GE 129: How GovDelivery Acquired More Than 100 Million Users And Is Growing 20-40% YoY [podcast]

Scott Burns GovDelivery

Hey everyone, today’s interview is with Scott Burns, CEO of GovDelivery, a digital communications platform exclusively for governments, serving over 1,000 public sector organizations around the world.

Today we’re talking about the need for government agencies to connect with the public and how GovDelivery manages to do that, the difference between marketing to public companies versus government agencies, and their unique approach to user acquisition.

From Dot-com to the Public Sector

When Scott was in college in New Hampshire, he got really involved in grassroots organizations. On campus everyone had this thing called “BlitzMail,” which was an early version of email, and he and his friends were able to use it to help a small group attract a lot of people to their events to which nobody was previously showing up. Even back then he had an awareness of that connectedness and how it could positively impact politics and the public sector someday.

He worked at McKinsey for a couple years and then had the opportunity to work at an early SaaS business where he helped it become very successful. After a year he left to continue exploring the idea that connectedness was an insanely great opportunity for the public sector to better connect with the public, got more involved in the citizen experience/citizen services side of it, and he’s been doing that ever since.

Digitizing Government

When he left that startup back in 2000 in Colorado, he had started a side business where the idea was to put government documents online to digitize them and sell them off. They were gaining a little bit of traction and he thought, ‘What if instead of putting them online and selling them off, we could build some software to help the government communicate directly with the people?’

So with nothing more than a Power Point presentation to explain this idea, he attracted the interest of someone from the city of Saint Paul, MN where they’re located and soon had their first customer—and then they had to build the software! GovDelivery helped them communicate with the public more effectively and build a bigger audience. Now they serve public sector entities from small public parks to the largest government agencies in the world, bringing the marketing funnel to government agencies in order to reach a much bigger audience.

Let’s Say the DMV Needs Help…

So what exactly do they do? Let’s say the DMV came to them because they wanted to get more people to use their online services. So when somebody—whether in person or on the website—shows interest in renewing their driver’s license, for example, GovDelivery would try to get them to enter their email address—basic lead form stuff, like you would do in a private company. They would help the DMV get that lead form set up, find out what the person is interested in, encourage them to sign up, give them some information, and then help promote online services so that the next time this person would go straight to the website instead of coming to the DMV in person.

They’d also send reminders when it was time for people to renew their license, messages about add-on services that the DMV offers and, depending on the state, maybe promote safety information. There are all kinds of things that the DMV could do and it applies to every government agency that wants and needs you to do something: pay your taxes online, get a flu shot, visit the park, enroll your kid in the literacy program. So GovDelivery is the organization that is involved in capturing information and marketing these types of services.

100 Million People Use GovDelivery and Most Probably Don’t Realize It

That was the headline on Huffington Post last month. GovDelivery just celebrated crossing the 100 million mark—that is to say, 100 million unique (and active) sign-ups across their government client base. There is this age-old problem of government agencies not being able to connect with the public, which contrasts drastically with how well marketers have been able to reach people in the private sector. Scott and his team have been able to bring those approaches and that kind of connection mentality into the public sector, allows more people get immunized, sign their kids up for school, etc.

They’ve been growing steadily for last two years and are now at over 1,000 public sector agencies of every federal department across 50 states, plus Europe, particularly in the UK (like the UK Parliament and the European Space Agency). They’ve grown every year for fifteen years at a rate of 20-40%, and now they’re above $30 million in revenue this year.

Marketing To Public Companies Vs. Government Agencies

Scott has always been a big proponent of trial and error, so he tries a lot of things. They use a lot of the same techniques you use if you’re selling to private industries, like content marketing, social media advertising, cultivating a really strong referral network, in-person user groups, etc. So in that respect it doesn’t look much different.

Where they’ve taken a different view is that they put a much more aggressive focus on keeping the clients they already have. They are in a constrained client base in the public sector, so they put more emphasis on client retention, which allows them to take a long view with the client. This means that they have to deliver new products and services rather than going out and getting that next city to sign up, as well as branch out to some learning capabilities and data management capabilities.

