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Most consumers would be familiar with receiving offers from brands via text messages that are not always customised to suit their profiles or preferences. These broadcast SMSs are typically sent out in bulk to a broad audience, with varying levels of success with conversions and engagements.
Pendula, an Australian startup founded in Sydney, has developed a cloud-based service that lets marketers and customer retention teams create customer communication workflows using both internal and external data to personalise their customer conversations and offers through various messaging platforms.
The company raised a Series B funding round of about A$6.8m in August 2021, and recently expanded into the ASEAN region where it is eyeing customers in the financial services, utilities and telecoms industries.
In an interview with Computer Weekly, Pendula’s CEO Alex Colvin and chief revenue officer Greg Cullen share more about the company’s business and what it is doing to help organisations improve customer retention.
Could you tell us more about Pendula?
Colvin: It’s been a journey since we were founded in Sydney six years ago. We’ve been working on our core proposition, which is around one key metric – customer lifetime value, which is about cross-selling premium and additional services so that customers don’t leave. The effect of that on a business is meaningful when you think about the core revenue numbers in terms how happy your customers are and how profitable they are to you.
It’s an interesting space that we’ve broken into. Conceptually, if you think about upselling to someone or keeping customers happy, it comes down to value realisation. For telcos and utility suppliers, a lot of what they sell is commoditised. And so, whether a customer likes or dislikes a supplier will depend on the customer’s own experience with the supplier as well as external influences.
Our platform does two things very well. The first is identifying data on what you as a customer is going through, which we categorise into two areas. The first is what’s happening between you and your supplier. In the case of a telco, are you using a lot of data? Are you making a lot of international phone calls? Are you constantly going on roaming?
Then you’ve got what’s happening externally. We love the example of how some of our utility customers that have a large retail base may be trying to cross-sell solar products. From an internal data perspective, they are probably going to target people that use a lot of energy where a solar product will help to reduce costs.
But on top of that, there are factors that aren’t affected by the service. For instance, do you own your house? Can you install solar panels? Is it sunny outside right now? Because if you’ve been cross-sold an offer for a solar product, you’d probably want to receive that offer when the sun is shining.
What that creates for us are interesting experiences where we can deliver very on-time and personalised messages than any other type of interaction because we’re factoring in internal and external influences. On top of that, we get feedback and enable conversation-like interactions between businesses and their customers.
We also like digital channels and the world is moving towards SMS and the likes of WhatsApp, WeChat, and Viber. And you can not only broadcast information to people, but also ask them what you can do to serve them better. And based on their responses, you can make offers that are more targeted and personalised.
If you look at the successes we’ve had with utility and education providers in Australia, Singapore, Hong Kong and New Zealand, the conversion rates are anywhere from 16-23%. The cross-sell and upsell campaigns driven by Pendula are almost two to three times what traditional marketing technologies can deliver.
Alex Colvin, Pendula
But on top of that, what’s exciting is the multiplying effect – if you’re able to get your conversion rates up, your customer acquisition costs come down massively, just for the simple fact that you’re getting this rotating effect of happy customers recommending new customers.
Now, from a technology perspective, we’re all about giving the power to the business. We don’t want to be consultants and we don’t want to force customers to jump through hoops. That’s really the lens we take when we build our technology, that is, to make sure business users can use our technology to drive those types of conversion rates.
Some of the capabilities you talked about are also found in other applications from Salesforce and Marketo. How is Pendula doing things differently?
Colvin: While the individual core components in Pendula aren’t new concepts, combining them into one tool that’s usable makes us unique. If I look at those core components, it’s about enabling you to interact in a user-friendly way with multiple systems like Salesforce and SAP, pull in publicly available information like weather data, location information and traffic information and then stack all of that on top of a conversation context engine.
But we don’t sell features. When we go to our telco or utility customers, we ask them about the metrics that matter to them. Ultimately, it is the customer lifetime value, ARPU [average revenue per user] and net margins that they are talking about. Technology-wise, it’s very rare to find something that has never been done before. What’s unique today are valuable solutions that drive results and that’s what we’ve been focused on.
I like the point you made about pulling in different data points. Now, some companies may not have a mature customer data strategy and could have data that exists in silos. Do your customers face similar challenges even before they adopt your platform? How are your helping customers overcome those challenges?
Colvin: If we look at the feedback from our customers, most of their challenges are not about sending or receiving messages – it’s about whether they can get the data related to the event in the first place. If you break down our product, 90% of our investment has been in workflow. Pendula is first a workflow solution, and then secondly, an interaction solution. And the reason for that is exactly what you’re talking about. It’s all well and good to be able to communicate, but if you can’t get to the data in the first place, there’s nothing to communicate about.
So, we then looked at our strategy to see how we can make it easier for businesses to connect with us. First, we’ve invested a lot in building integrations with common tools like Salesforce, and second, we looked at how we can stitch things together. It’s very common for customers to combine data from a CRM [customer relationship management] system like Salesforce with data from a billing system. Pendula has the ability to join those types of data together and customers can create identifying keys using phone numbers or email addresses.
