Episode 46: Cracking the CRM code


All Xero Gravity episodes

Hosted by Elizabeth Ü

“Make products they can just pop into and understand the value of.”

This is how Joe Malcoun, CEO, sums up the many ways in which CRM giant, Nutshell, makes customer relationship products work for small businesses.

CRM is more approachable than ever. And inexpensive. So how do you know if you need it? Good questions. Do we talk to customers and outside partners? Through what types of communication? Where and how often in the sales process? At business events? How do we want to catalog and measure it all? Are we sharing info across the company?

If you value simplicity, tune to Xero Gravity #46. You’ll get the scoop on identifying the right CRM and the value of trials, to what’s next in the CRM space for sales, marketing and lead qualifying. In a Nutshell — from one extraordinary Joe.

Small Business Resources:

Episode transcript

Host: Elizabeth Ü [EÜ]
Guest: Joe Malcoun [JM]

EÜ: Ahoy everyone! I’m Elizabeth Ü, and this is Xero Gravity.


Guest soundbite

“A huge fear that people have, is, you know, it seems like this big unwieldy thing.”


EÜ: Meet Joe. Joe is a three-time graduate from the University of Michigan, holding a master’s degree in environmental policy and a finance and strategy MBA. Joe has helped define strategy and corporate development at DTE Energy, which is a $13 billion publicly traded utility company.

Joe has run an investment capital firm specializing in early stage software startups and serves as president of the board of directors at 826michigan, a nonprofit supporting student literacy.

Right now, Joe is the CEO of Nutshell, a CRM for small businesses and start-ups. He joins us today to chat about CRM and how beneficial the software really is. And you’ll be pleased to hear there are plenty of options for small businesses, and they don’t need to cost an arm and a leg. Joe explains the consequence of not choosing a CRM product that fits you and your business.


Guest soundbite

“If you don’t enjoy the way it looks and feels and the way that you interact with it, you’re not going to use it. And then that becomes this burden and it becomes this thing that hangs over your head, because you’ve paid for this solution and you know you’re not using it.”


EÜ: So we have all that and more coming up on Xero Gravity right after this.


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EÜ: Joe we know a little bit about your professional background, but can you tell us a little bit more about what you do when you’re not serving as CEO of Nutshell?

JM: Absolutely. So I try to divide my life into kind of a couple of different buckets, the first being my family, the second being work, and then the third is I try to get involved with a lot of stuff in the community. The thing I’m most involved in is a really cool organization called 826michigan. It’s a tutoring and writing center for children, and there’s seven of them across the country now, with localized names founded by this really great writer named Dave Eggers. So I spend a lot of time with that and then I have three children who are very young. I’ve got boy girl twins who are five, then this little guy who’s three years old but thinks he’s five. And so they take up a lot of my time too, they’re a lot of fun, but they’re kind of insane.

EÜ: Wow, it does sound like it would keep you busy!

JM: Absolutely!

EÜ: I hear that you once spent six months in Kenya and learned Swahili. Can you tell us the impact that this experience has had on you?

JM: Yeah sure, so it had a huge impact on me, I think mostly just kind of opened up my eyes to the fact that it’s easy to kind of become very provincial in the way that you think, and not think that the world exists too much further than your local community. I went there when I was in college for a study abroad program through a really cool small liberal arts college called St Lawrence. They immersed us in everything there. It was everything from living with very wealthy Nairobi families to living with pastoralists in northern Kenya, where we lived in dung huts and drank milk and blood. So it was pretty intense.

EÜ: Wow, that sounds like a great experience. And you chose an interesting major in university. Maybe you can tell us a bit more about that?

JM: Yeah, not very conventional for someone in my current career path, but my undergrad was in environmental policy. I’d spent a lot of time as a young adult in northern Canada, in Ontario and Quebec, doing wilderness canoe trips. That had this huge impact on me, and I thought that I wanted to be an environmental lawyer. I thought I wanted to be the next Jan Schlichtmann from A Civil Action, but law school wasn’t really in my plans later on [laughs].

EÜ: So I understand you also have an interest in venture capitalism. What is it about VC that you find so fascinating?

JM: Yeah, so I was introduced to it kind of in an odd way. I went to business school here at Michigan, and it’s one of the few schools that has a completely student-run venture fund. It’s this really interesting experience in that you take these type-A students who’ve already been told that they’re kind of a big deal, because they’re in this fancy business school. And then you tell them they’re extra special because they’ve been chosen to be on this venture capital fund, and you get a really odd sort of mix of people.