What they’re doing clearly works because they have impressive retention numbers! Most of the churn is with smaller clients, but they’ve been very effective retaining the larger clients which has led to terrific retention on a dollar basis: well over 100%. Even during the recession, they’ve been able to hold in the high 90s.

Adding New Capabilities To Make Customers Happy

Moving to larger clients has always paid off for them. They had to look at moving upstream earlier than some other businesses, which is a tough decision point that a lot of entrepreneurs reach, but it was a good decision for them, serving larger and larger clients. Scott has a very simple model: you track your customer acquisition, your cost and your sales, time and investment for each client, and if you’re picking up clients that are three times larger and you don’t take three times more effort to close, you will focus your business upstream.

When they came on the scene in 2000 it was really difficult to build new software capabilities. They would handle this problem differently now, but what happened was the technology got a little dated and they made the possibly dangerous decision to rebuild it. Any CEO who makes the decision to rebuild their software should expect to lose their job, but he kept his job and was able to get it done. From there they then had a good platform for adding new capabilities, so they started testing new capabilities, experimenting with licensing small tech capabilities to bring in, and looking at acquisitions. Then they veered from there to more packaged services, which has been really successful. A lot of entrepreneurs stay away from packaged services, but if you can get them on a recurring basis they can be really powerful.

And then there were a couple of small acquisitions recently—they brought in some interactive texting capabilities, open data management, and have launched some learning solutions. So they’ve been really aggressive, but the cost of doing more work with existing clients was far less than going out and getting new clients, so it was worth it.

Unique Approach to User Acquisition

Their unique approach to helping their clients get more people signed up was creating something called the GovDelivery Network, which is basically a co-registration network within government. So anyone who signs up for updates from the state of Minnesota can sign up for updates from the city of Minneapolis at the same time. Or when someone signs up for updates from the Center For Disease Control, they can sign up for updates from Federal Emergency Management at the same time. They found that people are willing to sign up for more things once they’re in that sign-up process, particularly if they’re related. Their co-reg has been extraordinarily powerful, and while it’s harder to do in the private sector, it’s an untapped area for list-building.

A Big Struggle They Faced While Growing GovDelivery

One big struggle for Scott and GovDelivery is trying to maintain a high-growth entrepreneurial culture in a business that’s been around for a long time. This is much easier to do in the startup phase, but when you’ve gone through a couple recessions and growth periods it’s easy to lose that high-growth, energetic innovator’s culture. What they did to solve that was bring in new talent that was excited and wanted to take the business to the next level, so they have more of a start-up culture now than they did in 2005 when they were a fraction of their size.

Advice To His 25-Year-Old Self

Scott says that he would have worked harder to scale the things that were working rather than spending all that energy putting a lot of eggs into different baskets. He would’ve used those eggs more carefully. His 25-year-old self thought that as long as he had an idea he should try it out, and while you can do that to a certain degree, you can’t spread your team across 25 ideas at a time.

His Ideal Day

He believes that the most precious resource is time so he tries to be very deliberate about how he structures his day. Unfortunately there’s often tension between ideal and typical, but in an ideal day he would spend:

Most Important Question To Ask a Customer

“What’s important here today?” The reason for asking this questions is that clients can often be drawn into talking about GovDelivery’s system or the work they’re doing, but Scott wants to know what the biggest issue is right now with the client. Where are they investing their time or their resources? Once they know that, they can align the work they do with what matters most to the clients.

One Must-Read Book

Scott recommends The Goal: A Process of Ongoing Improvement by Eliyahu M. Goldratt, which is about transforming management thinking and the Theory of Constraints (TOC)—definitely a book you’ll want to recommend to your team!

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About Eric Siu

Eric Siu (@ericosiu) is the CEO at Single Grain, a digital marketing agency that focuses on paid advertising and content marketing. He contributes regularly to Entrepreneur Magazine, Fast Company, Forbes and more.

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