Driving loyalty: UrbanBuz interview

Mustafa Sadek and Salam Saadeh tell Tamara Pupic why they built the customer loyalty and retention platform, UrbanBuz
Driving loyalty: UrbanBuz interview
By Tamara Pupic
Mon 09 Feb 2015 10:29 AM

With a constant battle among businesses to provide top-notch customer service, customers can often feel overwhelmed.

Whether its dealing with marketing emails, fielding constant calls from sales people, or trying to work out which are the best – and genuine – deals being offered to you, the reality is that there is often too much to deal with.

But in the process, however, it can easily happen that sales and marketing teams can miss their target customers, no matter how easy it might be to identify them.

“What we’ve found out [among businesses] in the UAE and the region in general is that there’s a really big gap in terms of understanding who their customers are because this is one of the first questions we ask them,” says Mustafa Sadek, co-founder and CEO of UrbanBuz, a Dubai-based digital customer loyalty platform.

“To our surprise, a lot of these answers also came from big businesses. Although established for a long time, they didn’t really have processes put in place to build that relationship with customers.

“From our end, we really look at customer loyalty as a central piece to business growth. It’s essential [for businesses] to form a full picture of who their customers are because globally we are more and more moving towards a more personalised relationship with customers.”

Empirical research suggests that 80 percent of business volume comes from 20 percent of customers. Furthermore, it can cost five to 10 times more to acquire a new customer while a returning customer spends on average 67 percent more in store.

Therefore, advocating customer retention versus customer acquisition is one of the valuable pieces of advice the trio of long-term friends behind UrbanBuz has been offering to local retailers since the company’s establishment in 2013.

“Marketing has traditionally been about acquisition of customers,” explains COO Salam Saadeh.

“Little did they know that increasing customer retention has a much bigger impact on their bottom-line. If you increase your customer retention by five percent, you’ll increase your profitability anywhere between 25 and 125 percent.”

Combining the extensive business development experience in the technology field of Sadek with the financial and investment expertise of Saadeh, and the tech talent of Nehme Baghdadi, UrbanBuz’s tech director, has resulted in offering customised and evolving solutions for businesses to effectively engage with their clientele.

“We look at customer loyalty as more of an ongoing relationship which is going to grow and evolve over time,” says Sadek.

“That’s why we present ourselves as service providers and not just a company that will sell a product. We are giving businesses a customised solution to fit their specific business needs, cater for their specific customers.”

Although seeking to digitise their offering, an increasing number of UAE-based retailers are averse to purchasing software as a capital investment and seek a software partner to provide the same capability to them on an ongoing basis, which is a niche UrbanBuz has managed to successfully carve out for itself.

Software-as-a-Service (SaaS) is an important part of customer relationship management (CRM) since it allows retailers in the UAE, who conduct the bulk of their consumer engagement on social media and online, to improve that outreach.

Sadek says: “SaaS is a relatively new trend, especially in this region.

“It has brought several shifts. Now a business can move quickly. If I’m interested in something, I can immediately subscribe and have it within days.

“There are also shifts within budgets. Now they can subscribe to it and start paying as a user.”

Not only has this trend been evidenced by the 200-plus percent growth UrbanBuz experienced in 2014, but it has also differentiated the company from its competitors, who, as Saadeh explains, usually offer a one-size-fits-all solution and serve more as networks in which customers share clients.

She says: “We are B2B, not B2C. We cater to businesses, providing them with their own loyalty programme, catering to their own customers.

“We become their loyalty consultants but the technology part makes it easy and simple to do it in a very simple manner as opposed to waiting of months of implementation and customisation.”

UrbanBuz’s bespoke software enables businesses to grow and keep up-to-date with consumer trends and patterns, however, putting businesses on the path of achieving this goal required a mindset shift among local business people.

When asked how quickly businesses expect this service to increase their sale, Saadeh says: “It’s another myth we’re trying to overcome. They are used to putting an ad and then seeing people respond to that ad immediately.

“They are used to that reaction but when it comes to relationship, that’s the whole different story.

“So there’s an education phase that we go through to let them know that it’s going to take time because the biggest part of that relationship is trust. For a customer to trust a business, it’s going to take time.

“They need to see what’s in it for them as a relationship, that you’re being transparent and authentic as a business in order to get to that level that we can label them as loyal customers. That’s what customer loyalty is all about.”

The digital loyalty platform can be fully integrated with the POS system of a business and/or can be operated independently through a tablet that is included in the service, enabling staff to easily sign up and reward customers.

It thus facilitates live access to customer and business analytics to measure, react and adapt the business’s offering with real time data. When coupled with regular reports and quarterly reviews by UrbanBuz’s team, the platform allows for two main goals to be achieved – getting to know your customers and reaching previously set targets.