EÜ: [Laughs] With big heads.

JM: Yeah I would say some pretty big egos in that room, and it could get crazy watching people kind of like spar. But what I loved about it, what fascinated me, was I couldn’t believe your job was basically to go out and meet with really interesting entrepreneurs, and learn about their ideas. I didn’t know that was even a thing. So when I got to spend my time just going out in the community and learning about people’s great ideas, and learning more about them — I loved that, I thought that was so fun. So later I tried my best to gear my career towards it and I eventually did spend a couple of years as a full-time investor.

EÜ: What was one of the most unusual entrepreneurial ideas that really stuck with you from that experience?

JM: Oh gosh, okay, so at one point — you have to keep in mind we’re writing $100,000 checks, okay, these are not huge investments, and we had someone send us a business plan. And the thing must have been three or four inches thick. It’s not like they didn’t put time into it. They really thought this through, and basically their concept was to cover all roads with solar panels; basically enclose all highways so that there was a solar panel on top and then a train on top of the solar panel, and so we [laughs]…

EÜ: Wow, ambitious!

JM: Yeah, we were all blown away. It’s a little ambitious, it’s a little capital intensive but, you know, we liked the dream. But yeah, that was pretty nuts.

EÜ: And what was it about Nutshell that inspired you to ultimately come on board with them?

JM: My introduction to Nutshell was actually initially through my investing activity, and I’d spent a couple of years getting to know a lot about local entrepreneurship and the startup scene.

When I learned about Nutshell I was really surprised, because it was relatively unknown locally here. Yet it had incredible traction. So the number of customers that they’d been able to capture since the company was founded relative to their reputation, was just mind-blowing. What really attracted me to the company was I couldn’t believe how much they’d accomplished on such little capital and such little sort of investment in general. It just occurred to me that if we gave this company all the resources that it really deserved, it was going to grow into something really special. And so that was just really, really exciting to me.

EÜ: So let’s dig a little deeper into this episode’s theme, which is of course CRM. So first up can you define what CRM actually means?

JM: Well the acronym I can certainly define as customer relationship management, but I think it’s really hard to define what the sort of software, the product area means. I think it means so many different things to so many people at this point, and that’s why there’s a lot of opportunity, and why there are a lot of different solutions out there right now.

There’s been a huge move to bring CRM from where it originally sat in the large enterprises and make it more approachable and more beneficial for small businesses. It’s really been cool to watch. And the thing about the small business community is that they all will benefit from solutions like this, because they conduct their business in so many different ways. There’s so many different ways in which small businesses sell their products and relate to their customers, and contact and communicate with their customers, that it makes it difficult to balance with the need for the product to be easy to use and not a heavy investment.

That’s why I think you see so many different products out there, because everyone is trying to give the market their own version of what they believe is the best thing for certain small businesses. So for example that might mean that maybe some businesses, in order for them to grow and be really successful, they just need to make sure they’re closely tracking their communication with their customers (and have a record of that). That would be one end of the spectrum. The other end of the spectrum is somebody might have a very complex long sales cycle, and they have multiple stages to that sales cycle, and then within each stage they have multiple steps and they have to follow things very carefully. So therefore, in addition to tracking the communication, they also need to track how customers and leads are moving through a process. And you know, the key in those scenarios: how do you replicate the very best of your sales team and take out a lot of the guess work.

EÜ: So as CRM has really shifted from only serving large enterprise-scale businesses to serving small businesses, how has the public’s perception of CRM changed?

JM: That’s a great question. So I think we generally experience that they’ve probably heard the acronym, and they’ve probably become aware that it can help them. But a lot of small businesses still don’t understand why or how.

And so, you know, it’s our job to educate them and it’s our job to explain and help them understand how this really powerful tool can help them grow their business, and not overwhelm them in either time, money or other resources. Because I think that that’s a huge fear that people have, is, you know, it seems like this big unwieldy thing. You know, you’ve heard the stories of people who buy Salesforce, so that they actually spend tens of thousands of dollars just getting some consultant to implement it, right? And that’s insane in our world, that customers don’t have the time or money to do that. They want something that just works.

And so that’s our job as the industry: to make products that they can just pop into, quickly understand the value of, and make them work for them.

EÜ: How can a small business identify an appropriate approach, or an appropriate solution for their CRM needs, based on where they are in their own lifecycle?

