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Demographica Appeared In Entrepreneur 5 Years Ago. Today The Business Model Looks Very Different. Here’s Why

Demographica has been around for a decade, and in that time the company has enjoyed tremendous growth, quadrupling its turnover in the last two years alone, thanks to its ability to navigate some unexpected detours along the way.

GG van Rooyen

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Demographica is almost exactly ten years old now. It first appeared in the pages of Entrepreneur five years ago in 2011, when the company was riding a wave of success.

Most of its success was coming from its SA Consumer Initiative (SACI) — an opt-in database of 3,5 million users that it offered to clients looking to engage in direct marketing. Some of its clients included Shoe City, Telesure, Nissan, HP, Look & Listen, Marmite and the AA.

Fast forward to 2016, however, and the company looks very, very different. It is larger and more successful than ever, but nothing remains of the once-central SACI database.

Today, the company focuses on business-to-business (B2B) advertising and niche market advertising. It also fulfils a far more strategic role for clients, no longer simply selling a database, but playing a central role in the creation of marketing strategies.

Related: Entrepreneur BB Moloi’s Inspiring Story of Rise To Success Through Grit And Hard Work

Of course, things could have ended very differently. For every successful company like Demographica that manages to reinvent itself, there are countless others that showed tremendous promise for a brief while, but then went under. So how did Demographica succeed?

1. It wasn’t afraid to pivot

Just about every start-up pivots in its first year or two. As Steve Blank, the godfather of the lean start-up movement has said: “No business plan survives first contact with customers.”

In fact, there are plenty of examples of successful start-ups that ended up being something completely different from what was initially intended. Twitter started out as a podcast directory. Pinterest was a shopping app. Android (now part of Google) wanted to create a range of smart cameras.

Pivoting in the first few years of a business is nothing special. It happens all the time. But what about more established businesses? The fact of the matter is, just about every successful business needs to pivot at some stage.

No product remains relevant for decades. And when an entire industry is disrupted, massive change is needed within a company in order to survive. Just consider Apple. If it had stuck to creating desktop computers it would probably have disappeared ages ago. Most of its money now comes from smartphones. Similarly, Google wouldn’t be nearly the behemoth it is today if it had just focused on its search engine.

Look at companies that have been around half a century or more, and you find that many started life doing something very different. For more than a decade, Starbucks simply sold coffee beans and espresso machines. Nokia (a company again in need of a pivot) started life in 1865 as a Finnish paper mill. From 1910 to 1935, Suzuki produced weaving looms.

The companies that survive long-term are the ones that can see massive disruption heading down the pipeline, and manage to react quickly and efficiently to this existential threat. Not long after speaking to Entrepreneur in 2011, Demographica founder Warren Moss realised that the company would need to change the nature of its business fundamentally.

“Things like the Consumer Protection Act and the Protection of Personal Information Act were coming into being, so I realised that a database service like ours would come under threat. If we wanted to keep going, we would have to change the business,” says Moss.

The direction that Demographica had to take was quite obvious. “We weren’t simply sending out emails. We were constantly solving problems for clients. Our clients were asking us for help, and we were starting to build a reputation as a business that could provide advice and insight on a strategic level. We realise this was an area we could focus on, and so we started to turn into more of an agency, with a focus on direct marketing.”

Related: NicHarry’s R100 Million Business Plan

2. It found a niche

Warren Moss

There are plenty of advertising and marketing agencies out there, so establishing itself in this arena wasn’t easy. Luckily, though, Moss had spotted a niche that he believed was being under-serviced.

“In order to grow and dominate an industry, you need to either be very disruptive, or own a niche. The tipping point for Demographica came when it managed to carve out a significant niche for itself,” says Moss. “Since doing that, the company has grown 200%.”

This niche was B2B marketing. “None of the large agencies bothered with B2B marketing,” says Moss. “They all focused on the consumer side of things. So we decided to become the leader in the B2B space.”

Moss visited the United States and Europe and found a very healthy and established B2B marketing industry that didn’t really exist in South Africa.

“I visited all these large and established B2B agencies overseas. B2B was a large industry,” says Moss.

“So I decided to try and make Demographica the greatest B2B agency in Africa. So, as we grew into a direct marketing company, we also started to move away from B2C, and more towards B2B. It wasn’t always easy. We still get asked to pitch for large consumer campaigns, and it’s tempting because of the money, but you need to be firm. If you want to own a niche, you need to focus. Everything you choose to do has a certain opportunity cost that comes with it. The greatest advice I ever received was to find the one thing I can be the best in the world at and to focus on it. That’s how you become a market leader — not by allowing yourself to lose focus.”

