229: The Change from Print to Digital, the How with Luboš Čipera
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The logical thing is when everyone in an organization supports sales—everyone wins, right? The challenges may surprise you.
Special guest all the way from Czech Republic, CEO of Mediatel, Luboš Čipera! Mediatel transitioned from the traditional directory print side to a digital organization in a quick and efficient way. Luboš gives us the dirty details on what it really takes to transition a company successfully under the ever changing landscape of sales and marketing. He shares how he increased revenue by 12% year over year by focusing on profitability.
George: It’s the latest edition of the “Conquer Local Podcast” with a special guest in studio all the way from Prague, it is my friend Lubos Cipera. And how did I do? Am I getting better at pronouncing Czech names?
Lubos: You’re almost there.
George: Not bad?
George: Okay, well, we really appreciate you joining us and thanks for flying halfway around the world here to the frozen tundra of Canada. We appreciate your hospitality the last time that we were there and we’ll talk more about your sales organization here in a moment. But let’s talk about Mediatel and how you arrived in the CEO chair at this organization. Tell us a little bit about Mediatel and how you serve the businesses at Czech Republic?
Lubos: Well actually, it started 15 years ago I think, when I was asked or addressed by the original CEO which was joining the company and she asked me to help her with the building strategy because I came from the Telco and online business in the past and Mediatel was at the time was really printed oriented old fashion company. So, she asked me if I could help her to build a strategy and change the Mediatel from the print house to digital company. So, I started in that position. I was responsible for strategy, for marketing, and product management. And in 15 years, I changed to different positions in Mediatel and I became CEO of the company in 2013 when it was acquired by FCR Media Group and I spent that position two-three years and I was asked, or I was offered by FCR Media last year to acquire the company. So, now I’m not just a CEO, but I’m also owner of the company. And now I run my business, I like it. What is nice when I had joined the company, Mediatel had something like 300, maybe 350 employees, and now we have 60, 65, 70 employees. And of course, the reason is that we had to move from print business to digital. We lost a lot of customers, of course, we talked about it in the past because there’s huge competition on the market, which was not when we were just one incumbent print directory and we had to really focus on efficiency, focus on changing all the processes, products, etc., in the company. And now I try to build a family business out of Mediatel and I like it.
George: So, when I was in Prague here a couple of months ago and had the privilege of working with your sales team…but let’s talk about that sales organization and how many businesses they serve in Czech Republic right now?
Lubos: To explain the size of the market, we have something like 450,000 companies in our database. I would say that 350,000 of them are real-life companies. And we have somewhere between 12,000 and 13,000 paying customers. So, that’s the scope of the organization should they care about.
George: What’s the market like as far as business climate? Is there a lot of big box stores or is it small and medium enterprises?
Lubos: Well, actually we focus mainly on SMBs, so small, medium. Of course, we have some large accounts, large customers, we offer them some kind of marketing services in PPC, SEO, social engagement but the major focus of Mediatel is to SMBs.
George: So, Vlad is your head of sales, who I had the privilege of meeting a couple of times. Tell us about some of the challenges that Vlad and the team are having as you’ve made this transition to being a digital organization?
Lubos: I think the most difficult part of the transition was that the sales organization in five, six years ago was not the real sales organization. These guys went to our customers, they didn’t sell, they just renewed the contract on annual basis because that was the current or standard situation in all directory businesses. So, they didn’t sell, they just really went to the customer, they said, “Okay, I would like to give you the same contract as you had last year.” So, that was the most tough situation. You know, last year or in 2017, we had I think 35, 40 sales reps in the field, only 10 or 12 of them were real sales guys. We decided to change entire sales organization, we really had to fire two-thirds of our sales force and we kept just 12 or 13 best sales reps. What is nice, these 12 or 13 sales reps were able to manage better revenue than three times sales.
George: They were more efficient?
Lubos: Definitely. Definitely, they were focusing…they listen to the needs of our customers. So, they did good sales pitch.
George: So, you actually had that talent in the building, you transitioned the others back to society, and then that group was able to build the core around how you’re gonna go to market so when you add new people they follow that system you have?
Lubos: Exactly. I will say that I think we add just one or two guys to our sales organization last year. So, we are quite lucky with the staff which we had in the past I think two years ago. But as you said, we try to stabilize the current customer portfolio. We were able to increase the revenue which they were responsible for by 12% year-over-year. We want to continue on that. So, what we see right now our sales force is very strong and good in upsell and keeping the current revenue. So, retention of the revenue is quite good. We are still losing some customers, some small customers but in revenue point of view, we are growing, I mean in that part which is covered by this staff.
