Rick Hanna jumped into the deep end of the pool nearly two years ago when he was appointed Executive Vice President of Sales and Marketing of Dex One Corporation, responsible for all sales and marketing functions. Hanna did have the advantage of extensive background from the technology and telecom sectors to help him navigate a company and sales organization in the midst of monumental change, all within an industry undergoing equally significant transformations. With responsibility for leading the company’s transition from a product-centric to a customer-centric organization, the company is moving quickly to transition from a mostly print centric publisher to a provider of a wide range of print and digital products.
Most recently, Hanna served as President and CEO of RRA Partners LLC, working with companies focused on broadband network deployments. Prior to joining RRA Partners, Hanna served as Chief Operating Officer at Motive Inc., where he led the sales, marketing, operations and product development functions. He has also held a variety of senior leadership positions at at AT&T, Cidera, the small/medium business division at MCI, MFS-Intelenet, and Teligent.
We recently had a chance to sit down with Hanna at the SMB Digital Marketing Conference, to discuss his insights on the changing realities of selling advertising to SMBs, the challenges of reshaping Dex’s sales organization, and the pending merger of the company with SuperMedia. Obviously there were a number of areas specific to the merger with SuperMedia that Hanna could not discuss, but I think you will enjoy some of the insights he could provide. And we even didn’t hold it against him that he is a graduate of the University of Central Connecticut.
YPT: Have you found any surprises since you joined industry nearly two years ago?
Hanna: One of the first surprises was that yellow pages was actually a growth industry as recently as 2007, so the market is shifting rapidly. Now it’s a constantly evolving market. As I said in my presentation this morning, if you believe you’ve caught up, you’re probably still in denial. But back to your original question, I’ve found it’s really not much different from other industries I have worked in such as the AT&T Long Distance SMB division. The cultures were very similar.
YPT: How long was merger with SuperMedia in the works?
Hanna: We originally started discussions last fall. They kind of quieted down over the winter, but then started up again seriously this spring.
YPT: When do you think the merged group will be able to get things turned around and begin so see increase revenues, and ongoing profitability?
Hanna: I can really only speak to the trajectory Dex One is on. We had been seeing strong growth of upwards of 50 percent in our Digital product revenues recently. The combination of our Dex Bundles, Dex Guarantee Actions (DGA) and digital growth, has us on a trajectory to turn positive by 2015.
YPT: Was the shift from print to digital products as much an issue caused by the poor economy, as it was market demand?
Hanna: We have gotten more aggressive with our digital products as our customers have become savvier as to how to use these digital products. More and more SMBs are beginning to grasp the importance of leads and not worry about the platform that generates them. They know their customer base is changing and shifting but they aren’t sure how much or where they are moving to. Most business owners know they need have some presence on Google with at least a $200-$300/month investment.
YPT: So why then is Dex One best positioned to capitalize on this shift?
Hanna: The exciting thing is there really is no dominant, “700 lb. gorilla” in this space. There are a lot of smaller players trying to serve SMB with a variety of products, but only a few have the full product suite that Dex One offers. Even more important is the long standing relationships our sales force has with our SMB customers. They have depended on us for years to help market their businesses. Now, with our digital portfolio and bundles they are trusting Dex One for print and digital services.
For Dex One to be successful, we first needed to build the system and support structure to handle the new products. We also needed a revised, sharpened hiring focus, in order to make sure our sales force better matched our current market opportunity. We are hiring more digitally savvy sales people, including New Business Hunters, which is different for Dex One. This process took time to get in place across our national sales force. It took us about 4-5 months to really gain momentum in refreshing our sales force. We have learned a lot and now have over 1,000 new sales people in our force, representing a 60% refresh over the past two years.
The combination of the investment in digital products, our 21st Century sales force, and sales automation tools have really paid off for us in 2012. Our Digital grow will be around 40% for 2012, and our bundle penetration will achieve our target of 60% of our revenue in Dex Bundle, including our Dex Guarantee Actions product. Currently, we are running above 70+% penetration on our bundles, which means better retention, increased revenues and a very solid base to sell more new products to our customers on an ongoing basis.
We have also changed “ how” we call on our customers. In the past, our sales cycle was more of an annual basis, tied to the print cycle of the directory. Now, we are calling on our customers on a continual basis. We call it “1, 3,7, 11” – which are the first, third, seventh, and eleventh months of an annual cycle. We measure their results, sit down and review product performance, and in general, provide a higher level of service to our customers. This requires our sales force to be more efficient. This is where our efforts on sales force automation, especially delivering automated proposals on the sales reps iPads, makes a big difference.
Additionally, we have a sophisticated, search platform that really sets us apart; our DexNet platform, which sometimes internally is referred to as “science project that went well.” We have a team of algorithmic PhDs in Santa Monica working on improving our platform each day. It is more than a full time job to keep up with the myriad of changes that Google, Yahoo, and others make to their algorithms on a constant basis. This business is just too complicated for small boutique digital consultants or agencies to effectively serve the typical SMB customer, who spends $300-$500 a month on their digital marketing. Our biggest competitor in SMB is this local digital consultant, or as we call this segment “I got a guy.” With the market changing as fast as it is, we truly believe the best-informed marketing consultant/sales representative will win the day in the SMB marketplace. This is again the reason why we are investing in comprehensive, multi platform training for our sales and support teams.
YPT: How have you changed the profile of the sales people you are recruiting?
Hanna: We found that just having multiple years of digital background wasn’t enough, especially if you are missing the core selling skills. Making sure you are matching their skill set to the specific job is critical. Base retention sales is very different than new business prospecting. We had to make sure we were recruiting the right skill for each of our positions. Even with an improved hiring profile in sales, we still have to expect that a 30% turnover is normal in large SMB sales forces. This is part of the culture change as well. We have to be able to balance our sales relationships with our customers, in conjunction with the transformation to a cutting edge, marketing services sales force.
YPT: With this expanded product set, are the days of the one call close gone?
Hanna: Fading, maybe not totally gone, but heading that way.
I do believe the bigger change is the multiple call plan I mentioned earlier. By servicing our customers during the year on a more regular basis, the renewals and new product sales happen more organically.
For new business, we are training to be more prepared going into the first call. Plus, with our automated proposal and presentation tools on the iPad, we can accomplish a lot more on the first call.
Our goal is to be as efficient as possible, as the old saying goes, “time is money.” Bottom line, we want to make sure our customers and prospects alike fully understand our value story, and are confident in their purchase decision with Dex One.