We also have a capability that enables us to rapidly build new integrations to data sources in weeks, not months. So, if an energy business has a homegrown CRM system and wants to connect to it, we have a white glove service as part of our software licensing that lets them connect to that data source. That’s something we’ve been able to extend to our customers from the investment we’ve made to build integrations rapidly.
Could you give me a sense of your traction outside of Australia, particularly in Southeast Asia, and your go-to-market strategy?
Cullen: It’s super early stages for us in Southeast Asia and what we want to do is to build up a team there. We focus heavily on the utility, telco and financial services industries and Southeast Asia has a huge proliferation of companies in those sectors.
We’ve met with banks and telcos there and it was great validation of how we are trying to solve the customer retention problem. Typically, their problem lies in the ability to bring those data sources together, as you rightly pointed out.
We have two customers in Singapore, an emerging telco organisation and a marketing services company. We hope to win a deal in Indonesia, and another one in the Philippines this quarter as well.
Alex Colvin, Pendula
What we’re trying to do is a two-tiered, go-to-market strategy around the enterprise and commercial segments. But as you know, when you’re starting up in ASEAN, you need a two-speed approach. We want to bring in commercial deals that happen more quickly for our channel partners. We’re also trying to do that in our enterprise business, but we know enterprise deals are going to take a longer time to win.
Besides telco, utilities, and financial services, we’re also targeting industries that are going to be big for us in Australia, such as healthcare and education. In Southeast Asia, e-commerce will also make a lot of sense for us. The final one is government. We think we can offer, through our model, a great way to disrupt citizen services because a lot of engagements are done via SMSes delivered through central government services. We think we can improve that as well in healthcare.
Over the next two years, ASEAN could grow to about 10-20% of our business. A good test for us is how we internationalise to support the nuances of ASEAN, which is not a simple market with lots of different languages, cultures, currencies, and ways of doing business. But it’s a very fast-growing market for us.
Colvin: We’ve also been investing in building very compliant technology in the Australian market over the last four to five years. And it’s not just about building message broadcasting capabilities; we also need to be sensitive to spam and privacy, which is the number one priority for large enterprises and government. We’re well primed to serve the ASEAN region, particularly the Singapore market, in a way that’s more effective from a customer engagement perspective, but most importantly, also compliant with local legislation.
The rise in spam text messages has led some companies to move some of their customer communications into their own mobile applications. Are you thinking of abstracting some of Pendula’s capabilities and making them available through your mobile apps?
Colvin: We believe mobile applications as a technology and engagement channel is going the same path of email. It’s so saturated and every provider has an application.
Think of yourself as a consumer – how many apps do you have on your phone to maintain your relationship with suppliers? Now, the challenge that exists, particularly for services like utilities, is that you’re not really interacting with a utility provider on a regular basis. Billing could be the only reason you engage with them. As a result, we’re seeing a trend – not only within the ASEAN region but globally as well – that the uptake and effectiveness of mobile apps is declining at an exponential rate year on year.
I believe the last statistic we’ve seen was that 60% of app users were inactive, which means that while applications may give you some confidence that you are compliant, they are ineffective. How do you create differentiation if you are a supplier in a commoditised industry? You can become a differentiated business by price, but it’s a race to the bottom and no one wants to get into that. The more effective path is to provide a superior customer service and customer experience, but if the application is dwindling in effectiveness, you must innovate and iterate.
Unfortunately, innovation always carries a level of risk, but you can choose partners who understand that risk and can help you deploy conservative, well thought out tactics to manage those risks and differentiate yourself.
With that context in mind, we’re taking that challenge head on and saying let’s not go for a channel that’s becoming less effective. Let’s find ways to make the most effective channels work and we’re talking about SMS and WhatsApp, particularly in the ASEAN region. If you can crack those channels and manage your risk of spam, you’re going to be the highest-performing business in your sector. That’s the bet that we’ve put our investment into.
Many companies are concerned about data privacy and some of them might also be bounded by local data sovereignty rules. How is Pendula addressing those concerns?
Colvin: There are two things that we always employ within our business. First, we are a security-first organisation. We’ve got a very experienced head of security on our team who worked with Greg and I in previous companies. We are also obsessed with certification standards and maintaining them. One of the key standards is ISO 27001, but we are ensuring that we are not only ticking boxes from a security perspective but also embedding security within our culture.
The second thing is that because we are a SaaS [software-as-a-service] application, we use partners that have the same security standards that we have, but also presence in markets that gives us the ability to localise quickly. So, for instance, if we have a data residency requirement in one country, it’s a matter of taking a very small number of actions to create a new server location to ensure that the data does not leave that country.
We also work with enterprise customers who value their customers’ privacy above everything else. That’s something that we respect and one of our key value propositions for those customers is being a responsible custodian of their data.
But on top of that, we also meet them where their security needs are and that’s the unique thing about our sales cycle. For example, if you are a business or government organisation that’s concerned about security and you have very specific needs, it’s not a case of you fitting in with us – we will fit in with you.
That sort of collaboration happens in almost every engagement where we’re providing full visibility on how our processes work. At the same time, we’re also listening to your requirements and tweaking the service to suit what you need.
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