JM: Yeah, absolutely. So really the world could sort of be divided into two segments: people who are currently using CRM and are looking for a product that suits them better, or people who aren’t using CRM and they’re probably using, you know, a combination of e-mail and spreadsheets. And those are two very different learning curves when they arrive at our trial, and when we start talking to them. For one, you know, they typically come with a set of features that like they absolutely need, and their current product doesn’t have it. And now they’re just shopping around to find the product that has the features they need. And typically that’s a very straightforward conversation. A lot of times what we find though is that the product they have – it’s missing ten really important things, and we have those.

EÜ: Oh no!

JM: And we have those ten things, but then there’s this one thing, right, there’s this one little feature that they get hooked on, and it might not even be that important, relatively, but they’re hooked on it and you have to struggle with, “that’s not really what our product does.”

So it’s all about finding the right fit for the customer, because if they don’t have what they need, they’re not going to be successful, and it’s not going to be good for you, either. The other world is, you know, people who have heard of CRM, don’t really know what it is yet, and they’re using email and spreadsheets, and for them it’s really about educating them on the product category in general, and showing them the value of using one piece of software that’s specifically designed to manage all of that information, and surface it quickly and actionably for you and your team.

What’s really important is to step back and think about how you relate to your customers; what are your specifics; your channels for communication; what are the steps you take whether they’re in the sales process or post-sales process. And then find a tool that really fits specifically to those needs.

I think the other thing that’s really important — and it’s something that frankly we’ve invested heavily in at Nutshell— is you have to enjoy the software. If you don’t enjoy the way it looks and feels, and the way that you interact with it, you’re not going to use it. And that becomes this burden, this thing that hangs over your head because you’ve paid for this solution and you know you’re not using it. So absolutely number one is you have to really be sure that you’re going to enjoy the experience. And that’s where the difference and user experience and user interface makes a big impact on people’s decision.

EÜ: So as far as people actually trying out the different solutions, do most of them have a free trial before they commit, or what do you recommend as a good test?

JM: Pretty much every provider has a free trial, and those trials will range from seven days to 30 days. And the thing I tell people is that one of the myths is you should get yourself all set up and running in that trial period. And that if you don’t, then it’s been a failed trial. I don’t really think that that’s how the trial should be treated. I think the trial should be an experimentation period where it’s the company’s responsibility to deliver the value, demonstrate the value, of what it could be.

And then once you’ve decided which product fits you the best, the company should be helping you to set yourselves up in the most supportive way. That’s how we try to approach it at Nutshell at least, is that it’s super hard for you to set up the whole product, get your whole team on it, and try to become familiar with it at the same time. Those two things are difficult.

So we try to separate them out, we try to get people as familiar with the product as best we can — try to demonstrate whether or not the product is the best fit for their needs. And then once we’ve done that, once the sale is complete, then it’s time for us to really make sure that you’re set up for success and that you’re support is ongoing. That’s a huge, huge part of it too. CRM is a complicated area at times, or at least feels that way, so knowing that there’s a really great team behind the product to support you, and that you’re able to access them in any way you want, we think that that’s like really important too.

EÜ: What are some of the common misperceptions that you see that people have around CRM?

JM: One I think that there still is, is a bit of a pervasive myth that it’s just for big businesses — that I’m too early for CRM. There’s also this myth that no one ever got fired for buying Salesforce, or that my company will outgrow a lot of these other products. And the truth is we don’t really ever see that. Just like all the other products out there, and I’m not picking on Salesforce particularly — they’re actually very good partners of ours in a lot of ways — but that product is good for certain customers, just like our product is good for certain customers. So the way you’d approach it is more about your business style, your business model, not how big am I or how fast am I growing, or how many people do I have. Those aren’t the right metrics to use to choose your product.

EÜ: So let’s say I’m a small business owner and I know that I need to jump on board with some kind of a CRM solution: how can I do an inventory of what my company’s needs actually are, so that I can go about finding a solution that would be a good fit?

JM: Anyone in your company who talks to customers or outside parties or partners — first start there. What types of communication do they have? Is it by e-mail? Is it by chat? Is it by phone call? Do they go to a lot of events every year, and they’re collecting names that way? How do people find other people, how do they find customers? And how do they turn those people into a lead and a process? So that’s the first thing: where is your data coming from and how do you want to enter it into your system? So for example, at Nutshell, we get 97% of our leads online. So it’s really, really important to us that our software is enabled to pull leads from an online source. We have a lot of customers though that go to events and they meet a dozen people, and they get their business card, and that’s a lead. So then we built a business card scanner, right? So you can put it in and it becomes a lead.

So it’s really about finding, first step, how do you get information into your product? How do you do it efficiently and effectively? The next is, what are the ways in which you now move people through a process to become a customer?

