GE 164: Irv Shapiro on Why Using Phone Numbers as Part of Your Ad Campaigns Can Double Conversions & Reduce Ad Spend by 10-30% (podcast) With Irv Shapiro

Irv Shapiro CEO DialogTech

Hey everybody, today we have Irv Shapiro, CEO of DialogTech which helps companies drive sales through calls.

In today’s interview we’ll be talking about how DialogTech raised over $60 million in funding and has well over 5,000 customers, why the leads with the highest conversion rates are from phone calls, and how they acquired their first 100 customers and built highly qualified links at the same time by using PR services.

Download podcast transcript [PDF] here: Irv Shapiro on Why Using Phone Numbers as Part of Your Ad Campaigns Can Double Conversions and Reduce Ad Spend by 10-30% TRANSCRIPT

Episode highlights:

  • [5:34] – The pricing is similar to an old phone bill, flat fee, then additional fees, and they also have annual and monthly contracts
  • [6:13] – $60 million invested, 152 employees, 5,000 customers – every month they provide analytics on 40-50 million minutes of phone calls – they target mid-west style of growth
  • [6:59] – Being cash responsible, they are in a position that when the market tips, they will have the resources to double or triple down on growth
  • [8:44] – They would rather be a tortoise and grow responsibly than grow fast and burn out
  • [9:05] – iPhone full-function web browser opened up new way for brands to engage – a slow but steady progression with ads moving from desktop to mobile – tipping point, now more is spent on mobile
  • [10:30] – When a consumer visits your site from a mobile phone and taps on a telephone number, they fall into a black hole because no tool (like Marketo, DoubleClick, HubSpot and Google Universal) knows about the phone call—except Google AdWords call extensions. Most businesses aren’t tracking these calls.
  • [11:49] – Considered purchases need to be tracked the same way that web conversions are – exclude call tracking and you’ll miss half your conversions
  • [15:00] – Phone calls communicate a sense of urgency
  • [15:17] Phone numbers front and center – route the number to the right person to take the call – optimized ad spend around ads that drive calls – increase calls and conversions
  • [16:18] – First 100 customers – primary advertising public relations and press releases – SEO and PPC to juice SEO – PRWeb
  • [17:43] – Hundreds of dollars spent each month on beginning PR – today marketing team and full-time PR person
  • [18:11] – Building enterprise presence – 1 to 1 marketing techniques – prospect or personality based – list similar to current customers – find like companies – marketer puts together personalized content relevant to the target
  • [19:35] – 411 technique – share 4 pieces of content before ask soft ask download a white paper or attend webinar, hard ask – talk to sales person
  • [21:44] – Universal struggle is hiring great people – accept as business grows you will hire people smarter than you – blueprint for the characteristics of hires consistency – smarter than average – emotional intelligence and street smarts – willing to work hard – ambitious – hire people that are referrals

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Disclaimer: As with any digital marketing campaign, your individual results may vary.

Full Transcript of The Episode

Show transcript
Irv: One of the secrets of PR is it's a great way to start building your site ranking, because basically they're highly qualified links back to your site.

Speaker 2: Do you want to impact the world and still turn a profit? Then you're in the right place. Welcome to Growth Everywhere. This is the show where you'll find real conversations with real entrepreneurs. They'll share everything from their biggest struggle to the exact strategies they use on a daily basis, so if you're ready for a value packed interview, listen. Here's your host, Eric Siu.

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All right, everybody. Today we have Irv Shapiro who's the CEO of DialogTech, which helps companies drive calls and sales. DialogTech has raised over 60 million dollars in funding and has well over 5,000 customers. Irv, how's it going?

Irv: It's going well. Thank you for inviting me on to the podcast today.

Eric: Yeah, thanks for being here. Why don't you tell us a little bit about who you are and what you do?

Irv: What we do at DialogTech is very simple. We are returning humanity to commerce. If you think about it, over the last 15, 20 years the technical community, which we are part of, has encouraged businesses and brands of every size to move away from engaging with their customers in a human way and instead asking them to participate in transactions solely via online commerce, shopping carts, self-service. At DialogTech, we believe that while self-service is a perfect solution for a range of transactions, there are many transactions, we call these considered purchases, where humans want to engage in a very human way. How do humans engage? The same way we're engaging right now.

