Kevin Gavin Discusses 'Brilliantly Simple' ShoreTel

2 Aug 2010

In this podcast, UCStrategies UC Expert Blair Pleasant is joined by Kevin Gavin, VP of Marketing, ShoreTel. Kevin discusses ShoreTel's successful quarter, new branding, new announcements, and new opportunities.

Blair Pleasant: Hi, this is Blair Pleasant with, and I'm here in Carlsbad, California at the ShoreTel Champions Partner Conference. With me is Kevin Gavin. Kevin is Vice President of Marketing for ShoreTel. Kevin kicked off this morning with a great presentation talking about branding and some of the new things that they're going to be working on. So Kevin, let's start off. You had a great quarter. What do you attribute this to?

Kevin Gavin: Thanks, Blair. We did have a good quarter. I think-I'm not sure there's any one thing that it could be attributed to as much as sort of the fact that the stars are lining up and we're sort of firing on all cylinders. It really was across the board. We had a very strong, international quarter in our revenue growth internationally. Our contact center business has come together very nicely. So we're seeing strong growth there. We're also becoming increasingly successful moving up market. We have seen a number of larger enterprises coming on board. So really I don't know that it's any one thing as much as is it is sort of the whole plan coming together. And we're seeing a nice revenue growth. And we're pretty darn bullish. We think, you know, in a going forward basis, we don't think it was an anomaly or a one-time thing. We're pretty optimistic and pretty hopeful that it's the beginning of sort of the new growth phase where we start looking into significant double-digit growth on a quarter over quarter basis.

Blair Pleasant: Okay, good. Now you mentioned, and several people have mentioned, that ShoreTel's biggest challenge right now is gaining consideration when getting into deals. So can you talk about what you're doing to increase the consideration rate?

Kevin Gavin: It's true. I mean we recognize ShoreTel is a relatively smaller player in the space. And we've done a lot of research, and our research says that we're in consideration for around three out of 20 deals that go down in the space. That's about 15% of the time that businesses are considering a new business phone, business communication system, they consider ShoreTel. And frankly, our brand awareness is not high like the competitors. And so it really is a challenge. It's kind of frustrating that we have a very, very high win rate, but unfortunately our consideration rate is low. So we're really taking steps to go ahead and address the problem of consideration rate. Really from the company's history, we focused most of our resources on product development and channel development, and there was very little left for advertising and brand development in the past. But beginning in fiscal '10, which just ended, we began investing really for the first time, in a substantial way, in brand development. And as we look forward in fiscal '11; we're going to re-double that investment. It really has become strategically important to us, as a company, to make more people aware of ShoreTel, make people aware, and to get invited to the table. I think another thing that's going on that's benefiting us, perhaps it's to your earlier question, is that the demise of Nortel has been very favorable. I think many businesses choose to bring three people to the table. And it used to be Cisco, Avaya, and Nortel. You know, pick one and let's go. And we were very frustrated to be outside of that circle all too often. And with Nortel kind of giving up that seat, certainly you know, Avaya is attempting to capture as much of that business as they can. But at the end of the day, Nortel's departure leaves an open seat at the table. And so now it's Cisco, Avaya, and hmm. And now that ShoreTel is much more often being invited to that table, and therefore our investment in branding is really something that we see as strategic. And if we can be more successful in getting to the table, we have a very high win rate, and we have a very high customer satisfaction level. So it becomes a virtuous cycle. If we can get invited more often, we drive revenue. More revenue allows us to invest more in advertising. And we think we're right on the verge of sort of breaking out from a second-tier player to one of the top tier players.

Blair Pleasant: So can you talk a little bit about the brand and the "brilliantly simple" terminology that you're using now?

Kevin Gavin: That is really sort of the ShoreTel magic. It really is what separates ShoreTel. We went to our existing customers, and as you know, as most people know, we have a...a really substantially high percentage of our customers are not just satisfied. They really are sort of raving fans. We have a very high level of customer satisfaction. We've got a very high kind of loyalty among the ShoreTel customers. And so we went to them and tried to understand better, what it is that they really like and what really makes them tick and what makes them enjoy ShoreTel. What kept coming through is this whole notion of it's simpler. It's less complicated. It's easier to use. And at the same time they said, it's not simplistic, it's low feature. It has all the features that I need, but it's fundamentally simpler than some of the more complex alternatives. We really stepped back a little bit and said, you know, it's kind of true that you give the competitors their due and they certainly are technically powerful. And they've got good solutions. But they're...they really are-they tend to be more complicated whether it's Avaya having brought forward some sort of legacy systeBlair Or whether it's Cisco, bringing together various acquisitions. They tend to be more complicated by nature. And ShoreTel had sort of almost an unfair advantage.

