The zoho way

Sridhar Vembu, Founder and CEO ,Zoho

The company remains profitable and loves holding the independent tag. Vembu has turned down acquisition offers from Marc Benioff of Salesforce.com, a direct competitor and carefully balances the delivery of innovative products and strong financial performance. Today, the Pleasanton, CA headquartered company has offices in London, Beijing, Tokyo, Austin, New Jersey and Chennai. It has launched over 26 different online CRM, productivity and other business applications – under the brand name Zoho – and serves more than four million customers across the globe. Its competitors include the likes of Salesforce.com, Google and Microsoft. The company that was founded in 1996 (known as AdventNet until 2009) also owns ManageEngine, an enterprise IT management software product and WebNMS, a product that focuses on the needs of original equipment manufacturers in the network and telecom space.

The best way to protect a reputation and the brand is to continue to provide great products, treat customers well, and when we make mistakes, own up and correct them. Staying visible means staying in touch.

The company is also known for its interesting staffing practices. Vembu setup the ambitiously christened ‘Zoho University’ to rope in people from economically backward sections of society, right out of school, train them, and then hire them into software development roles. It’s a strategy that makes financial sense, but it’s the social benefits of such a strategy that has attracted attention as well.

We decided to quiz Vembu on the topic of building a globally visible product. For someone who makes several unique decisions, Vembu is convinced that the process of building a brand cannot be very different even at Zoho.

1) At a broad level, what are the thumb rules to enhance the visibility for your software product among global customers? What did Zoho do right?

First of all, I must say that Zoho is not yet all that visible globally; compared to the companies we compete with. We still have work to do in that respect. Having said that, I would say the first and foremost rule is to deliver a really useful, innovative and differentiated product. Only then will you get noticed. Everything else is secondary. The next thing to do is to actively participate in all the Internet avenues for spreading the word. This includes social media, keeping in touch with your users through Twitter, Facebook, blogging/news outlets (such as TechCrunch or GigaOm), social news sites such as Hacker News (very critical for web services in particular), various industry or domain specific websites and trade publications, and finally, search engine optimisation and marketing. An entrepreneur needn’t perform all the activities accurately initially. He or she could start with a few, find out what works for them and concentrate on that activity. For instance, one’s audience could come through search or through Facebook. In that case, you should focus your attention there.

I must emphasise that if your product does not resonate with its audience to begin with, none of this is going to help. So, if you are trying every avenue and still don’t find traction, it is good to get back to the drawing board with the product. We have experience with having to go back to the drawing board many times at Zoho, which is inevitable considering the slew of products we’ve launched over time. If we are convinced a market exists, we come back and try again.

Lesson: The core aspect of building visibility is offering a really differentiated product. If you don’t get traction inspite of brand building efforts, it is a good idea to go back to the drawing board and relook at your product.

2) Today, Zoho is known not only for the quality of its products but also for its ability to create them with the help of cost-effective Indian engineers, who are not necessarily from the top schools. How did Zoho leverage such a differentiation?

There is a lot of talent potential in India, but they do not have enough experience in building technology products. We had to find our own way. What we found was that if we broaden the pool of people we recruit from, and not just look at the top colleges, we are more likely to find good talent. This means that we also had to invest in training, but we figured it would be a great way to build a durable company by doing it. Zoho University carries that idea further, and we simply recruit students who finished their schooling, and provide training at our end. It has worked great for us, and we think every company should try this.

Lesson: There are no rights or wrongs. Do what works for you. Differentiation, in whatever aspect, certainly helps in building a brand.

3) Once you get that initial visibility, how does one retain the name and stay visible?

The best way to protect a reputation and the brand is to continue to provide great products, treat customers well, and when we make mistakes, own up and correct them. Staying visible means staying in touch.

Lesson: Stay in touch with your customers. Keep improving, especially in terms of your product.

4) For a larger company, visibility is about advertising spend, unlike in a startup/growth company. How did you do the budgeting, say, when you were a US $2 million company several years ago? Today, how does Zoho plan its budgets for brand building?

We allocate a percentage of our revenues for marketing, of which a portion is spent on brand building. The percentage varies across products, but you can look at the marketing budget as a percentage of the revenues of various public companies to get an idea.

When we were a much smaller company, we hardly had a marketing budget. We would go to trade shows and that is all we did. But then our customer base also was narrow. When we were at US $2 million revenue, our business model was to bundle our network management software with equipment vendors. There were only a few hundred of them (at the most) worldwide, so there was no point in investing in any broad marketing campaign.

Lesson: There’s a lot written about budgeting for a brand building exercise as a company’s revenues grow. In the early stage, it is certainly about smartly and cost-effectively building a brand through word-of-mouth. This word-of-mouth strategy has to be managed, it doesn’t happen automatically.

5) Please take us through the customer service at Zoho. Experts believe that the customer service mantra should spread across each and every member of a team, how do you manage that at Zoho?

First of all, the best customer service is to deliver a product that just serves the customer’s need. Of course, we do not always succeed, so when customers do have to contact us, our first goal is to respond promptly and courteously, and be knowledge-ready to solve the problems. So, the key metrics in support are a) being prompt to respond to customer issues b) be accurate in our diagnosis and troubleshooting and c) communicate clearly. We measure customer satisfaction levels to see how well we do.

Lesson: List out the metrics by which you’d measure customer service, and keep at it. Make sure service quality is at its peak, always.

6) Brands like Apple and even say, Infosys and Wipro, built brands with enigmatic founders. What can company founders do to build visibility?

It just comes down to having a personality, having ideas and being able to communicate those ideas clearly. It doesn’t matter if someone is a company founder or not, but these things matter to being an effective spokesperson for a company or product.

Lesson: Your personality as a company founder can be a great selling point. One needs to capitalise on it.

 

Prem Sivakumaran is co-founder & CEO of Growth Mechanics, a leadership and entrepreneurship-focused business content company in India. Growth Mechanics publishes The Smart CEO, a publication focused on enabling peer-to-peer knowledge exchange among C-level executives and board members. The platform reaches over 1.2 lakh CXOs across its website, app, print publication & CEO Round Tables, and has featured on the cover India’s leading business leaders/founders from Infosys, Mindtree, Tata Sons, ICICI Bank, Biocon, Yes Bank and several others. In addition of Smart CEO, Growth Mechanics also organises the Startup50 Conference & Awards, an annual event to recognize India’s top 50 startups every year. Startup50 Alumni include Freshdesk, Oyo Rooms, Urban Ladder, Capital Float, Paperboat Beverages, among others. Growth Mechanics’ primary business model revolves around linking CXOs and Brands around engaging content and has worked with India’s leading companies including Mahindra Group, Godrej & Boyce, BASF, Airtel, Tata Docomo, Fiat, IDA Ireland, Yes Bank, Prestige Estates, Frederique Constant, Indian Terrain