience for folks. That’s a tremendous challenge, and I tip my cap to anyone in your field who can do that well.
It is but everybody knew this was coming. Back in the ‘90s, I was telling people, “This thing called the internet is going to change the way we sell.” They all said, “You are crazy.” That’s back when I had a full head of hair.
They said Kodak will live forever.
That was a big one right there. We didn’t even call it film. We call it Kodachrome or Kodak moments. Now, they are no longer or they might have a tiny little division here and there of another company. Things are changing. General Electric was purchased. There are a lot of things that are changing, and I really appreciate you coming on here and giving people how you did it, and they can take the lessons from this.
I’m going to plug SparkToro again because I love it. Folks, go to www.SparkToro.com. Check it out, understand the intelligence that it brings forth so that you can have quality conversations and better quality marketing once you understand this information. Rand, anything I should have asked you that you were hoping but I didn’t?
No, I think we ran the gamut, Doug. I really appreciate it.
Rand Fishkin. His company is called SparkToro. His previous company built from $0 to $30 million. He left, and then they went to $50 million. This one, you are on a $1 million-plus run rate. Congratulations, and thanks for being on the show.
It’s my pleasure. Thanks for having me. Take care.
I’m going to repeat this. He went from a connection to building a relationship through education. He went from that to building a relationship and deepening it to create trust, like, respect, known as rapport. He continued to keep educating, building the relationship, and kept going on until the offer came. When that offer came up, it was an offer that was being offered anyways throughout the process. People were ready and said yes. Here’s the thing I want you to understand out of this. This is the pathway to building any great relationship, not just a sale.
A lot of times, people are presenting too early. When you present too early, then all people have to do is be able to compare against their presentation versus someone else’s because they don’t have the relationship. They don’t have that trust built. You are really getting commoditized in that process. When they [SparkToro] did that, they weren’t getting sales but when they stopped doing that and just built the relationship and focused on the relationship – lots of sales.
He’s on a $1 million-plus run rate with his new company, SparkToro. Pay attention because this is the way it’s being done. It takes some time to do this. Are you playing long-term or short-term? The other thing is he played win-win. When it wasn’t a right fit for the clientele, they disengaged. He didn’t take clients on, and they didn’t become problem clients because he didn’t take clients on. They weren’t supposed to have them in the first place.
Start building relationships. Start pushing those relationships forward. You would be surprised. I have had relationships where I have talked to them, and it has taken eight years for them to actually purchase. Now you go, “Doug, that’s way too long of a sales cycle.” It depends on what you are selling, number one. The reality is sometimes people aren’t ready now, and we all want to close now. That’s cool because that’s what we do. That’s what we get paid for. That’s how we build our companies. That’s how we help fund the growth of the company. Sometimes you’ve got to help people cross that bridge now but sometimes the bridge isn’t ready to be crossed.
As the selling person, the party selling, you have to know whether or not it’s the right timing. If they are giving you indicators, it’s not the right timing, and it’s incumbent upon us as the sellers to actually figure out what that timeframe is for the client. It doesn’t mean you don’t try to close them. It doesn’t mean you don’t try to close them for their own benefit but if it’s truly not for their own benefit, you are better off waiting. If not, what will happen is they will dump out of your sales process. Down the line, they will remember. They may just even go to your competitor at that point.
Make it a great year for yourself. If you want any help at all with your marketing, with your sales, you want to grow your company, you want to get more sales acquisitions, you want to improve your sales in general, you want to improve your profits, reach out to me. It’s at Doug@BusinessSuccessFactors.com or hit me up on LinkedIn at DougBrown123 as all of you are doing.
If you love this, do me a favor. Go rate this. I’m putting a lot of focus into this show. Those five-star ratings help. They start moving us up, we get more downloads, and they attract more people. I appreciate that. Reach out to me and let me know what you would like to have on this show because the reality is, I’m here for you. If I can provide you with information that will help change the trajectory of your business in a positive manner, that’s why we are here. Make it a great year, go out, and sell something. Build your life. Be happy. Until next time.
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