First of all, they weren't telephony people so they didn't know what they didn't know. And so they weren't trying to kind of reinvent the PBX and IP. Or they really started with a blank slate and said, "If voice was an application running on a data network, how would I architect this?" So they really were able to build in simplicity from the beginning. And they weren't bringing forward some complex legacy technology.

The second advantage that they had was while it's been in play for 10 years now; it was born in the internet era. And so it was nothing about bringing some TDM capability forward. From the very beginning it was IP based. And it will incorporate the whole concept of ease-of-use and ease-of-administration that's able to be done in an IP era. So the bottom line is, we think that the magic of ShoreTel is this whole concept of anti-complexity. And it's about being fully featured, but also easy to use. Hence the tag line-and more than just the tag line-sort of the corporate brand, is about being brilliantly simple. And it really seems to be resonating, not only with our customers, but prospects are starting to pick up on this concept that says, "you know, why does it have to be so complicated? Why do I need to send people to week-long training? And why do I have to go through complex upgrades and hire consultants to help me manage my system? Why can't it just be a simple easy deployment?" And ShoreTel delivers on that promise...of brilliant simplicity.

Blair Pleasant: Well, I know talking to some of your partners here this week, that's absolutely what they really love about ShoreTel.

Kevin Gavin: I think so. And you talked to a couple of customers yesterday, as well, right?

Blair Pleasant: Absolutely.

Kevin Gavin: Good.

Blair Pleasant: Last question. What do you see as ShoreTel's biggest opportunities in the coming year?

Kevin Gavin: Well fundamentally, it's what we've been talking about, this notion of increasing the consideration rate and getting in more deals is certainly going to drive more revenue. But beyond that from a product perspective, we continue to have several innovations that are also pretty exciting in terms of opening up new market opportunities. There are several of them. A couple I've mentioned. One is the whole project we've been working with IBM on the IBM Foundations platform. IBM is creating a small business platform. They call it Foundations. It's a complete IT-in-a-box solution: single box, easy to administer. The value proposition lines up very nicely with ShoreTel brilliant simplicity. It's a file server, mail server, and firewall. It provides IM and other capabilities. But it doesn't have core telephony capabilities. So we have worked for 18 months now with IBM to tightly integrate the ShoreTel telephony capabilities into the IBM Foundations platform. We're now in the process of bringing that to market as a single unified platform. And it has significant ease-of-use benefits from the administrative perspective, but also for the end-user perspective. And I'd like to talk more about it, but for brevity that's something that is an important initiative for us.

And then another major initiative that we have going forward is our upcoming introduction of ShoreTel Manage Solution. We're just moving into pilot phase right now. So it's still early on, but we have great enthusiasm for this idea of allowing customers to purchase ShoreTel on a monthly service-oriented basis. So it's by the user, by the month. And they don't have to buy the gear. In fact, we put the gear on premises for them. Or we put it in the cloud if that's where they prefer it. But essentially the customer doesn't purchase ShoreTel as a product. They purchase ShoreTel as a solution, as a service, paying a monthly fee. And while there's a contract, it's a year contract; it's just sort of a legal agreement to make sure that ownership is established of the equipment and such. We actually also have a total customer satisfaction guarantee. And as part of that program, if at any time, for any reason, the customer decides they no longer want the ShoreTel solution, in terms of this managed solution offer that we have, they simply box up the gear, send it back to us, and we stop billing them on that day. So it's a-we earn your business long as you're happy, we're happy. And the minute you're not happy, then if you think there's a better solution out there you should go for it. So we think that it really significantly decreases the risk to the customer. It allows them to pay as they go. It allows them to take advantage of brilliant simplicity and some monitoring and some other kind of white-glove treatment that they get that wraps up the ShoreTel Manage Solution offer.

Blair Pleasant: Well thank you so much, Kevin. And I hope the following quarters are as good as the last one. And thank you for a wonderful conference.

Kevin Gavin: Terrific, Blair. Glad you could make it. Thank you an awful lot.


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