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How a bootstrapped Singapore startup sold software to 1,800 bank branches in Mexico

Lucep’s co-founders Zal Dastur (left) and Kaiesh Vohra were childhood friends in Singapore who went to the same school. Vohra went on to study AI at Edinburgh University and Dastur got a master’s degree in marketing from Monash University. Lucep is their second startup. Photo credit: Zal Dastur.

When we wrote about Singapore startup Lucep two years ago, we focused on its website widget for pop-ups asking visitors if they want a callback. Sales leads from the callback invites go to a “click-to-call” app on the mobile phones of salespeople. An AI engine at the backend does user analytics to prioritize the leads and help with conversions.

Despite the promise of its AI-powered SaaS product, the bootstrapped startup found that selling to enterprises had very long cycles. As such, it needed to find a path with a shorter sales cycle.

The answer came serendipitously from another Lucep product designed to solve the problem of queues. Called VirtuaQ, it took the spotlight when India suddenly withdrew high-denomination currency notes in November 2016, leading to chaos at banks and ATMs. Lucep has an operations team in India and initially offered banks a simple SMS-based service for virtual queues. This evolved into an online-to-offline product for customer engagement.

The sales cycle for such a product was shorter, and it created an extra revenue channel. Lucep found that once a customer had used VirtuaQ, it opened up a range of other engagement possibilities. For example, high networth customers could receive special attention as soon they walk into a bank.

Any technology that can run a browser can run our tech. So, you don’t need to go out and buy new equipment.

Then the penny dropped. Why not also integrate the website engagement widget with the online-to-offline product?

“We’re calling it Lucep OmniPath,” says Zal Dastur, Lucep’s COO and co-founder. “It’s an omnichannel management system for customer engagement in specific types of businesses. So, it’s really built for banks and medical clinics.”

Whether people want to connect with a business in person or via digital means – mobile app, SMS, website, or telephony – Lucep’s OmniPath helps to funnel connections to one channel and direct them to suitable entities like a branch, call center, relationship manager, or customer support team. And where necessary, it can also use AI-powered analytics at the backend from its original online product.

The omnichannel product now accounts for a lion’s share of Lucep’s revenue. It’s also helping Lucep enter new markets such as Mexico, where its software is licensed for use in 1,800 branches of a leading bank chain. But it took much more than a shift in product and sales strategy to achieve that. One crucial breakthrough was a partnership business model.

Image credit: Lucep

The partnership model

The break came from deploying its omnichannel product in the Singapore branch of a global bank. The bank’s innovation team was working on reducing its footprint to address concerns over branches getting too expensive to maintain. The success of the pilot led to an agreement for the bank to use Lucep OmniPath in all its branches that wanted to implement new digitization systems. The product went to Thailand, Indonesia, and Hong Kong first. Then it went half-way around the world.

This global bank – which cannot be named because of a non-disclosure deal with Lucep – has a partnership with one of Mexico’s three largest bank chains. It didn’t take long before it shared the benefits of adopting the omnichannel customer engagement system with its partner. And that’s how Lucep landed in Latin America – virtually. “We just made one trip to Mexico, but only after the deal was closed – just to meet the client, have some tequila, shake hands,” says Dastur.

A lot of banks are looking for ways in which they can reach customers that have never dealt with banks before. These customers expect a bank to behave like any other consumer business.

Lucep’s previous success with the global bank’s Singapore unit had also come via a partnership. This experience as well as its immersion in India’s well-developed SaaS ecosystem had convinced Lucep to avoid going it alone for sales. It partners with the likes of Accenture and NTT Data which work out a package.

Lucep hunts for leads together with its partners, but it doesn’t go in and sell the deal to banks or hospitals. Instead, it brings in one of its integration and fulfilment partners.

What’s in it for the partner? A lot. “Our partners make a lot more money than us off the deal. They make the money through hardware, installation, setup, support, configuration, and all of that, but it’s all backed off our system,” explains Dastur. This is how it becomes a win-win.

Sometimes, Lucep’s online product gets deployed first, as a leading bank chain in Africa did on its website to prompt visitors to send callback invites. Now the startup is talking to the bank to extend the customer engagement offline as well with the omnichannel product.

Disrupting legacy systems

Essentially, Lucep is helping banks and hospitals to become full-fledged digital businesses. Dastur points out that even when they have digitization, most banks have incumbent legacy technology, which is unsuitable in many cases, especially in emerging markets.

India, for instance, is going through a huge shift after demonetization. Government initiatives to ease the opening of bank accounts facilitated by a national digital ID are pulling hundreds of millions of people into banking. Many of them have never dealt with a bank, and it’s the first time anybody in their family is opening a bank account.

The big gorilla in this space is Swedish company Qmatic.

Mobile banking aided by new digital payment systems are transformative. But people still feel the need to speak to somebody at a bank. This is where Lucep OmniPath comes in.

“A lot of banks are looking for ways in which they can reach customers that have never dealt with banks before. These customers expect a bank to behave like any other consumer business,” explains Dastur.

Other companies are also helping banks with digitized queue management and customer engagement, but “they’re stuck in a legacy thought process,” contends Dastur. “They’re not thinking about how do I change the industry. All they’re thinking about is how do I grow what I’m currently doing, or how do I develop my existing product.”

The big gorilla in this space is Swedish company Qmatic, which has been doing it in one form or another for over two decades. But Dastur points out that banks end up having to buy Qmatic hardware once they sign up for the system. Lucep offers a lower price point and more flexibility.

“That’s where we’re looking for disruption. Previously you had no choice, now what we’re saying is […] our system runs off a browser. Any technology that can run a browser can run our tech. So, you don’t need to go out and buy new equipment.”

Bootstrapped by choice

It took nearly two years for Lucep to close the Mexican deal, so the sales cycle remains long as the startup focuses more on large enterprises. What’s changed with the partnership model is the number of deals in the pipeline.

Our profit per employee is in excess of US$150,000.

“Whereas last year, we were working on maybe five deals at any one time, because of our bandwidth and location, now we’ve got a pipeline which has like 25 to 30 deals because we’re working with our partners,” says Dastur.

Lucep realized that if it connects with five partners each of whom has five or six potential clients, there’s a quantum leap in deal flow. But there was also a benefit for its clients in this model.

“They are not used to engaging with product vendors on a one-to-one basis,” explains Dastur. “They are used to engaging with a company like Accenture who will also manage the rest of their product vendors for them.”

On hindsight, Dastur feels relieved that Lucep chose to remain bootstrapped, despite the struggle that entailed. It allowed the startup to find a product and go-to-market strategy which has taken it to multi-million-dollar annual revenue level. “Our profit per employee is in excess of US$150,000,” he discloses.

This post How a bootstrapped Singapore startup sold software to 1,800 bank branches in Mexico appeared first on Tech in Asia.

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