Clarity is Key

• Customer acquisition toughest challenge, client preference for foreign software
• CGP sharing and learning goes long way in helping shape company today

“THE entrepreneurial journey is never a bed of roses,” says Kelvin Leow (see pic), co-founder of Claritas Consulting Asia. “You always hear about other people’s success stories, but you don’t usually hear or see what took place behind the scenes: the sweat, tears, and failures that entrepreneurs have gone through to achieve their dreams. To be an entrepreneur, you have to toughen yourself up.”        

Despite knowing this, Leow was undeterred from embracing entrepreneurship. However, it was not the lure of being his own boss or the financial rewards that inspired him. It was his passion for technology that was the deciding factor. “Prior to setting up my own business, I spent years in Australia and in the corporate environment, working as a software architect and a project manager. The one thing that remains my passion is technology,” shares Leow. “It was this passion that made me take the plunge and become an entrepreneur.” Leow adds that he and his co-founder Jeffrey Ch’ng set up Claritas Consulting Asia in 2009.

“Ch’ng comes from a telecommunications background. Prior to setting up Claritas, we saw the gap where Malaysian companies were – and still are – facing a lot of challenges when it comes to implementing an integrated customer relationship management. So we combined our experience and strengths to create Claritas Consulting Asia.”

Meaningful relationships

‘Claritas’ is Latin for clarity, which is an apt name when you discover the founders’ vision. “We want to allow companies to have a 360 degree view into their customers wants and needs. This allows them to get to know their customer from day one and then build a long term relationship with them.”

The core product is Claritas™, an enterprise software that focuses on the 5 key areas of customer relationship management (CRM): contact management, marketing, sales, customer service, and loyalty. Their clients are mid to large-size companies in finance, insurance, telecommunications and retail. In these industries, the volume of customers that each client has, can be large and difficult to track. Competition is also fierce in these industries and customer acquisition costs are high. That’s where Claritas comes in.

“Claritas software allows our clients to manage the entire customer life cycle – from generating leads via marketing campaigns, to converting opportunity into sales, managing the after sales support process and implementing customer retention strategies,” explains Leow “The key value proposition of using Claritas is that it helps clients understand and anticipate their customer’s needs. What this means from our client’s perspective is that they can retain each customer acquired and continue to service and up-sell to them, resulting in long term Return On Investment or ROI, per customer.”

Startup challenges

Like many startups, Claritas’ road to success was fraught with difficulties. Although Claritas has been in existence for six years, Leow says the biggest challenge has always been the same — customer acquisition. “Customer acquisition is generally slow in our line of business. An enterprise business in Southeast Asia typically spends 6 to 12 months evaluating a suitable product; and has a software replacement life span of 5 years.” There is another familiar challenge. “The industry norm for larger corporates is to pick global established brands over a startup because the risk is lower.” In order to survive, Leow and Ch’ng took on any software development projects that came their way.

“These projects sustained our Research & Development (R&D) and kept our company going. Each one of us had to take on multiple roles within the company to keep the cost low. The down-side of that was that, we were more often recognised as a software development house rather than a product company,” Leow recalls. To counter this perception, the co-founders made a decision in 2009 to develop and launch a cloud version of their product. They trimmed off all non-core projects and re-deployed all available resources to their new ‘baby’.

“We launched the new product in 2010, after 9 months of work on it, but customer adoption for cloud based software was slower than we anticipated. We tried every possible way to convince customers to use our new product but to no avail,” recalls Leow. “We were at our peak in terms of headcount at around 15 people and cut costs wherever we could but with no new revenue coming in, we were eating into our reserves. 2010 and 2011 marked the lowest phase of our entrepreneurial journey – we suffered huge financial losses for two consecutive years and I had months of sleepless nights.”

Operating expenses were a RM500,000 in 2010 and RM900,000 in 2011 while revenue as at RM300,000 (RM2010) and RM800,000 (2011) respectively.

Angel to the rescue

The two founders began to wonder if they had made a wrong decision that would end with them losing everything they had built. “Finally we managed to convince an angel investor to trust our vision and put some money into our company. The fact that a third party was willing to invest in us and the company, made us believe in ourselves again and so we continued to go out into the market to educate the customer to adopt our new cloud based software” says Leow. Their resilience, perseverance and instincts paid off. By 2011, customers began to look at the cloud model, better known as software-as-a-service, or ‘SaaS’ more seriously.

“By restructuring pricing into two parts – a one-time implementation cost and a recurring subscription cost – it was a win-win for us and our clients,” says Leow. “Clients could spread their IT investment costs and we had a healthier and more consistent revenue model. More importantly, the subscription model gave us better customer retention and that was how we managed to get out of the lean times.”

Community and connection

Leow found the community and connections within the Coach and Grow Programme (CGP) to be invaluable. He specifically appreciates the sharing of knowledge and information from his peers in the programme that he joined in 2014. “We share and learn about other entrepreneurs’ successes and failures, strategies and business models at the CGP. These insights and ideas have gone a long way in shaping what our company is today,” he says. “The CGP also taught me about the critical process of cultivating growth and measuring results in order to achieve business goals.”

Although there are risks involved, Leow says being an entrepreneur and being part of a successful startup is his dream job. “I am doing what I love, and I would never give up doing what I love.” However, he has a word of caution for budding entrepreneurs. “Entrepreneurship is not for everyone. Do evaluate the possibilities carefully before taking the dive. As an entrepreneur, you need to be an all-rounder,” he says.

Discover Claritas Consulting Asia at www.claritascrm.com and please register your interest to apply for CGP Season 4.

The above is an excerpt from the book Startups to Scaleups published in October 2015 by Cradle Fund and Proficeo Consultants, the programme manager for Cradle’s Coach and Grow Programme. DNA will be featuring every entrepreneurial story from the book in a special commercial arrangement.

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