Is this the next SaaS unicorn? Invoca grows 1200% in 3 years by solving Salesforce’s biggest blind spot
Each year, billions of dollars are spent on cloud-based CRM and marketing automation solutions, all with the goal of optimizing the sales process. But despite all this technology (and spending) there is a glaring blind spot in the marketing clouds of the vast majority of organizations: calling.
The best sales and marketing operations can track, through a series of retargeting ads, a single prospect from a digital ad impression to an online lead capture form and, ultimately, to a converted sale. But when that lead abandons the process at any point and picks up the phone to call the company, all the cloud intelligence in the world won’t connect the dots between that digital impression and that call center engagement. The result, should that sale later close over the phone, is a false negative on the original lead and bad intelligence about the digital marketing channel.
Enter Invoca, a
three seven year old Santa Barbara-based inbound call marketing SaaS startup (fka., RingRevenue) that closes the loop from digital to call-center business intelligence. Unsurprisingly, given the rarity of its solution, the company has been on an absolute tear of late, growing revenue a staggering 1200 percent over the last three years to a comfortable eight-figure annual run rate, according to CEO Jason Spievak.
While he declined to specify an exact revenue figure, Spievak sizes the market opportunity at $4 billion per year, and describes Invoca as the market leader with just 1 percent share of this market. It stands to reason then that the company is in the vicinity of a $40 million run rate, and also that there is a ton of greenfield opportunity ahead.
Comparing the first six months of 2014 to the same period a year ago, Invoca has grown its total customer count by 82 percent and seen its average deal size rise by 39 percent, Spievak says. That customer list now includes marquee names like DirecTV, OpenTable, MillennialMedia, Liberty Mutual Insurance, LendingTree, and TRUECar, among other Fortune 100, 500 and 1000 brands. More importantly, Invoca reports a greater than 100 percent year-over-year increase in inbound call volume for its customers, for the last four years, and has seen a total increase in call volume on its platform of 337 percent.
To put it simply, Invoca is en fuego. The more important question is, why?
Deep Domain Expertise and a Head Start
The reality is, while conventional wisdom suggests that the rise of connected consumers – who are more comfortable than ever transacting online and never far from their mobile device – should mean a decline in call volumes for major corporations, the opposite is in fact true. Research from BIA/Kelsey indicates that mobile search actually drives call volumes, and as a channel will result in more than 73 billion calls by 2018. Many of those calls will be made to restaurant reservations or ask for directions, but a meaningful percentage will be sales calls – the kind of leads that traditional CRM and marketing automation continue to miss, but which Invoca can capture and optimize.
“We’re like Marketo for calls,” Spievak says. “When I say that in the Valley, people get it. Sometimes when I say it elsewhere, people ask, what’s Marketo?”
BIA/Kelsey’s Abid Chaudhry adds, “Inbound calls produce some of the most valuable, high-intent business leads, but until recently it was incredibly difficult to connect online marketing campaigns to conversions from calls.”
As Spievak points out, the propensity for consumers to call a company is especially large for high value items like travel, education, insurance, financial services, and home subscriptions (cable, etc.). For DirectTV in particular, appreciably 100 percent of transactions happen over the phone, Spievak claims, with almost no one completing the signup process online. Calls are even more likely to occur when searches occur on the cramped screens of mobile devices. And with everyone including Google, Apple, Facebook, Twitter, and Amazon all launching click-to-call buttons on their social feeds its a trend that is likely to continue.
“Nearly all of Google’s highest value search terms are associated with phone-based sales,” Spievak says. “But marketing automation, retargeting, and bid management all fail when a lead abandons their online sales form, but later converts on the phone. These channels have almost no visibility into their highest converting inbound calls, which means they are delivering false negatives all day long.”
The emergence of mobile is a major theme for Invoca. The company notes that mobile advertising now drives the majority of inbound calls to its customers and increased by 173 percent from 2012 to 2013. More than 65 percent of this volume comes from mobile search, with the balance generated by mobile display and native apps. With the average call originating through mobile search lasting 227 seconds in 2013, up from 90 seconds in 2009, the company indicates that call quality is increasing as well.
It’s not just marketing attribution that sets Invoca apart. The company automates call routing in real-time based on demographic intelligence. Spievak offers the following examples: If DirecTV gets a call from Belarus at 3am on a Saturday, it’s highly unlikely that is what it would consider a high quality call. As a result, Invoca would automatically route that call to a voicemail inviting the caller to visit the company’s website or call back later. If it sounds like profiling, it’s because it is. But, as Invoca is proving, it’s also a highly effective way to optimize the return on marketing and sales spending. Similarly, if an insurance carrier gets a call from an existing customer, the system will route that call away from the sales call center and to customer service, saving the company’s sales staff time and delivering the customer a better experience (at least in the majority of cases).
“The thing that differentiates us is not that we’re the best at tracking calls – although we are – but it’s the layer on top of that, the programmatic marketing automation we offer that allows brands to scale up what they’re doing,” Spievak says. “They no longer need to be afraid of letting agencies drive calls into call centers. Brands who close a large percentage of sales sales via inbound calls want more calls, but they only want good ones, note expensive one from bad bad leads.”
Competition is Inevitable, but Growth Cures All
The big question is, if what Invoca’s doing is so valuable, why isn’t there more competition? Specifically, why aren’t the big names in the marketing cloud like Salesforce and Marketo moving in? The primary answer is, according to Spievak, is that Invoca’s solution is highly technical and requires a blending of both telecom and marketing automation expertise.