We talk to each other, so unless intelligent design or evolution moves very, very quickly, we're going to be talking to each other for a long time. At DialogTech we remove all of the friction of allowing major brands to communicate with their customers, with their prospects via phone calls in a very, very simple way that is compatible with all of the rest of your marketing programs, which imply that they're quantifiable, you have solid analytics, you have very sophisticated contextual routing capabilities, and you have the ability to optimize your ad spend even if a customer chooses to tap a number on their phone and make a phone call.

Eric: Wonderful. Let's say I'm a series A startup. I raised a series A round, maybe 2, 3 million dollars in funding. What's a practical application or an example of a company like this using DialogTech?

Irv: Well, think about pretty much any software as a service businesses. How do most software as a service businesses sell? While they all advertise via digital media and perhaps they participate in other vehicles, trade shows, webinars, other types of



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marketing, the majority of software as a service sales are made over the telephone. Isn't that ironic? You go to a company, whether it's Salesforce or it's HubSpot, whether it's Zendesk or it's a brand new startup, and they're saying to your business, "We want you to move a business process in the cloud. Oh, by the way, the way we're going to convince you to do that is we're going to talk to you on the phone."

Therefore the most highly valued leads with the highest conversion rates to opportunities and to sales are those leads where a prospect picks up the phone and calls you or taps on a number, more frequently today, on their smartphone and calls you. When that occurs, we tell you as a business what ad they sell right before they called, what keyword they typed in, what page they were on your landing page, what their click stream was. We then combine that with information that we have because it's a phone call, like where are you standing. We use that information to contextually or intelligently route or forward that call to the best person on your business to take that call.

They could be in a call center, they could be working in your office, they could be offshore, they could be in their car. It doesn't matter. Then we record that call, we transcribe it and we have three sets of data, the advertising data that drove the call, the data about when they called, how long it was, who they spoke to, and the actual words in a call. We put that all into a big data repository and we use machine learning and big data techniques to allow you to mine that information and optimize your ad and marketing spend.

Eric: Wonderful. Awesome. How does pricing on something like that's worth? It sounds like it could be pretty expensive.

Irv: Not at all. We are priced very much like an old fashioned cellphone bill. You have a monthly fee that can start at a couple of hundred bucks a month that includes a certain number of conversations and then if you go over that number of conversations, we charge you per conversation. For our enterprise customers, because we have customers who pay us hundreds of dollars a month and we have customers that pay us over $100,000 a month, for our larger customers, they're on annual contracts of monthly minimums. For our smaller customers, our SMB and early stage customers, they're just monthly contracts.

Eric: Awesome. Okay. What kind of numbers can you share around the business today? Just to get everyone an idea of how you guys are doing growth rates, anything like that.

Irv: Sure. Because we're venture funded, you can go to CrunchBase and you can learn a lot about us. As you indicated, $60 million have been invested in this business. We have approximately 150, 151, 152 employees. We do have over 5,000 customers. A typical month, we are engaged in providing analytics on between 40 and 50 million minutes of phone calls. 40 to 50 million minutes of phone calls. We target sort of a Midwest style of growth, so we target cash flows responsible growth, so we target 20 to 30% a year growth and we are a cash flow positive business. The reason for that is very, very interesting.





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By being cash responsible, we are in a position that when the market tips, because today what we do, call analytics and optimization outside of a call center, is an early technology and so while we work with some of the largest brands in the world, it's not all brands that understand the value proposition. This is a nice [inaudible 00:07:25] you must have. By building a company around responsible cash flow positive growth, you ensure that you have the resources when the market tips to double or triple down on your growth expectations.

Eric: Interesting. Yeah, nowadays you see in the climate today that people are still, a lot of companies are still growth focused but investors are pulling back, so it's refreshing to see your approach to that.

Irv: I think our approach could be, it's sort of the tortoise versus the hare. There are some hares. [Toliol 00:07:55] is a very good example. They did a brilliant job of maintaining high growth, almost 70% compound annual growth. They did it by spending an enormous, hundreds of millions of dollars, and by building a really strong brand and presence in a new platform as a service area around Telco, but that's a very high risk play. I could name for you, right off the bat I can think of two other companies that were in that space and there are probably dozens of companies that were in that space that are struggling. We're Chicagoans, so we believe in making money the old fashion way. We'd rather be a tortoise and grow responsibly, 20, 30, 40% a year than a hare and potentially burn out on the side of the road.

