We talked to Massimo Sirolla of Loyalzoo about resources for small businesses, and he had the following to say:-
First of all, how are you and your family doing in these COVID-19 times?
Massimo Sirolla: I think we’ve been very lucky, I have two sons in university who have been able to continue their studies remotely, and even got summer jobs, and a daughter who is still in school, but managed to remain in a good mood until now. And working from home is not an issue for me, so overall I really cannot complain.
Tell us about you, your career, how you founded Loyalzoo.
Massimo Sirolla: I spent over 20 years in the global payments industry. I could see then that the growth of digital technology among large retailers was leaving the little guys behind. Large companies have the resource to build their own fancy loyalty programs, small businesses do not. I could see there was an opportunity to change that.
Small businesses have their own unique requirements when it comes to loyalty. For example, a big supermarket chain will be interested mainly in data. A small business will be focused much more on customer engagement, with minimal friction at the point of payment. Our focus from the beginning was on creating a product which was intuitive, even for the least tech-savvy, and which any merchant could launch and get using within minutes of signup. Coming from a developer background, I knew that it’s easy to create something complicated but hard to make it easy. That was the challenge for us, and I think we’ve succeeded.
How does Loyalzoo innovate?
Massimo Sirolla: The initial development is based on our own intuition of what a merchant would need. Once released, we get merchant feedback, refining and enriching functionality. Merchants know better what they need once they have something to work on. At that point, their feedback becomes part of the development loop.
Early on, we realized that to minimize friction for staff and to get the most out of what data was available, integrating with POS and payment systems was key. So we quickly became part of the wider ecosystem built around digital technology. That created a self-sustaining cycle of innovation as merchants began to discover what an integrated loyalty program could do for their business and feed us a steady stream of suggestions to enhance the application.
This was how our “prime loyalty” product evolved, based on the concept of Amazon Prime. This software allows a small business to charge members a subscription fee in return for rewards, thus generating a guaranteed recurring revenue for the business.
How does the coronavirus pandemic affect your business finances?
Massimo Sirolla: Well, our client base are the same small independent retailers that have been forced to shut down, so at the start of the pandemic, I was a bit worried. But then things have not been too bad, mostly thanks to our international exposure, with most clients being based in the USA. Different countries and states went into lockdown at different stages, and this has offset the slight drop in recurring revenues we experienced in the spring of 2020. Overall our recurring revenues went down 10%, and then picked up again in the summer, but overall we burned 6-7 months of growth.
In the last couple of months once again, we have been experiencing very slow growth, but no decline in revenues.
So overall, the main result of the pandemic on our finances has been that our growth trajectory has been slowed down, which has had a manageable impact on our cash flow.
Did you have to make difficult choices regarding human resources, and what are the lessons learned?
Massimo Sirolla: Recruiting for a start-up is always a challenge. Our experience is that, when we went out recruiting, we got poor results, but when people came to us, we were more successful. We see other start-ups investing in huge numbers of staff, especially for sales, but Loyalzoo never had a sales team, and that made recruitment a lot easier. People are often amazed when they realize the large client base we serve with such a small staff and how we can continue to scale without having to recruit.
The result is that, when the pandemic hit, we really didn’t have to make difficult choices and we could carry on with minimal disruption. There was no sales team to layoff or furlough. Our processes are highly automated, from merchant signup to customer service and sales demos. Of course, many of our merchants were shuttered due to lockdown, but the fall-off there was offset by the large numbers who turned to selling online, which we helped them do.
How did your customer relationship management evolve? Do you use any specific tools to be efficient?
Massimo Sirolla: From early on, we knew that great customer service is the key to success, but this doesn’t mean we need a large customer service team. Our software is completely self-serve so a business owner can sign up to our services, view our product tours and get activated without input from our team. We recognize that other clients may need reassurance and guidance, so our offering does include 24/7 live chat support. Clients can engage with customer support if they can’t find the answer on their own, and we’ve been able to scale vastly with the help of Intercom and their automation tools.
Did you benefit from any government grants, and did that help keep your business afloat?
Massimo Sirolla: Being a small business ourselves and not knowing how much the pandemic would affect us, we took advantage of the Bounce Back Loan scheme. With consumer behaviour changing and a strong switch to e-commerce, we used the loan to overhaul our website, improving user-experience and resources so that other small business owners would feel confident implementing a successful loyalty program with our software. In addition, we’ve invested even more in product development, so that when the world does reopen, we’re ready with some amazing innovations!
Your final thoughts?
Massimo Sirolla: The pandemic has brought a lot of uncertainty for everyone, but our lean approach meant we were well-prepared and experienced little business disruption. Our approach is to build on strategies that work: if something works and drives revenue, build on it. If it doesn’t, don’t get attached, make the change early on. We are confident that businesses coming out of lockdown will adopt a similar approach and be more conscious of the need to enhance customer loyalty and not rely on the whims of passing trade. This will be a huge opportunity for us, and we believe we have the right tools available to help merchants overcome the challenges of the year ahead.