3. It has a unique business model

Why had other companies not tried to own the B2B space prior to Demographica? “The margins weren’t big enough,” says Moss. “Agencies could make more money by focusing on B2C.”

Demographica, however, could make money in the B2B space because it had a very different business model.

“We didn’t start out as an agency, so we didn’t really know how things were ‘supposed’ to be done. In a way, our naivety was a benefit. Instead of billing for time, which is what most agencies do, we adopted an outcomes-based model. The client would describe a desired outcome and agree on a price, and it would be our job to make it happen. This meant we could have healthy margins, provided we found an efficient way of reaching the client’s desired outcome,” says Moss.

Moss also made the decision to hire a different kind of employee. When it came to client service personnel, Demographica started hiring high-level professionals, such as lawyers and business people, instead of traditional client service people.

Related: RocoMama’s 7 Lessons To Remain On Top Of Your Game With Customers

“We decided to hire the most senior people we could find, and not necessarily the cheapest, or even those with the most client-service experience. We wanted people who could deal with pressure and deadlines, and who were used to dealing with clients at a very high level. We wanted strategic thinkers who could become trusted advisors to clients,” says Moss.

The aim was not to be just another agency, but to operate on a different level — to offer what others couldn’t.

“You never want to compete on price. You want to offer the kind of value that clients can’t find anywhere else, and that they are willing to pay for.”

With this in mind, Demographica goes above and beyond to offer the kind of insights that can’t be found anywhere else. The company is the largest employer of anthropologists in South Africa, for example, and regularly sends these experts out to embed themselves within the target demographic of a client.

“When it comes to B2B, your target audience for a campaign might be financial directors at large corporates. That’s a narrow demographic, which allows you to dig very deep. On the consumer side, you’re dealing with millions of people who are all very different, so you can’t offer the same service,” says Moss.

4. It knows how to scale

Demographica

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“Expanding into Africa seems like an obvious next step for us, but every time the discussion comes up, I ask: Have we mopped up everything at home? Have we won all our home games? I don’t think it’s wise to expand and look further until you completely dominate a space. Once you can honestly say that you dominate your home market, you mitigate a lot of risk that comes with growth,” says Moss.

For Demographica, it’s all about managed growth. “Setting big targets is risky,” says Moss. “Entrepreneurs like to go for it. If they see a large target, they’re going to try and achieve it. But explosive growth can be dangerous. I like to set achievable goals.”

So far, the strategy has worked very well for Demographica. It has managed to increase its revenue without adding too much complexity to the business.

“It all comes down to economies of scale,” says Moss. “We operate successfully in the B2B space because of healthy margins, and we achieve these margins because we work efficiently. The growth of our revenue outstrips the growth of our expenses. To me, that’s what managed growth is. In contrast, explosive growth brings with it a lot of complexity. It can be impressive in the short-term, but hard to manage in the long-term.

“Technology has been invaluable within Demographica, and is a great example of how you can increase revenue without necessarily having to add complexity. I’m still involved in a lot of the sales in the business. Once upon a time, I could only manage about 15 deals at any given time, since I couldn’t keep track of any more than that. Now, thanks to CRM software we’ve implemented, I can manage 50 or 60. It shows you how you can leverage technology to scale successfully. Without this software, we’d need more sales people. With it, we can increase our margins even further.”

Related: 101 Efficiency Hacks For Busy Entrepreneurs

Key learnings

  • You’re never too big to pivot. Long-term success demands foresight and agility.
  • Find a niche and own it. Don’t allow yourself to be defocused.
  • Find a business model that works for you. Be creative. Add value, don’t cut price.
  • Don’t scale too quickly. Manage your growth and aim for long-term sustainability.

Do this

To be the best, you have to hire the best. Often the most interesting candidates come from outside your industry and bring unique skills with them.

Lessons Learnt

Scaleup Learnings From Our Top Clients – What The Most Successful Entrepreneurs Do Right

So, how do our successful clients move through these constraints to scaling up? We see four key drivers of success, and they are: people, strategy, flawless execution and finance.

Louw Barnardt

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You’re out of your start-up boots, staff is increasing, your client base is growing, revenue is up and you’ve proven your case to the market. Now it’s time to scale up. The challenges of this vital growth phase are different and it’s a time that demands different mindsets and different actions. In a world littered with small business failures, it helps to be well-prepared for scaling up using a proven methodology. At Outsourced CFO, we get an inside look at the success factors of our clients who are mastering the transition.

