Sramana Mitra: From a customer acquisition point of view, how did you go to market?
Ashik Ahmed: It was really, really hard. We spoke to a lot of customers. In the second round where we went for anyone can just sign up, you don’t need to get the word out. Back then, I don’t think we even understood the M of marketing. One of the other things we realized is that we do quite a lot of time and attendance but we don’t do payroll.
There was this company called Xero which was growing very fast in Australia. They do accounting and payroll. We built and did integration. Most of our customers used to say that it took them a day or two to do payroll. We took it down to one minute. You just press a button. We will calculate all the overtime and pay the employees really quickly. Payroll is one of those things that business owners or the accounting of the company really panics about. If you overpay somebody, it’s really hard to get that money back. If you underpay, you make yourself look like a fool.
Getting that right was key for us. We were able to do that very well to the point once we built that integration with Xero, we found that every customer that Deputy was getting was actually coming from Xero. We had very high conversion rates.
Sramana Mitra: Was Xero referring the customers?
Ashik Ahmed: Absolutely. They were saying, “I run a coffee shop. How do I gather their time and pay them?” Xero says, “We have the payroll but we have another partner called Deputy.” It worked like a charm. All of a sudden, I had a sales force that I don’t have to pay for. Here’s the important thing. What we found is the fact that there’s an MPS of somebody who uses Deputy on their own, there’s an MPS who uses Xero on their own.
What is the MPS of the customers when they use Xero and Deputy together? That was a lot higher. Your experience with using Xero Payroll was much higher because you’re using it with Deputy now. I actually then tried to repeat that same strategy in the United States.
In San Francisco, there’s a company called Gusto. I called the CEO at least 20 times a week before he picked up the phone. Once we launched it, we found out that four out of five customers in the United States came from referrals from Gusto. When the customer uses both products together, they’re actually much happier. We’re making the workflow. We’re reducing error. It just works.
Sramana Mitra: What year did you start the Xero partnership?
Ashik Ahmed: 2013.
Sramana Mitra: How much did you do revenue-wise in 2013 because of that partnership? My question is did you see an inflection point, financially, because of that partnership?
Ashik Ahmed: Definitely. I believe by mid-2013, Xero referrals were matching the revenue of the original 150 customers. We came up to $2 million.