“We call them big hairy scary balls and every time we do them we’re terrified,” says Afrihost CEO Gian Visser.
In this instance he’s referring to the time he and his co-founding team decided to enter the ADSL connectivity market by offering R29 a GB – at a time when the market was offering R70 and the cost price was R55. It would mean the company would take a R250 000 hit a month.
The immediate question you want to ask is, “Why the hell would you do anything so stupid?”
The answer? “It sounded like a good idea when we’d all had one too many beers at News Cafe.”
On a serious note
Now answer this: what is the ultimate goal of marketing? To grow brand awareness and increase sales, right? Right. So who says there’s a traditional way to get there? Offering R29 a GB is certain to gain attention, grow brand awareness through word of mouth referrals and tick the box that the founders of Afrihost call ‘braai marketing’.
“We’re all about ‘braai marketing’ – giving our clients an experience they will want to talk about around a braai,” says Visser. Until recently, in fact, they’d been only about braai marketing. It’s something Visser in particular feels strongly about.
“People in advertising always talk about return on investment – ROI. I call it ROE, Return on Ego, because I think that’s what it’s all about. Putting up a billboard ad that you and your advertising agency think is fantastic and clever, but that doesn’t necessarily gain you market share,” he says.
It’s an interesting take on how to get your name out there and definitely comes with its downsides.
Putting clients first
“I concede that it might mean that we’re not in the faces of all consumers, but given the choice between spending R2 million on a traditional advertising campaign and giving clients R2 million back in Sin Revenue, I’d always go for the latter,” he says.
Sin Revenue is a term Afrihost coined a couple of years back. “If the margin we are making is too high purely because input costs have dropped, we pass on the saving to clients – new and existing,” explains Visser.
The market uptake for the R29 a GB strategy has exceeded even their wildest expectations. “We signed up in one hour what we thought we’d sign up in a month. We didn’t have enough staff to manage the influx of new clients because although the process was automated, we had to manually verify ID numbers.”
Big growth thanks to savvy ideas
For Afrihost this was the tipping point, the line in the sand between the company ticking over R14 million in turnover and its trajectory into stratospheric growth, resulting in the R400 million turnover it will do at the end of this financial year.
After just four days Afrihost was in a position to renegotiate rates with broadband supplier Internet Solutions, lowering their input costs significantly and ensuring their earmarked R250 000 would go a lot further. Existing industry players simply couldn’t compete.
Visser thinks of every additional cost as a marketing cost – from paying for more staff in the call centre than are needed, to giving staff extra bonuses so they stay motivated to delight clients.
It’s marketing with a difference – and it’s working.
Read the full article here.