On the one hand, scaling up is a really exciting phase; this is what moves you into real job creation and making an impactful contribution to economic growth. On the other hand, it is really hard to scale up successfully. We see three major constraints that limit companies’ transition from start-up to scale-up:

Leadership

The business has to have the leadership that can take it to the next level. When you start scaling up, especially rapidly, the founders can no longer do everything themselves. The team must grow and include new leadership talent that can take charge and execute so that the founders are working on the business instead of in the business.

Infrastructure

The processes, procedures, networks, systems and workflows of the business all need to be scalable. This is imperative when it comes to your infrastructure for the financial management of your business. You’re only ready for growth when your infrastructure can seamlessly keep pace.

Market access

Scaling up demands more innovative marketing and storytelling so that you can more easily connect and engage with the new employees, clients, network partners, investors and mentors that need to come along with you on your scale-up journey.

Businesses that build a market conversation and a compelling brand narrative during their start-up phase are better positioned to have this kind of market access when they need to scale up.

People

It is critical to have the right people on your team. Our successful entrepreneurs have what it takes to attract, inspire and retain top talent. A strong team of smart, ambitious and purpose-driven people who love the company and want to see it succeed contribute greatly to a world class company culture. They are adept at communicating a compelling vision and establishing core values that people can take on. These entrepreneurs are tuned into the aspirations of their people and focus on developing leaders in their teams who can in turn develop more leaders.

Strategy

It is planning that ensures that the right things are happening at the right times. At successful scale-ups strategies and action plans are devised to ensure that the most important thing always remains the most important thing.

Strategy includes input from all team members and setting of good priorities for the short, medium and long term. Goals are clear and everyone always knows what they are working towards. The needle is continuously moved because 90-day action plans are implemented each quarter to achieve targets and goals that are over and above people doing their daily jobs.

Flawless execution

Top entrepreneurs are not just focused on what operations need to achieve, but how the business operates. They have the right procedures, processes and tools in place so that everyone can deliver along the line on the company’s brand promise. Frequent, quick successive meetings ensure the rapid flow of effective communication. Problems are solved without drama. There is no chaos in the office environment. Everyone is empowered to execute flawlessly to an array of consistently happy clients.

Finance

Everyone knows that growth burns cash. A rapidly scaling business faces the challenge of needing a scalable financial infrastructure to keep the company healthy. Our successful entrepreneurs pay close attention to finance as the heartbeat of the business, ensuring that everything else functions. They look at the tech they are using for financial management and for the ways that their financial systems can be automated so that they can be brought rapidly to scale. The capital to grow is another vital finance issue.

The best way to finance a business is through paying clients on the shortest possible cash flow cycle. However, when you are scaling up and making heavier investments in the resources you need for growth, it is likely that you will need a workable plan for raising capital. Our scale-up clients know the value of accessing innovative financial management that provides high level services to drive their business growth.

Navigating the scale-up journey of a growing private company is one of the hardest but most rewarding of careers to pursue. Having people in your corner who have been through this journey before helps take a lot of pain out of the process. No growth journey looks the same, but there are tried and tested methods that will – if applied diligently – lead to definite success. Happy scaling!

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Lessons Learnt

That Time Jeff Bezos Was The Stupidest Person In The Room

Everyone can benefit from simple advice, no matter who they are.

Gene Marks

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When you think of Jeff Bezos, a lot of things probably come to your mind.

You likely think of Amazon.com, a company he founded more than twenty years ago, that’s completely disrupted retail and online commerce as we know it. You probably also think of his entrepreneurial genius. Or the immense wealth that he’s built for himself and others. You may also think of drones, Alexa and same-day delivery. Bezos is a visionary, an entrepreneur, a cutthroat competitor and a game changer. He’s unquestionably a very, very smart man. But sometimes, he can be…well…stupid, too.

Like that time back in 1995.

That was when Amazon was just a startup operating from a 2,000 square foot basement in Seattle. During that period, Bezos and most of the handful of employees working for him had other day jobs. They gathered in the office after hours to print and pack up the orders that their fast-growing bookselling site was receiving each day from around the world. It was tough, grueling work.

The company at the time, according to a speech Bezos gave, had no real organisation or distribution. Worse yet, the process of filling orders was physically demanding.