Eric: Got it. I love that approach and I think you're going to see more companies doing that moving forward, so great to hear. Probably I'm going to talk about that down the road. One thing I wanted to touch upon, you talked about how companies are mis-attributing 49% of their conversions. Can you speak to that?

Irv: Yeah, absolutely. Here's the phenomena that's occurring. If you go back pre iPhone, so I divide the world into pre iPhone and post iPhone; what was the reason that was significant? It wasn't that the iPhone didn't have a keyboard. It wasn't that Steve Jobs is a fantastic sales guy or was a fantastic sales person. Obviously a talented, unique once in a generation type of human being. That said, what was unique about the iPhone is that it had a full function browser. It was the first phone where you could point it at any web page and see it properly, interact with it properly and because of that, the iPhone opened up a new way for brands to engage with their customers.

That led to a slow but steady progression where marketing spend, ad spend, both search and display, have moved from desktops to mobile to the point where towards the end of last year we crossed the tipping point between desktop and mobile spend and now more money is being spent on mobile. Let's assume that you're using a fine analytics tool for one of the biggest vendors and you're measuring everything that happens on your website. Any time a consumer visits your website from a phone and they tap on a telephone number, which is a click to call on a phone, and places a phone call, they fall into a black hole.

Marketo and DoubleClick and Adobe Analytics and HubSpot and Google Universal, none



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of these tools know about that phone call. Now there's one exception. That is Google Analytics if you're using call extensions, it doesn't know about that. I don't want to mislead the information. The majority of businesses aren't tracking those calls. Now, for businesses that are selling products that are considered purchases, an example would be life insurance, nobody knows what life insurance is or how it works, so you have to talk to somebody. Car insurance, auto insurance, is not a considered purchase. That's sort of the standard thing. Another example of a considered purchase, you're buying a home, you're renting an apartment. You're hiring somebody to watch mom who's getting a little older and she needs somebody there during the day.

You're not dropping a caregiver into a shopping cart and putting it into a credit card. Water is dripping from your ceiling. You're not dropping a plumber in a shopping cart and putting in a credit card. You're calling. For any of these considered purchases, you need to track those in the same way you track your web purchases and your web conversions. If you don't across our customer base, as I said, we look at about 40 million minutes of calls a month across over 5,000 businesses, we have found that if we exclude the tracking for calls from the tracked conversions for our customers, they would be missing about half of their conversions. If you're making ad spend decisions based on only the desktop conversions, the online conversions, you may be making the wrong decisions, paying for the wrong ad words, running the wrong display ads, having the wrong content.

Eric: Okay. Now you talked about call extensions a second ago, you mentioned Google Analytics call extensions. Is that Google Analytics or you're referring to Google AdWords?

Irv: I'm talking about Google AdWords call extensions. I apologize. Google AdWords' call extensions will tell you the ad group that you're going to call. They will not tell you the keyword, actually. Our product does tell you the keyword. Google AdWords' call extensions are a good way to put your toe in the water and learn about using telephone numbers as part of your ad campaigns. Bing has a similar product.

Eric: Great. Wonderful. There's this case study right here where basically it says how accurate attribution helped hotels corps increase phone leads by 83% and decrease cost per conversion by 10%. Can you speak to that?

Irv: Yeah, absolutely. It really speaks to the example I gave. Their conversion optimization statistics were a little larger than what we typically see. What we typically see is double digit reductions in ad spends, so anywhere from 10% to 30%, and we see equivalent increases in conversion rate. The use case once again is, in their case they are in the high end of the resort space, so resorts where you take your whole family for a week and it's pre-paid or time sharing, all the types of things where you have to have a conversation. You have a child that's allergic to peanuts. You have to find out. Can they go to the play group?

