- Player: Warren Moss
- Company: Demographica
- Established: 2006
- Visit: demographica.co.za
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.
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.”
2. It found a niche
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.
“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
“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.”
- 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.
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.
How We Went From 0 To A Million In Sales In 6 Months
It became a numbers game. How Version Eight is winning 2018.
In November 2018, I left a very cosy position at a flourishing retail company in order to pursue my own destiny. Version Eight was born on 1 February 2018.
Everyone told me starting a business in today’s economic climate will be tough, and boy were they right. However, through a bit of luck, some hard work, and out of the box thinking, we managed to turn over our first million rand in sales within our first six months.
Now, for the record, hitting the seven figure turnover mark in six months is nothing to write home about, and that is certainly not the purpose of this article. The purpose of this article is to share our key ingredient with you so that you can possible achieve the same growth within your business, whether it’s an existing, new or business you are still dreaming about.
So, How Did We Do It?
The answer is quite simple, we did it through digital marketing.
Well, to be honest, not having had capital to spend on our own digital marketing at first, our first few clients were signed through cold calling as mentioned on the Big Small Business Show with Allon Raiz.
Only after signing our first three clients did we have some money to spend on online marketing services like Google Ads.
In Aug 2017, I wrote an article on this very website named “Beginners Guide to Digital Marketing in South Africa”. In the article I talked about the four fundamental pillars and how they form part of an effective digital marketing strategy.
We only incorporated three of the pillars, as one of them was more aimed at B2C businesses, and being an digital advertising agency meant we were B2B driven.
1. Search Engine Marketing
If you read the guide, you will notice that search engine marketing was the number one pillar on the list, and with good reason.
In a nutshell, we knew that 90% of all online sales and enquiries started with a search engine and that is why it’s something we started implementing as soon as we could. In the beginning organic traffic was slow, so we spent a very small amount on search engine ads.
Having the knowledge and understanding how Google AdWords work, I strategically bid on keywords that indicated that someone was looking for digital marketing help.
We made sure to find keywords that got a decent amount of searches per month but didn’t have a lot of competition, and yes, these kind of keywords do exist, you just need to know how to find them. This meant that we ended up paying very little for leads that enquired about online marketing services.
2. Social Media Marketing
Next up was to start working on a social media strategy.
Again, not having had a lot of cash floating around, we thought LinkedIn would be the best place to start. The professional network is amazing for connecting with potential prospects and that is exactly what we did.
By connecting with the right people, being active on the platform and sharing knowledge on a weekly basis, it was only a matter of time before we started getting private messages of people and companies looking for digital marketing services. Not to mention, this strategy was completely free.
3. Email Marketing
Another pillar I mentioned in the guide was email marketing. After cold calling prospects and finding the emails of key decision makers it became a numbers game. We knew that no one would know who we are and therefore we had to provide some form of value up front if we wanted to build some credibility.
Soon after we launched we created a Social Media Advertising Guide and all it was a 90 page PDF and 40 min video talking about social media advertising and how one can go about advertising on all the different platforms.
You can download our amended 2019 Social Media Ad Guide Here for Free.
As expected most recipients found it interesting but didn’t feel the need for our services, however, for every 50 people emailed, 21 would reply. And out of every 21 replies we about 1-2 meetings. Like I said, it became a numbers game.
WRAPPING IT UP
As mentioned earlier in the article, we did not end up using all four pillar (SMS Marketing), however, we’ve had great success with the above three.
In six months we did over a million rand in sales, and by the grace of God we are still growing, and you can too! I truly hope this article has opened up your mind to the power of digital marketing and if used correctly, and consistently, it can most definitely change your business for the better.
I do understand that not everyone is a digital marketing wiz, and for those I want to say, read, learn and experiment with online marketing as much as you can.
For those interested I would recommend doing a digital marketing course. Not only is it affordable, but it will allow you to scale your business.
Make sure to visit the Digital School of Marketing if you want to learn more about some of the best and accredited digital marketing courses around.
Blood, Sweat And Tears – The Journey To Becoming Emerging Entrepreneur Of The Year®
You see the awards, the magazine features and the highlight posts on social media. But building a successful business from the ground up is a really tough journey behind the scenes. Outsourced CFO co-founder Louw Barnardt opens up to Entrepreneur Magazine about what it actually takes.
I can tell you about all the exciting successes. I can mention things like two to twenty-six professional staff in under five years, more than R500 million in growth funds raised for SMEs, some notable awards and many other things that make the headlines. This is a part of the story and we do try to stop and celebrate the successes as we go…
What I would rather share with you are the trials and tribulations, the challenges and heartaches of the process of building a company. It is in this trail by fire that one learns the most about being a good entrepreneur. The most challenging of times often determine your path and hold the best lessons.
For me, blood represents the big losses. Bleeding financially is definitely a part of the journey. Very few companies have started up without some months or years of bootstrapping, of keeping it lean. For us, that meant continuing on articles salaries for more than a year after we had qualified. It took years to get to and exceed market salaries. This has been a painful sacrifice, but one that all founders need to make in order to get out of the rat race. Live a few years like no-one would so that you can live the rest of your life like no-one else can.
Relationships are also often counted among the losses. Many a time we have invested a lot into a staff member only to see them jump for a better deal. Many times people close to you try to steal ideas or copy direction. It hurts, but it has definitely been a reality.