“We were packing on our hands and knees on a hard concrete floor,” Bezos recalled. “I said to the person next to me ‘this packing is killing me! My back hurts, it’s killing my knees’ and the person said ‘yeah, I know what you mean.'”

Related: Jeff Bezos: 9 Remarkable Choices That Shaped The Richest Man In The World

Bezos, our hero, the entrepreneurial genius, the CEO of a now 600,000-employee company that’s worth around a trillion dollars and one of the richest men in the world today then came up with what he thought was a brilliant idea. “You know what we need,” he said to the employee as they packed boxes together. “What we need is…kneepads!”

The employee (Nicholas Lovejoy, who worked at Amazon for three years before founding his own philanthropic organisation financed by the millions he made from the company’s stock) looked at Bezos like he was — in Bezos’ words — the “stupidest guy in the room.”

“What we need, Jeff,” Lovejoy said, “are a few packing tables.” Duh.

So the next day Bezos – after acknowledging Lovejoy’s brilliance – bought a few inexpensive packing tables. The result? An almost immediate doubling in productivity. In his speech, Bezos said that the story is just one of many examples how Amazon built its customer-centered service culture from the company’s very early days. Perhaps that’s true. Then again, it could mean something else.

It could mean that sometimes, just sometimes, those successful, smart, wealthy and powerful people may not be as brilliant as you may think. Nor do they always have the right answers. Sometimes, just sometimes, they may actually be the stupidest guy in the room. So keep that in mind the next time you’re doing business with an intimidating customer, supplier or partner who appears to know it all. You might be the one with the brilliant idea.

This article was originally posted here on Entrepreneur.com.

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Lessons Learnt

How Sureswipe Built Its Identity By Building A Strong Company Culture

Culture is unique to a business, it’s the reason why companies win or lose.

Nadine Todd

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A company’s culture is its identity and personality. Since this is closely linked to its brand and how it wants to be viewed by its employees, customers, competitors and the outside world, culture is critical. The challenge is understanding that culture contains unwritten rules and that certain behaviours that align to the culture the company is nurturing should be valued and cherished more than others.

At Sureswipe, the core of our culture is that we value people and what they are capable of. We particularly value people who are engaged, get on with the job, take initiative, are happy to get stuck in beyond their formal job descriptions, and who sometimes have to suck up a bit of pain to get through a challenge.

We include culture in everything we do, so it’s a fundamental element in our recruitment process. In addition to a skills and experience interview, each candidate undergoes a culture fit in the form of a values interview. We look for top performers who echo our core values (collaboration, courage, taking initiative, fairness and personal responsibility) and have real conviction about making a difference in the lives of independent retailers. If we don’t believe a candidate will be a culture fit, we won’t hire them.

If we make a mistake in the recruitment process, we won’t retain culture killers, even if they are top performers. This is such a tough lesson to learn, but it liberates a company and often improves overall company performance.

Culture should be cultivated, constantly communicated and used when making decisions. At Sureswipe, we often talk about what it takes to win and have simplified winning into three key elements: A simple, yet inspirational vision; the right culture; and a clear and focused strategy. The first and third elements can be copied from organisation to organisation. Culture on the other hand is unique to every business and can be a great influencer in its success.

Catch phrases on the wall are not the definition of culture

A strong culture is purposeful and evolving. It’s what makes a company great, but also exposes its weakness. No company is perfect and it’s important to acknowledge the good and the bad. Without it, we cannot ensure that we are protecting and building on the good and reducing or eradicating the bad.

Mistakes happen. That’s okay. But we are very purposeful about how mistakes are handled. Culturally we’re allergic to things being covered up or deflected and have had great learning moments as individuals and as an organisation when bad news travels fast. It’s liberating to ‘tell it like it is’ and almost always, with a few more minds on the problem at hand, things can be rectified with minimal impact.

Related: Starbucks Coffee Is All About Culture… For A Reason

Culture should be built on values that resonate with you and that you want to excel at. In our case, some are lived daily and others are aspirational in that we’re still striving for them. In each case we genuinely believe in them and encourage each other to keep living them. This increases the level of trust within the team, as there is consistency in how people are treated and how we get things done.

We are always inspired when, after sitting in our reception area, nine out of ten visitors will comment on the friendliness of staff. We hear their remarks about how friendly the Sureswipe team is or a potential candidate will talk about the high level of energy and positivity they experience throughout the interview process.

