A 105-year-old company that invented the checkbook explains how it used products from Salesforce and Microsoft to transform from a tangle of disparate businesses that 'no one really understood' to a sales powerhouse


Marc Benioff Barry McCarthy Deluxe

  • Deluxe is best known for inventing the checkbook in 1915. Now, the 105-year-old company is trying to modernize with new technology and a more transparent culture. 
  • After acquiring more than 50 companies, the business was wildly fragmented, CEO Barry McCarthy said, spurring him to try to unify it using software tools from the likes of Salesforce, Microsoft Teams, Workday and SAP.
  • The transformation process started with Salesforce, because the most pressing need was to bring all the company's customers into one single system.
  • The new technology goes hand-in-hand with cultural changes that McCarthy has made as well, like "flattening" the management structure and granting employees shares of the company.  
  • While the economic downturn has hit the company hard — putting some initiatives on pause — executives say they are still committed to the transformation process that's underway. 
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In 1915, W. R. Hotchkiss took out a $300 loan and started a company called Deluxe which created the first flat checkbook. About 105 years later, the Shoreview, Minnesota-based company now sells many more products and is in the process of modernizing its business for the 21st century. 

While it still prints checks, Deluxe expanded its business to include web hosting, marketing services, promotional items, payroll management tools and more, an empire its built through more than 50 acquisitions over the past decade.

The problem was, each time Deluxe bought another company it neglected to meaningfully integrate it with the rest of the company. When Barry McCarthy took the reins as CEO in late 2018, he realized that he had quite a dilemma on his hands. 

Deluxe headquarters

"The company was operating as a company of companies, not as a company of products," McCarthy told Business Insider. "No one really understood the company. There was no integrated strategy — none of these 50 different companies were ever integrated." 

Each company used its own software tools: There were 50 different customer relationship management systems, 52 resource planning software systems, and multiple HR systems, too, McCarthy said.

Sales teams in one unit had no idea if their customers were using other Deluxe products and there was no easy way to quickly access that information. That was particularly ironic because the only thing all the entities had in common was that they were all going after the same type of customers: small businesses and financial institutions.

McCarthy knew that he had try to fix these issues, believing that if he was successful all the different units would benefit. So, over the last year and half, he's guided Deluxe through a massive transformation, upgrading its technology and revamping the culture with the aim of unification.

While the recent coronavirus crisis has hit the company hard and many of Deluxe's changes are still underway, McCarthy has reason to be optimistic that his changes are having concrete benefits: The company's revenue grew 6% between the first quarter 2018 and Q4 2019 (before the effects of the coronavirus hit), and the company is "cross-selling to our customers in a way we weren't doing before."

Partnering with Salesforce to get a "360-degree" view of customers 

McCarthy got a major wake-up call about Deluxe's disjointed customer strategy soon after he joined the company. During a meeting with one of Deluxe's largest customers — a financial institution — the CEO of that company asked him which part of Deluxe he was in charge of. It came out that the customer had a meeting planned with a sales rep for one of Deluxe's products right after McCarthy's meeting and wasn't even aware that they worked at the same company. Similarly, McCarthy and that sales rep also had no idea that they were both meeting the same customer that day. 

"The customer is telling me about business they do with my companies that I have no idea about because I'm running so many different systems," McCarthy said. "I'm blind."

This huge red flag prompted McCarthy to decide that one of his first steps would be to make sure the company had a clear picture of who its customers were and which Deluxe products they were each using. That led Deluxe to Salesforce, which touts its software's ability to give businesses a "360 degree" view of their customers.

Last July, Deluxe signed a deal with Salesforce to implement its CRM software across the entire company, which would create one massive database of all its customers instead of a bunch of separate ones. This gave Deluxe employees a single hub for customer service, direct and indirect sales, digital commerce, and marketing. 

McCarthy also hired Chris Thomas as the company's first ever chief revenue officer, tasking him with creating a new sales culture within the entire organization to go along with the back-end technology upgrades. 

Chris Thomas Deluxe

That included making sure every employee had a customer-focused sales mindset. During Thomas' second week at the company, his team launched a Salesforce-connected portal where anyone from across the company could submit new customers leads. Within 24 hours, they had 72 new leads come in. 