Sadek says: “With one client within six months we saw a jump of 20 percent of returning customers and that was one of the KPIs that we actually focused on.

“Another client, a retail business, was able to realise that a big chunk of their customers were actually from KSA and Kuwait, allowing them to tailor solutions for those two groups.”

Examples are many, and the co-founders state that a recent shift in clients’ attitude towards customer loyalty is derived from their need to build solid business foundations.

“What we’ve seen as well is that businesses realise that they need this as part of their future growth plans. That’s something we didn’t see a year ago,” Sadek explains.

“Now it’s shifting because they’ve realised that growth needs something to rely on and that’s customer engagement and relationship.”

Following the LEAN start-up model has seen their business grow to include 125 to 130 locations distributed across 45 to 50 businesses from different sectors, serving more than 120,000 consumers.

“We make assumptions and we immediately validate them, explains Saadeh.

“The key for us was to be as agile as possible in order to adjust to what we hear from our business partners and the market in general to be able to stay ahead.”

She adds that UrbanBuz has reached a stage where it’s appealing to medium and large businesses, in spite of their initial expectation to be mainly focused on small businesses.

Sadek explains: “From day one we’ve set up guidelines for ourselves that we are not building a product for ourselves but something for the market.”

With $735,000 of seed-funding raised from individual investors in less than six months after the round’s opening and within the very first year of the company’s existence, their ride seems as an easy one when compared to other start-up stories.

Confidently looking forward to raising series A funding from institutional investors soon to help them go to the next stage, Saadeh advises other entrepreneurs: “It’s about getting to know people. It’s based on relationships, especially the first one. The first one is built on trust, they invest in the team. In the second round you have something to show so it’s different.

“You need to really understand what investors look for but at the same time you also need to know your worth, and meet somewhere in the middle.”

However, as a very young technology company playing in a relatively new and niche field, they face the challenge of finding staff with a mastery of all the coding languages and frameworks UrbanBuz might need.

Sadek says: “There is a challenge to find the right technology skillset because we are really a company dealing with very advanced technology, even with technology that we anticipate to be available in the next year or two that we need to start looking at.

“What we are really looking for are people who can function within that mentality of thinking ahead and thinking outside the boundaries to come up with great ideas and solutions.”

Being aware of the belief, well-established in the tech world, that the very best developers are capable of achieving ten times the productivity of their merely competent colleagues, they keep an eye on the best students of the region’s universities.

“This is the skillset that is really hard to find. In general, but especially here,” Sadek admits.

However, a silver lining in this difficulty is the reason why they set up their business in Dubai which Saadeh describes as a great testing ground for any idea and a base to expand it across the region.

She adds: “In our space in particular, which is technology and software as a service, it’s a green field space here. Even though people think of Silicon Valley or Boston, it’s very competitive over there and it’s extremely crowded. Here it still offers a lot of opportunities.”

Drawing conclusions from exposure to both Silicon Valley and GCC start-ups throughout his career, Sadek finds US businesses to be more tech savvy and more accustomed to doing online transactions, “while e-commerce is just starting here,” he says, adding: “In terms of consumers [in the US], they are also more open to trying new things.

“Here, it’s the opposite. For example, people here still like to pay in cash even though they all have credit cards.

“Also they still heavily rely on SMS, whereas in the US SMS doesn’t exist between business and consumers anymore. Here it’s the main channel.”

With smartphone ownership in the GCC outstripping the global average, Saadeh defines ‘going mobile’ as a pattern businesses need to follow in 2015, and adds: “There’s a shift to Instagram now so businesses need to follow the need for more visuals in 2015.

“Also, omni-channel communications, communicating the same message across different channels is important.”

The co-founders explain that technology developments have allowed businesses to also focus on more personalised, specific location-based communication, which includes deciding what and how to communicate once a customer is inside of a store.

“The most important thing is finding a non-intrusive way. And that’s a challenge because customers are being bombarded with communication,” Sadek says.

An interesting fact about their rapidly growing business is that it naturally expands as their clients grow both in terms of business volume and geographical coverage. With UAE businesses conquering the region, UrbanBuz ‘organically’ enters new markets sooner than any other less-than-two-years-old start-up would do.

“Our mission is to stay on top of consumer trends and new technologies, and to make sure that we bring all of those to our solution to equip the businesses to grow.

“The second thing is to grow regionally, which we started already in 2014, but now with more focus and directly or sometimes indirectly through e-sellers. Definitely we are growing with our businesses because most of them are also growing regionally and internationally,” concludes Saadeh.

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