Trimming the Fat
George: You know, I love all customers, I wanna help everybody that I can, but there are some customers that the spend just doesn’t warrant the sale, where it’s not a profitable sale. Are you finding that the sales that you’re continuing to drive are a more profitable chunk of business than some of those small ones?
Lubos: Yes, it is. That’s also what we were working on last year, we focused on profitability. So, we really did a huge analysis, a lot of analysis on the profitability of different customers and of the different product lines and we also removed some not profitable customers and not profitable products which we had in our portfolio. So, that was one of the reasons why we were more successful last year in growing revenue because we really focused on the profitable part of the business.
George: So, you know, you went through a pretty interesting transition from the traditional directory print side to being a digital organization. What were some of the things that really stick out in your mind as you did that transition? If you could do it over again, are there some things you might do differently or what were some things that really worked well?
Lubos: I think one of the most important part of the transition was that we already decided to switch off the print. I had a huge discussion also with guys from social media, they said, “Okay, you shouldn’t do it so fast.” We did it quite fast and I think that was the way which helped us to transition in let’s say one or two years because what I saw our sales reps were really focusing on print and they sell the digital product just on top of, as addition product. So, the decision to switch off the print, get out from this was one of the best decisions we did three or four years ago, I think it was 2015. It was the last book which we published. So, I think that was the most important part until the second that we decided to build a huge company in the last 11 months. And we visited every single customer which we had in our portfolio and we offered some specific package which we prepared for them before we started the company. And during those 11 months, we were able to transfer all the customers from print to any of the digital services which we had.
George: And that’s pretty impressive. There’s been other organizations that have tripped on that. So, congratulations on making that switch. If you were to advertise for a salesperson today, what would be your ideal sales rep? What type of sales rep are you looking for? Because I’m sure it’s way different than it was 15 years ago when you got into the space?
Lubos: Well, actually, I think the most important thing is that it must be somebody who fits to our organization. Because I have experience, we had two very good sales reps who killed the rest of the team. So, I think this is the most important part that these guys don’t kill the rest of the team because they don’t cover results of 10 other guys. So, this is the most important part for me. Then we need somebody who would like to learn. We don’t need the sales reps and we are not currently looking for the sales reps who are ready to go to the market and sell what we can sell. So, we need somebody who would like to learn, somebody who can listen and understand the customer needs. Then you can build a successful sales rep from the guy.
George: So, when I was in your offices I noticed that it really felt like a tech company. You had the lunch room and you got the water cooler and you got the free pop and you got the lunches and it seems like part of transitioning one of those traditional companies also means having a very collaborative environment from an office standpoint.
Lubos: That’s true. We moved to our new offices so two years ago and we are really focusing on open area and it helped. We mixed the back office or concierge part with the sales, product management with tech guys, and now they’ve started to work together. So, you can see that if they have any issue, any problem, they can start to talk immediately because they are sitting in the next table and they don’t need to go to to different floor for the answer or for the help. So, we focused on that corporate kind of cooperation in the company. Everybody in Mediatel has to support sales. So, that’s how we build the culture in the company.
George: Now, it’s interesting that you brought that up. So, what you’re saying then is every single person understands that it’s a sales engine?
George: That’s a big switch, though.
George: From what you were doing before in the directory business and that it is a very sales focused organization. You did mention another thing, I just want to bring this up. How important is it to sell something that solves the customers’ problem?
Understanding Your Customers
Lubos: Well, it is the only way how we can sell I think because if you don’t do that, then you can convince the customer for one year but then the customer will quit. So, this is something that we try to educate our sales reps that they don’t do sales just for one year, they have to build the relationship with the customer. So, they really have to understand the customer needs. Otherwise, the relationship with the customer will be very short.
George: What’s in your stack? What are you offering to solve those problems? What are some of the solutions that you bring to market?
Lubos: Well, actually, if I look at the customer life, we start with solving content part. So, we try to explain them that the content they want to show to the customer must be correct. We help them with the listing part and we help them with very simple advertisement which they can show to the customers. So, that’s where we start with a simple stuff which we can fix for our customers. Then when we get them, they’re here to that position and we start to explain to them to also focus on reputation, social management and if we have some large customers, of course, we offer them also the performance kind of advertisement like PPC and this stuff. So, we do almost everything but step-by-step.
George: I’m not good at math but you did use the term 12% growth. So, 12% more digital revenue this year than last year? Is that the growth rate?
Lubos: Yes, but only in the part of the customers which are covered by our sales force. What is important what I have to say we split our customer base to two parts. One is managed somehow by our customer care. So, it means that these are customers on subscription kind of contract and here we have to improve a lot. We don’t do that too much and we are not very good in that. So, we are losing customers and revenue in that part of our customer portfolio. But the customer portfolio which is assigned to our sales reps, then here we grow by 12%.