These are indicators that our culture is alive and well. It’s these components of our culture — friendliness, helpfulness and positivity — that cascade into how we do business and how we treat our customers and people in general. Being able to describe your culture and support it with real life examples is a great way to communicate and promote the type of behaviour that is important and recognised within the organisation.

Culture doesn’t just happen

We are fortunate that culture has always been important to us, even if it wasn’t clearly defined in our early days. As we grew it became important to be more purposeful in the evolution of our culture. About four years ago, the senior leadership team and nominated cultural or values icons were mandated to relook all things cultural.

A facilitator said to us, “You really love it when people take the initiative, and get very frustrated when they don’t.” That accurate insight became core to our values. We love to see people proactively solve problems, take responsibility for their own growth, initiate spontaneous events, change their tactics or implement new ideas. It energises us and aligns to the way we do business.

We celebrate growth and love to see our staff getting promoted due to their hard work and perseverance. We recently had one of our earliest technicians get promoted to the Regional Manager of Limpopo. It was one of the best moments of 2018.

Be purposeful with culture, describe it, communicate it and use it in all aspects of business. Culture should change. Don’t allow phrases like ‘this is not how we do things,’ or, ‘the culture here is changing,’ to stifle the growth and development of your culture. When done correctly change is a good thing. Culture is driven from the top but at the end of the day it’s a company-wide initiative. Design it together with team members from different parts of the organisation to get the most from it. And then make sure everyone lives and breathes it.

Cost Cutting

The best ROI is achieved when you stop wasting money.

Peter Drucker once said that businesses have two main functions — marketing and innovation — that produce results. “All the rest are costs.”

If you agree, that means that the average business has a lot of fat to trim. Obviously you can go overboard trying to cut costs too. My philosophy has been to look at some of the general areas where you can add some efficiency but not at the expense of impairing your most valuable resource — your focus.

The following cost-cutting measures will do that. Think of these as adding value to your company, whether it’s time, creativity or a closer connection to your consumers.

Related: Wise Words From wiGroup On Building A “Wow” Company Culture

Uncover inefficiencies in your process

This is where I begin. In fact, it was analysing the inefficiencies of legal communication and knowledge sharing that led me to create Foxwordy, the digital collaboration platform for lawyers. I noticed that attorneys in our clients’ legal departments were drafting new documents from scratch when they could pool their knowledge and save time by using language that a trusted colleague had employed in a similar document. Business is all about process. When you create a new process, or enhance an existing process, you will drive cost efficiency.

Refine your process, then automate

If existing processes are lacking, it is time to create process. If you have processes, but they are not driving efficiency, it’s time to redefine your process. Either way, a key second step is refining processes that are needed in your business. Only then can you go to automation, since automating without a process will result in chaos — and won’t save time or money. Similarly, automating a poor process is not going to give you the cost-saving results you are looking for.

Thanks to the Cloud, there are very accessible means of automating manual processes. For instance, you can automate bookkeeping functions with FreshBooks and use chatbots to interface with clients — for very basic information. If you’re a retailer, a chatbot on your site can explain your return policy or address other frequently asked questions. Automating such processes allows you to spend more time focusing on clients and customers. Technology alone isn’t a panacea for all business functions, but if you find something you’re doing manually that can be automated, take a look and consider how much time and process definition automation would save you.

Rethink your outreach

Marketing and outreach are usually big and important challenges for an organisation. In my experience, there are two main components to successful marketing — knowing your customers and using the most effective media to spread your message. For the first part, I recommend polling. There are various online survey services that offer an instant read on what your customers are thinking. You may think business is humming along, but a survey could reveal that while consumers like your product, a few tweaks would make it even better.

For the second part — marketing messaging — once you have a firm idea of your marketing messaging, Facebook is a great vehicle for outreach. The ability to granularly target customers and create Lookalike audiences (from around 1 000 consumers) can help grow your business.

Related: Take Responsibility For Your Company’s Culture To Boost Productivity

Scrutinise your spend history

There are tools that can help you assess spend history and find cost-cutting opportunities. For example, you might be able to take advantage of rewards or loyalty programmes to reduce common business expenses, like travel, or consolidate vendors for a similar function. If you have a long-standing relationship with a vendor, negotiate better pricing.

The most important elements to keep in mind are resources that make your company special. Your company may be built on one person’s reputation and expertise. Guard against tarnishing that reputation with inappropriate messaging in advertising or social media. If your company’s special sauce is intellectual property, protect that too. But everything else — ranging from physical property to salary and benefits — are costs and should be considered negotiable. — Monica Zent

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