“It’s hard to do what we do for billions of calls in real-time without dropped calls and with almost zero latency,” he says. “On top of that , we do the same things that everyone in the digital marketing world does, but with inbound phone calls. We do geotagging and lead scoring and pricing and so-forth. I’m not saying that other companies couldn’t build something similar, but it would take them a while and they’d need to find the right people first.”
Invoca’s other advantage is that it recognized an opportunity where no one else has and has given itself a meaningful headstart. The company has gotten this far with almost no marketing and a skeleton sales crew. It was only in the last year, once management felt it had nailed product-market fit, that they began deploying resources to these growth engines. In the time since, the marketing department grew from one to 18 full-time people, and sales from four to 35.
“I like to think of marketing as the air war and sales as the ground war,” Spievak says. “That’s why I’m incredibly proud that we’ve achieved this eight-figure revenue run rate with almost no formal marketing whatsoever. Needless to say, we plan to invest heavily in both areas going forward. We need to get the word out to a broader base as a way of driving growth.”
Pouring cash into sales and marketing and having it come out the other end as revenue is a task that sounds easy on paper, but can be brutal in practice. Add in that Invoca is headquartered in Santa Barbara – albeit with offices in San Francisco and Romania – and the company isn’t doing itself any favors in terms of attracting A caliber talent. Perhaps the biggest thing working in Invoca’s favor is the pedigree of its founders. Spievak and CTO Colin Kelley are well known in the central coast region, having proven themselves with a highly successful IPO of their previous company CallWave.
“Colin is recognized as a technology luminary in our area, so the best engineers want to work with him. Hiring for dev talent hasn’t really been an issue,” Spievak says. “It has been more challenging to hire for sales and marketing talent. That’s why we’ve extended our efforts to acquire from top companies and have recently added senior people from Eloqua, Responsys, SilverPop, Salesforce, and Microsoft. I think it speaks to the quality of our leadership team that we’ve been able to attract these type of talent.”
Another key to continued growth will be keeping existing customers happy, something the company has seemingly excelled at thus far as indicated by the fact that it has seen zero percent churn among its enterprise customers, and continues to see recurring revenue from existing customers grow by “several percentage points” each month, according to Spievak. Also, 50 percent of Invoca’s customers have come through referral – often a large brand customer insisting that their agencies and vendors adopt the software. This does wonders the cost of customer acquisition, which is low enough that it’s currently being repaid in under a year, according to Spievak.
Invoca has established channel partnerships with Salesforce, Marketo and others – the former also participated in its Series C round. This allows the company to cooperate, rather than compete with these giants (at least for the time being), and to access their high value customer rolodexes. But it’s not a one-way street. The marketing cloud incumbents know (now) that their customers are blind in the key area of calling and are reselling Invoca as a solution to this problem.
“How can they say with a straight face that they help customers understand their sales channels when they have zero visibility into high converting inbound calls?,” Spievak asks.
It seems inevitable that each of these behemoths has thought about acquiring the Spievak’s company – Salesforce has already put some money to work as a possible purchase option and to get a look under the hood. But the founder and his investors are saying all the right things when it comes their focus on building a large, independent public company. For those cloud incumbents who can’t buy Invoca (which may be all of them), creating a competitor will be the obvious alternative.
Spievak acknowledges this reality, calling the entrance of competitors the company’s clearest remaining obstacle. “When a market opportunity is this big, you inevitably get fast followers,” he says. “Yes we have patents, but that’s not enough. We need to move fast to lock up as much market share as possible.”
Invoca has raised $30.8 million to date, including a $20 million Series C round in January of this year that included Accel Partners*, Upfront Ventures, and Rincon Venture Partners. Most of that cash is still in the bank, Spievak says. It’s nothing to sneeze at, but in the world of SaaS software, that remains a relatively paltry sum. For the company to compete with the exponential resources of the Salesforces of the world, it’s likely that another growth round or two will be in order before any eventual liquidity event – something Spievak acknowledges.
“Our team has been fortunate enough to have multiple IPOs and dozens of collective software M&A exits in our past,” Spievak says. “We’re focused on only one thing at this point – growing our base of happy, referenceable customers as large as possible. I’ve found that if you focus on maximizing value and set the goal of being a standalone public threat, the rest typically works itself out.”
Despite endless predictions to the contrary, calling remains a large part of our everyday lives (not unlike email). And with the tech giants pushing consumers into a new era of voice connection, it’s incumbent upon marketers to evolve their thinking and strategies. As it stands, Invoca is the best and effectively the only option to have visibility and intelligence into inbound calling activity.
As they say, in the land of the blind, the one eyed man is king.
*Disclosure: Accel Partners is an investor in Pando.
Invoca helps the modern marketer drive inbound calls and turn them into sales. Our platform delivers the inbound call intelligence required for marketers to optimize customer engagement and sales beyond the click. From attribution to intent, marketers gain a complete understanding of the customer’s journey across digital, mobile and offline touch points so they can optimize their marketing spend, drive quality inbound calls and deliver a better customer experience.
Invoca has powered more than $3.1 billion in sales to its customers and is backed by Salesforce Ventures, Accel Partners, Upfront Ventures and Rincon Venture Partners.