How Andrew Cook Took His Business To R8 Million And Beyond

How Andrew Cook Took His Business To R8 Million And Beyond

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Vital stats

  • Company: Smoke Customer Care Solutions
  • Player: Andrew Cook
  • Est: 2007
  • Contact:  +27 (0)11 462 9881
  • Visit: www.smokeccs.com

What would it take to double your turnover? The answer to that question depends on where your business is in its growth cycle, and how focused you are on growth.

Smoke Customer Care Solutions doubled its turnover in 2012, and again in 2013. It’s still growing by at least 12% per month. But as founder Andrew Cook will tell you, it’s easy growing from R2 million to R4 million, and even from R4 million to R8 million. Where it gets trickier is taking a business from R8 million to R20 million and beyond.

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So what’s his secret to success? A laser focus on growth, which follows a plan that was meticulously designed from launch.

1. Design a solution that customers want (and need)

Andrew Cook left a successful career at KPMG because he believed that South African companies either didn’t take customer service seriously, or they didn’t know what their customers thought of them.

He assembled a small team of developers who were able to put his vision into practice through simple-to-use electronic surveys that highlighted key performance indicators that businesses could act on.

 

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“We created a customer platform that any company could use. It needed to be cost effective for the customer because our ultimate goal is to make the world more customer-centric – if a product is too expensive, it becomes a ‘nice to have’. We wanted to create a ‘must have’. Once it’s running, it proves itself.”

2. Spend on early development

Even though the business was bootstrapped, all revenue was poured back into development for the first two years. It meant the business didn’t show a profit, but it also meant that the product was getting better and better with each iteration, based on client feedback.

Today feedback can be given through 11 different channels, from SMS to email and phone surveys. The question Smoke’s engineers consistently ask themselves is: Is this the quickest, simplest way for customers to give our clients their feedback?

3. Give your market what it wants

Smoke-CCS

“When we created the business model, it was focused on creating a user-friendly product (called Eyerys) that customers could literally plug and play. We wanted to sell licences, not man-hours, which meant we didn’t want to be consultants. A consulting model is extremely difficult to scale, and it’s much more expensive for clients.

“Eyerys collects an enormous amount of data and distils it into simple dashboards, reports and spreadsheets that our clients can then use to improve their customer service models. The problem is that many of them weren’t using the data.”

It was a key insight that Cook could have ignored. Instead he chose to pivot the business. “We had worked on the assumption that to save costs our clients would want to analyse the data themselves. When we actually evaluated this assumption, we realised that 60% didn’t want to do it – they wanted us to do it.

“The result was that either they weren’t using Eyerys to its full potential, or, in the case of many key clients, the account was costing us money. At the beginning, helping big clients analyse their data was a value add until they were able to do it themselves. We didn’t charge for the service, which meant we didn’t immediately realise how much time our brains were spending on ‘non-core’ work.”

Many businesses don’t track the time their employees spend on accounts, and the result is that key clients actually become a revenue drain rather than a revenue booster, with no one understanding why profits aren’t higher when business is so good.

“Because we track everything, we were able to show our clients that our consultants were spending up to 50 hours over six months working on their data, and that we could no longer shoulder that cost. Our clients were very happy to pay for the service – as long as they continued to get it.”

This meant a new decision for Cook, because it was taking the business towards a consulting model, which was not where he wanted to be. Until he evaluated all angles of the business model shift.

“In situations like these, three things can happen: The business owner can refuse to do something that’s not in the business model; he can take on anything that brings in revenue and lose focus; or he can carefully determine how many resources to give the new division, and find a way to make it work for the original business model.”

This is what Cook chose to do. “This will never be a big revenue generator for us, but we realised that it could be used as a pull factor for clients who want the product, but also want the analytical support to use the product effectively. Don’t ignore what your market wants, or you’ll lose business – but charge accordingly. At the end of the day, keep clients happy in a way that works for both of you.

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4. Focus on sales

Eyerys has been recognised as a leading ‘Voice of the Customer’ solution. Years of pumping money into development has paid off, and while Cook will never cut down on development costs, even great products don’t sell themselves, which is why focus needs to be shifted to sales.

In addition, because the product’s development costs have already been paid for, the business’s margins grow exponentially as sales grow.

“We have a very specific sales model, which is to focus on channel partners rather than direct sales,” says Cook.

“Infrastructure companies speak to customer service reps and decision-makers, so it makes sense for them to recommend us when they’re fitting or maintaining enterprise infrastructure systems

“We could be seeing all the same companies and trying to close deals, but working through channel partners means we’re approaching clients through trusted service providers. It cuts out cold calling, and promotes good relationships.”

For partnerships like this to work though, three key elements need to be in place. Cook and his team only approach telecoms companies with good reputations that they know and trust – adding your product to a business that isn’t delivering good customer service itself will hurt the brand; they understand that they need to always deliver great service so that their partners can trust them – after all, it’s their recommendation that’s making the sale; and a revenue share is crucial to make the partnership worthwhile.

“It means our margins are smaller on each sale, but the volumes are much higher.”

5. Hedge your bets

While business in South Africa is doing well and the brand is steadily gaining recognition, Cook’s main focus for growth is the international market.

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“I spend a lot of time travelling overseas, visiting trade shows and conferences, and making connections with channel partners in the US and the UK. Because we’re a rand-based business, we’re extremely competitive, and this side of the business is growing daily.

“It’s a licence agreement deal, with no consulting work, so when the rand does well our local business strengthens, but when the rand is weak our international business does well. After all, growth is the name of the game.”

Nadine Todd
Nadine Todd is the Managing Editor of Entrepreneur Magazine, the How-To guide for growing businesses. Find her on Google+.