So sit down and try to outline your sales process. I think that oftentimes that’s where people get a little overwhelmed. But just start really high level. What is the last thing that happens and what is the first thing that happens, and then just sort of fill in the blanks in between. And then what you have is sort of a roadmap for what your sales process might look like. Then what I often tell people to do is go talk to your most experienced, most successful salespeople. Find out what the individual steps are that they’re doing on a day-to-day basis that’s successful. That is the stuff, those are the steps that you want to institutionalize. Those are the things you want to be able to share with the rest of your team and replicate when a new person comes on board.

So take all that now, and map it against the products that you’re looking at. Does it enable you to get to that level of detail that you require? Does it enable you to measure the important metrics that you need? So really understanding how you get information in, what is your sales process, and then what are the types of measurements you need at the other end.

EÜ: And as far as really leaning on your CRM to make sure that the whole team is supporting their customers, what kind of recommendations can you make?

JM: So we believe in a very social perspective on CRM. We built a platform where it’s really made for teams. And not all companies operate that way. There’s a lot of products out there that are built for the lone wolves. And the product: you jump into it; you’re at your little lane and you’re phone; you’re dialing and you’re tracking leads. But there’s not a lot of interaction or communication across your team. But our product is built actually more for people who are sharing information internally. We talk about transparency but we always say it’s not like the Edward Snowden kind of transparency — it’s more like the transparency across an organization and about your customers.

So things like having access to the information that not only you were responsible for, but other parts of the company. An example of that is: say you have a customer service team and they have been answering support tickets for one of your customers or one of your leads. Well, you want to know what the status is of those support tickets before you call that customer and try to sell them something new.

EÜ: Right.

JM: You want to make sure that value has already been delivered on what you’ve already sold them, and that they’re a happy camper. So now you can do that because all the information is in one place.

EÜ: So beyond managing the customer and sales experience, how can CRM support other operations in the company, say for instance managing vendors or the manufacturing process?

JM: Totally. Another use case we see is donors. So a lot of nonprofits will use a CRM system because, you know, they’re basically selling their dream, right, and donations are the sale. And so they’ve got to manage those relationships, they’ve got to track those conversations. So we use CRM at 826michigan. And when we’re going to go talk to a donor, it’s really important we go back and we look at where did we leave the conversation. What did they tell us last time that was really important to them? When was the last time they gave? How much have they given? What can we expect going forward? All that information being in one place and being able to report out on it is super powerful. And the same can be done with your vendors or any outside partners.

So for example, you know, I want to know when was the last time I talked to the Xero team about a partnership, right? That’s going to be in my CRM, so that I can be reminded of when maybe we need to do it again.

EÜ: What’s the most exciting new development that you’re seeing in the CRM space?

JM: Yeah, so something we’re really excited about is we’re seeing sales and marketing come together more than they ever have before. And one of the ways we’re seeing that is that marketing and marketing tools are effectively doing a lot of the busy work — the early busy work that sales teams used to have to do. So things like how do you qualify a lead — we’re actually able to build that capability now, for you. So if you’re getting your leads online and your lead has done a bunch of things before they actually signed up for your trial, well you’ll know that. And maybe you already know ahead of time what qualifies for a really strong lead. Maybe they read this ebook or they downloaded this video. And every time a customer does that you know that that’s a really qualified lead. Well now your CRM can actually do that for you as well.

EÜ: Alright. So we’re going to finish up with our Five Quick Questions, for which we need five quick answers. Are you ready?

JM: I’m totally ready — let’s do it!

EÜ: What business book or idea has made the biggest impact on your life?

JM: It’s All About People.

EÜ: What’s the one thing you can’t live without?

JM: Negronis. They’re the perfect cocktail.

EÜ: [Laughs] And the most useful app on your phone right now?

JM: Notion AI.

EÜ: In one sentence, what’s the greatest lesson you’ve learned throughout your small business journey?

JM: Take care of your team and take care of your team and take care of your team.

EÜ: Oh, and finally, what skill do you want to enhance in 2016?

JM: Taking care of my team, taking care of my team, taking care of my team.

EÜ: [Laughs] Joe, thanks so much for joining us on the show.

JM: Oh I’m so delighted, this has been a lot of fun. Thanks so much for having me.


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EÜ: That was Joe Malcoun, CEO of Nutshell. Thank you for listening to Xero Gravity. Make sure you join us next Wednesday, because we’ll have another awesome new show that you definitely won’t want to miss. See you next time.


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