If there's anyone who knows how to pull through when the cards are stacked high against him, it's Zor Gorelov.
Gorelov is co-founder and CEO of SpeechCycle, a company that makes software for automated call centers. He happened to open his business in August, 2001—12 days before hijacked planes slammed into the World Trade Center. “In 2001,” he says, “it was nuclear winter in New York, and in the tech world.”
He went on to build a company that attracted major corporate customers such as Cablevision and Cox, and now handles millions of calls every month. Here’s a look at how he adapted his strategy on the fly:
Like the (false, it turns out) Willie Sutton line about how he robbed banks because “That’s where the money is,” one lesson Gorelov learned quickly is that chasing customers without big budgets is a losing game. His company’s plan was to provide sophisticated automated call center software, allowing for fewer live operators. He started out pitching printer companies because printer purchasers often need support help. “We got a list of 1,500 printer manufacturers and went to work calling them,” he recalls. But printers are sold at razor-thin margins, so printer companies didn’t have much room to invest in call centers.
In any case, Gorelov soon realized, there were much bigger fish out there. “We realized that when people have trouble with their routers, they don’t call Linksys, they call Comcast,” he says. So SpeechCycle switched its target market from consumer electronics to Internet providers.
Gorelov’s original plan was to sell companies the call-center automation software he’d developed. “HP told us that in the winter of 2001, they weren’t buying software from Microsoft or Oracle, and they weren’t going to buy any from SpeechCycle either,” he recalls. “But they said, ‘If you do it as software-as-a-service, that would be appealing.’” So Gorelov switched from the original plan to sell software licenses and set up an online service instead.
To further entice clients, SpeechCycle works on a value-based pricing principle. The company is paid only for calls that are handled through its automated system and that actually solve customers’ problems. “They pay for calls we automate. We don’t get paid if the customer starts pounding zero or calling for an operator, or if they just hang up.”
This, too, was not the original plan. “We started out with a per-minute model like everyone else,” Gorelov says. “But necessity is the mother of invention. We had to find a way to break into these larger companies.”
Now that it’s in place, he says value-based pricing helps everyone. “Broadly speaking, having SpeechCycle handle a call costs our customers 25 to 50% of what it would cost to have a live operator do it,” he says. “So our pricing creates a very powerful synergy between us and our customers. The more calls we automate for them, the more they save, and the more we earn.”
“At the beginning, we implemented no-fee pilots,” Gorelov recalls. “We said, ‘Try it for 90 days, and if we don’t deliver the numbers we’ve been telling you, you can walk.’ Customers had very low risk getting it in and trying it out, and they were able to see live reports of how the system was working for their customers. We pretty much converted every one of those customers.”
Today, SpeechCycle no longer offers free trials because it doesn’t need to. “We process millions of calls every month,” Gorelov says. “So we have enough data and enough referenceable customers to be able to show our value.”