In any of these cases, they found that by putting the ability to engage with their call center right upfront via telephone number increased their call through rate, we call it



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the phone through rate, and because they knew what ad words and ads were driving those calls, they were able to optimize around those calls and those calls are the best quality leads because there's immediate urgency. Nobody is taking up the call if they're not seriously thinking about going to your resort, whereas somebody might down click on an ad or fill in the contact form just to gather information for next year. The interesting thing about our use of telephones, of mobile devices, of smartphones is they communicate to the brand a certain level of urgency that you don't necessarily get from a click.

Eric: I'm trying to understand this right now. The accurate attribution part I understand, but that doesn't necessarily drive more phone leads. It's the optimization part after you're looking at the data that helps you figure out what types of actions they take that drives the increase, right?

Irv: No. There are two things that drive the increase. Number one, our customers tend to put the phone numbers front and center. Historically before that, they would often hide it because their marketing team would literally tell them, "Don't put a phone number on every landing page because we won't be able to measure things." One thing is very basic. They put a phone number front and center. Number two, they were able to route that phone number to the right person to take the call. If you're calling about a time share property, you don't want to go to a sales person who talks about resorts, so the calls get routed to the right person for that call. Number three, they are able to optimize their ad spent around those ads that drive calls and that leads to increased number of calls and increased conversion rates because calls convert in general more frequently than online clicks.

Eric: All right. Makes sense. Diving a little more into customer acquisition right now, how did DialogTech go about acquiring its first, let's just say, 100 customers?

Irv: I was the original angel at DialogTech, which meant that basically every time I put a tranche of money into the company I had a discussion Mrs. Shapiro. Dollars were tight and our primary advertising vehicle, which I think is underrated today, was public relations. Using a variety of services today, it is very inexpensive to do press releases. The first 100 customers were acquired by DialogTech via PR and primarily SEO with a little bit of PPC in order to juice the SEO.

Eric: Okay. You mentioned some PR services. What are those?

Irv: This is like PRWeb, so these are online PR services that you can use very, very inexpensively to submit press releases. They go to both traditional channels and automatically get indexed to give you the SEO juice. One of the secrets of PR is it's a great way to start building your site ranking, because it's basically their highly qualified links back to your site.

Eric: Okay. How much were you spending on PR initially?

Irv: Oh, hundreds of dollars a month.



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Eric: Okay, hundreds of dollars a month. How many links do you think you were acquiring per month?

Irv: You know, I can't tell you. It was seven years ago.

Eric: Seven years ago, got it.

Irv: It was a long time ago.

Eric: Okay. All right.

Irv: I will tell you that today we have as part of our marketing, our marketing team is about a dozen people right now, and today we have a full time individual just concentrating on public relations.

Eric: Okay. What's really effective for you guys today? What's the most effective thing that you guys are doing in terms of customer acquisition nowadays?

Irv: We've been focused for about the last 18 to 24 months on building our enterprise presence. In the enterprise space, traditional digital marketing is a bit less effective than an SMB and mid-market, so primarily today we're using one to one marketing techniques or prospect based or personality based marketing. The way it works is as follows. We create a list of the businesses that are similar to current customers, so we do a lot of work in the auto industry. That one's easy because everyone knows who the auto OEMs are, which is just the term that's given to the manufacturers. We do a fair amount of work in senior care, another example I give. Pretty easy to find. You find companies that are like the companies you're currently doing business with.

Then a member of your marketing team puts together effectively personalized content by pulling from resources that we have. We use Google Apps, so we have these all in Google Drive. By pulling together content that is relevant to that specific target, so case studies that you may find on our website about healthcare or auto or insurance or home services. Then our technique is what we call 411. We want to share with a contact four pieces of content and before we reach out to them with an ask. All we're doing is making them aware of the advantages of doing call tracking for a business, similar businesses that have used it successfully, what the ROI on that call tracking is reduced ad spend, increase call through rates.

Then after we've touched them four times, we'll go for a soft ask. A soft ask might be, "Would you like to download this white paper or this e-book?" or, "Would you like to attend a webinar?" Once we have an indication of interest through a soft ask, we'll then go to a harder ask, which is, "Would you be willing to talk to one of our sales people?" That's the approach we're using primarily on the top end of our market in order to market to enterprise. In the SMB and mid-market, we're using all of the classical digital marketing techniques that range from SEO to PPCs to email. We do a lot of retargeting and very focused display.