George: You said to me when we were in Prague that day, that your top part of your team, so, the group that really understands digital marketing, were doing some special sessions with businesses and sitting down with organizations where they knew they were businesses that needed help. So, you were actually going in and you were teaching and then you had the solutions that could help with that. You found that to be a good approach to grow that base?
Lubos: Yes, we like that. We do some training for our customers. So, what is nice is we do that as a paid product.
George: I’d say I’d love to know how you get away with that. That’s interesting.
Lubos: For example, I will use example of social media engagement or social media at all. So, we make some advertisement and we invite I will say 15, 20 potential or our customers for training which is done or which is managed by our social media manager. He does this training which last four, five hours. He explain everything about the social media, what they should do, how they should do that, etc. At the end, usually, I would say 70% of those customers understand it’s very difficult, it’s tough, it’s time-consuming so they sign a contract with us. So, they pay for this training and then at the end, we can have contact with them. So, that’s how we do that. Now, we would like to also do some kind of webinars because on webinars you can get more customers and you like to use this kind of training and webinars to get our customers to the services, to the concierge marketing services which we would like to offer to them.
George: I’m glad you brought that up. So, by webinar, you’re saying you’re gonna use the technology so you don’t have to go face-to face-with the customer. How many of your calls right now are being done over the phone as compared to what used to be done on a face-to-face call?
Lubos: Due to the fact that we have very limited call center, we closed the call center which we had in North Moravia last year or two years ago. Now, we are launching new call center, we’ll incorporate it with external call center. So, currently we have more face-to-face calls than calls via phone but we would like to change it because our goal is to get 10,000 new customers in Mediatel or to Mediatel next year and you can’t do that face-to-face. So, the idea or strategy will be to use call center and some kind of e-shopper solution so our customers can also buy the product in some kind of e-shop which we are launching right now.
George: Well, I want to congratulate you on the transition because a lot of groups have stumbled on this and it seems like you have had a lot of success in making that move. And, you know, you just have to spend a couple of days inside your organization and see you got some really great people inside that organization. I think a number of your top people have been with you for quite some time.
Lubos: Yes, that’s true. I will say that 65, 70 employees that we have right now, half of them are with Mediatel more than 6, 7 years, and this really is a team which I wanted to keep. So, I’m happy to have them there.
George: Well, I really appreciate you making your way to our headquarters here in Canada in the middle of bloody winter and I appreciate you giving us that feedback. So, for those of you that are going to Czech Republic, you wanna have a proper Pilsner. You wanna give any tips on places where they should go? Because there’s a few places they do it right.
Lubos: Well, actually, I think there is just one place which is been doing right and this is the chain which is called Lokal. Anybody who would like to go to Pilsner in Prague, they have to go to Lokal. I think there are five different pubs called Lokal in Czech Republic and they do.
George: Thanks for your feedback. Congratulations on the success of making that transition. As I mentioned off the top there’s lots of organizations that have tried this that have not been as successful as you, congratulations on acquiring the company. It’s all on you now my friend which I know you like.
Lubos: Yeah, yeah. Thank you very much for invitation. That was pleasure for me.
George: Thanks for joining us on the podcast.
George: I will tell you that the transition from Mediatel, from traditional directory organization into fully transformed digital organization may not quite be as easy as Lubos made it out to seem inside the podcast, but it’s really interesting when CEOs always give you the high-level view and everything’s great. But when you get in and you start talking to the staff in these organizations, you can actually hear the truth. And I had the privilege of attending an entire day with Lubos’ staff back a few months ago in Czech Republic and sat down with the people who were doing fulfillment, sat down with sales leadership, sat down with some of the sales reps. And they talked about this culture that has been created inside the organization where, “We’re gonna solve the problem, we’re gonna solve our customers’ problem.” And that’s been one of the reasons why these legacy organizations have not been able to transition from what really was a binary sale, “Will you buy my shit or not?” To, “How do I solve your problem and here’s some insights as to what the problems are that you’re having and now I’m here to help you solve that problem.” That’s been a really important piece to success that Mediatel has had in transitioning that business. Now, as you heard Lubos say, there’s still a lot of work left to be done but to see that growth double digit month over month growth, that’s really what we’re shooting for inside our organizations to grow that digital revenue and to get that monthly recurring revenue. Well, that’s the Holy Grail if we can get the gift that keeps on giving.
Don’t forget about Conquer Local the conference. It’s coming your way, June 10th through 13th in San Diego, California at the beautiful Hotel Coronado. So, don’t miss out on the conference of the year to help you be a conqueror. conquerlocal2019.com is where you can get your tickets and I look forward to seeing you face-to-face for a few days in beautiful Southern California. My name is George Leith, thanks for joining us on the podcast this week. I’ll see you when I see you.