Previously, sales reps didn't have a plan for how to convince existing customers to use additional Deluxe products, but it was much easier to plan around using its new tools. He also created a forward planning culture within the sales organization. Previously, sales reps didn't have a plan for how to bring more products to existing customers (which, typically, were only using one or two of its products). 

"[It] gives us the visibility to figure out how we can help [reps] more, which we didn't have before," Thomas said.

It seems to be paying off: In the fourth quarter of last year, just four months after implementing Salesforce, Deluxe closed four of its ten largest deals in the last decade. 

The deal didn't just benefit Deluxe, either. The company become a reseller for Salesforce Essentials — a set of tools targeted towards small business — which opens up about 4.8 million small business customers of Deluxe to potentially start buying the product. Salesforce invited McCarthy to speak at its investor day and annual Dreamforce conference last year. 

Modernizing IT and navigating the coronavirus crisis 

Deluxe's technology upgrades go beyond its partnership with Salesforce though. To standardize all its different businesses, it's revamped almost every single piece of technology that it was previously using in what's become a whopping $120 million investment in its own infrastructure. 

Deluxe CIO Mike Mathews reflects that when McCarthy joined Deluxe the company became laser-focused on using technology to achieve its end goal. 

There are six areas of the company that Mathews' team has implemented new technology for: customer relationship management through Salesforce, communication through Microsoft Teams, financial planning through Anaplan, human resources through Workday, resource planning through SAP, and data management through Cloudera. 

Not all of the tools are completely new — some teams were already using older iterations — but it was key for his team to upgrade everyone to the same cloud-based versions. The company initiated all the partnerships last year and its shift to Microsoft and Workday are complete, while others are still underway.

The SAP project is the only one that's still in its very early stages: It was about 25% complete before the economic downturn spurred by the coronavirus crisis prompted Deluxe to slow down as it tries to conserve money. What was originally a 25-month process might now take between 28 and 30 months, the company expects, because some of the implementation requires consultants to work in the office, which can't be done right now due to shelter-in-place mandates. 

While Deluxe is now facing lots of uncertainty — it suspended its second-quarter and full-year guidance and warns its revenue this year may be significantly lower than previously expected — McCarthy said that its transformation plans haven't stopped. They've just slowed down. In fact, McCarthy said on the company's earnings call in early May that he believes that the new technology will help the company survive the crisis better than its older systems would have. For example, he doesn't think the company would have been able to transition to remote work as easily without tools like Teams.

It would previously have been a "herculean" effort to have the company operating remotely, CIO Mathews added: "In this moment of the COVID-19 crisis, having these robust, scalable platforms that help operate and run the company are really nice because they allow us to work from wherever we are located." 

For the sales organization in particular, using Microsoft Teams allowed CRO Thomas to send all sales reps to work remotely without "any hiccups." 

Changing the company culture

The shift to more modern technology also required a culture shift in the company, too. McCarthy wants Deluxe to operate more like a tech company, with faster decisions and processes he said.

Part of that was "flattening" the organization and getting rid of layers of bureaucracy. Initially, there were seven layers of management between McCarthy and entry level staff in offices as well as manufacturing managers and now there are only four.

McCarthy also wanted to make that every employee felt invested in the success of the overall company, rather than only the success of their own unit. Deluxe reorganized into four divisions centered around products: payments, cloud, promotional, and checks. As an added incentive to think as one team, McCarthy also gave all of Deluxe's North American employees shares of the company. 

"It changes employees from being 'just' an employee that goes to work [to], now, owners: They have a stake in the success of the company," he said. "That fundamentally changes the story and the trajectory of how people interact with the company. And, honestly, that's exactly how tech companies work."

Finally, McCarthy also reads and replies to every single email he gets from employees — though, he admits, not always on the day he gets them. 

"People think of us as the sleepy check company," McCarthy said. "Yeah we sell checks, but we are so much more than checks and so different than the check company you think we are." 

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SEE ALSO: Salesforce's free online learning platform could create a pipeline for tech jobs amid record unemployment and help the company retain customers during the coronavirus crisis

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