Sweat represents hard work. Outsourced CFO was built on many long hours of hard, focused work. We’ve made this fun by working from coffee shops on weekends or from the beach for a day. But hard work has definitely been a part of getting things to where they are today. Nothing worth building is easy. Don’t start a business if you want to work less!
Sweat also means stretching. Coming from a finance background, there are dozens of core skills that you need to teach yourself in order to be successful at business. Sales, marketing, public speaking, networking, people management, technology. It is a process of continuously stretching your mind and your abilities. Treat learning like a superpower!
Tears just refer to literal tears. I have yet to meet an established founder who has never come home after a ridiculously tough day to a good cry in the dark. The journey has massive emotional asks. Disappointment, rejection, temporary defeat (which feels like failure in the moment) and other experiences are a part of the game. You have to learn how to dust yourself off, refocus and keep moving forward. But sometimes it’s okay to just shed that tear. Heaven knows I have.
Fate has a cruel sense of humour
The funny thing is that our biggest successes have very often been followed in quick succession with our biggest disappointments. The week we received the Premier’s award as one of the top two Emerging Companies in the province is the same week we had to postpone paying our own salaries. The month I came back from honeymoon early in our second year of business is the same quiet April that we had to seriously consider if we should continue with business. The list goes on! Business teaches you in a very real way to hold both the extremely high and extremely low moments at the same time.
Pivotal moments and the grind
In every young company’s story there are pivotal moments. Things that happen that change the game. I’ll share two of ours with you. At the end of the very April month mentioned above, we won the contract to become the national financial service providers to Microsoft’s BizSparks Program, allowing us to work with the top 10% of a pool of one thousand tech start-ups being incubated by Microsoft. This set us on a course to become the leading authority in the country on finance for tech start-ups.
Another such moment was the Fundraising Readiness Program that we ran with Investec, where we helped over a dozen private companies prepare for and pitch for growth capital. The brand association and fundraising processes that came from this also changed our trajectory. These pivotal moments change your game – but don’t take anything away from the weeks and months of hard grind in between them.
Entrepreneurship is a team sport
No great company has ever been built by one person. It takes a village to build a business. I have been blessed with two co-founders that I have been friends with for over a decade. Their work and support as well as that of our team (which include my sister Dore too) has been the secret sauce to our success. Don’t try to go it alone. Surround yourself with likeminded people who share in and contribute to your vision.
The road to building a successful company is a steep and rocky one. It is scattered with high mountains as deep valleys. You will need patience, dedication, willingness to sacrifice and a sincerely, fierce belief in your vision for the road. But if your why is big enough, you can get up every morning and make that dream a reality!
SA Entrepreneur Takes First-Of-Its Kind Business To An International Level
Jo Farah shares some insights on his entrepreneurial journey as Global Entrepreneurship Week (GEW) gets underway.
South African-born entrepreneur and creator of the world’s first environmentally friendly sneaker care product – Jo Farah says entrepreneurship has always been part of his DNA, and making a valuable contribution to society his ultimate goal.
The founder of Sneaker LAB – an innovative business that’s managed to create a first-of-its-kind, biodegradable sneaker care product, delivered his sentiments on entrepreneurship and his entrepreneurial journey as Global Entrepreneurship Week (GEW) kicked-off in 170 countries around the world this week.
Farah, who’s been mentored and groomed by his entrepreneur father, says developing a successful business has always been part of his life’s plan. And while he managed to establish a few start-ups during his entrepreneurial journey, which includes founding a guerrilla marketing agency in South Africa, and producing ads for the likes of Adidas, New Balance and Puma it still wasn’t enough.
After returning from the United States in 2008 with just one thing on his mind – to help cure South Africa’s conundrum by creating jobs for the unemployed, and in-turn fostering economic growth, Jo invented a one-of-a-kind sneaker care product, and put shoulder to the wheel to establish his business in 2013.
Starting a sneaker care product range was a natural choice, especially considering Jo’s passion for sneakers, street wear and urban culture. He also wanted to create a complimentary product to accompany the list of sneaker brands that has inspired him over time. Jo’s work behind the scenes commenced in earnest and in no time he conducted enough research to support his theory – there was a gap in the market for branded sneaker care products. He knew that he was on a good wicket.
“There already was a range of non-branded products on the market, but my research revealed there was a healthy appetite for branded, environmentally friendly sneaker care products. That spoke directly to my business model,” he says.
Today, Sneaker LAB has placed Cape Town on the map with its premium global status – it’s the only sneaker care product range in the world to be Green TAG certified, environmentally friendly and biotech driven. Its products are water-based, readily biodegradable, and the packaging is suitable for recycling. The business also operates internationally, in 50 countries across Africa, with an experiential brand store in Braamfontein Johannesburg; as well as downtown Los Angeles in the USA; Asia and Europe. The business is growing by the day, with a store in Tokyo set to open soon.
As an entrepreneur he’s grown in leaps and bounds, and despite many changes along the way, his sentiments on entrepreneurship remain.
“Inspiring potential entrepreneurs to develop an entrepreneurial mindset and embark on an entrepreneurial journey is one way of solving some of the world’s most critical problems, and freeing the economically marginalised,” Jo says.
He urges young aspiring entrepreneurs with an entrepreneurial mindset to take the plunge and to channel time and energy into developing their business ideas into something tangible and workable that could generate good long-term financial returns.
“People will tell you that it can’t be done, but believe me, it can. All you have to do is to believe in your idea and to work hard and smart and you’ll reap the benefits,” Jo says.
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