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Eric: Okay. I really like the sales approach that you have because a lot of people, you're getting the cold emails all the time. It's like, "Hey, they just keep pinging you over and over." Obviously you're using some type of automation tool and they're just trying to get you straight to a demo. They're basically asking you to go to bed with them immediately, but you guys are approaching it where, "Hey, we're going to hit you with value four times and then we're going to do a soft ask." You're not even asking for the demo right away, which I really like. Do you guys have a write up for something like this online that we can possibly link to?

Irv: I don't think so, but let me check with our team.

Eric: Okay. Well, if not, we're probably going to write it up. We'll probably take it up. I really like that idea and I think it's something that people are going to take action on here, so love it. I want to switch gears here right now. Can you tell us about one big struggle you faced while growing this business?

Irv: The biggest struggle, so I'm a lucky guy. I've done this three times. I have two prior companies that I sold. They're publicly traded companies. I will tell you the universal struggle is hiring great people. It will never change. It's independent of the economy. It doesn't matter whether unemployment is high or unemployment is low. If you want to build a great business, you have to hire great people.

Now, to hire great people I think you need two things. Number one, you need to accept the fact that as your business grows, you're going to hire lots of people that are smarter than you are. It may be that as an entrepreneur, you have a bit of a renaissance personality. You're able to do everything.

But as your business matures, you need people that do marketing better than you do, that write code better than you do, that are better at sales, that are better at finance. You need to hire people that are better than you are.

Number two, you need a blueprint for the characteristics of the hires you're going to make so you can have consistency. We call our blueprint swans. We hire people that are smarter than average and we're not embarrassed to say that we can't make you smart. Smart doesn't mean, by the way, that you got all As in school or that you went to Harvard. Smart may mean that your emotional intelligence is off the roof, that you have street smarts, that you're very savvy.

We need to hire smart people, we need to hire people that are willing to work hard. They're only going to be willing to work hard if they're ambitious. Then we have a piece of this Midwest value stuff and that is we only hire people that are nice. We basically have a no-jerk rule here because life is too short. You spend an enormous amount of time at work, so when we're successful in hiring swans, then you're surrounded by other people that are smart, hardworking, ambitious and that fuels growth more than anything else you can do.

Eric: Love it. Where do you go about sourcing your talent? Maybe just one source.



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Irv: The best source of talent is referrals. There's nothing better. If you build an organization built on people that have referred each other, then you naturally have people that like working together. Outside of referrals, we use every classical source. We run ads in all of the online vehicles. We do use retained recruiters. We use contingency recruiters because, once again, hiring people is very, very difficult. At a more senior level, we've been using LinkedIn a lot, where when a senior executives reaches out to other senior executives, that's just a wonderful way to make connections and to hire. For general staff, as I said, referrals are the best way to go.

Eric: Great. Okay. Wrapping up here. What's one must-read book you'd recommend to the audience?

Irv: In terms of a must read book, I would recommend the Purple Cow by Seth Godin. It's really the history of FedEx, Apple, a couple of others companies that today seem very old, but what they recognized is we're transitioning to a world where product rules. It's all about building great products, not about marketing campaigns that are going to pull wool over people's eyes. You got to build great product and I think Seth Godin defines it perfectly in a book that's probably 15 years old called the Purple Cow.

Eric: Love it. Great book. Irv, this has been fantastic. What's the best way for people to find out more about you online?

Irv: All they need to do is go to dialogtech.com. That's dialog spelled the sort of new economy way D-I-A-L-O-G dot com. DialogTech, all one word, dot com. They can reach out to me personally. My personal email address is ishapiro, that's I-S-H-A-P-I-R-O at dialogtech.com.

Eric: All right. Wonderful. Everyone make sure you check out DialogTech. Thank you again for doing this. Thanks again, Irv.

Irv: You're welcome. Thank you.

Speaker 2: Thanks for listening to this episode of Growth Everywhere. If you loved what you heard, be sure to head back to growtheverywhere.com for today's show notes and a ton of additional resources. But before you go, hit the subscribe button to avoid missing our next week's value packed interview. Enjoy the rest of your week and remember to take action and continue growing.