Start-up of the week

5 February 2013

Hardly did we have the time to recover from the wonderful article in De Volkskrant last week, and yet here we are! Casengo is This week’s start-up on Sprout, Holland’s major online magazine for entrepreneurs. This is a double honour, as it not only allows us to explain what Casengo is all about. Sprout always couples This week’s start-up with a review from a venture capital! So lets hear what Robert Verwaaijen from Prime Ventures thinks of our product. (We don’t know him – yet – but we sure love the guy!)

You can find the Dutch version on Sprout.nl; read on for the English translation!

‘Venture capitals should keep an eye on Casengo’

Floris and Thijs van der Veen offer helpdesk software that enables companies to support their customers online, including via live chat. According to both brothers, Casengo is doing so well that they could use an investor. In Prime Ventures’ opinion, they’ll find one.

Casengo is a spin-off company of Livecom, which develops customer support software for large companies such as DSM, Wehkamp and Philips. Floris and Thijs founded Livecom ten years ago. It has around 25 employees, some of whom work in its Chinese office in Shanghai. It turns over a few million euros a year and is profitable.

‘Livecom focuses on the enterprise market, while Casengo helps out small and medium sized businesses,’ says CEO Floris van der Veen. Casengo operates from the Cloud and only offers those features that SMEs truly need. Van der Veen: ‘Whoever wants to use more features, integrations or adjustments, will find Livecom a perfect match.’

Distinguishing value

‘Hybrid messaging is a new technology that enables our customers to switch from static email to dynamic chat. Just click a link in the email and the conversation can be continued in real-time chat. Even without adding a chat button to their website, SME’s can use live chat to improve support responsiveness. Our customers have reported an increase of their online conversion by about 30%. Hybrid messaging improves the interaction between customer and support agent, and leads to more happy customers.’

‘As opposed to our competitors, we kept Casengo as simple as possible. We don’t offer any bells or whistles that look fancy but have no tangible use for an SME. And because our product is extremely flexible, we can respond to our customers’ needs very quickly indeed.’

‘We email, call and tweet loads with our customers, which is how we know exactly what they expect of Casengo. We think this dedication, together with our attractive pricing model, distinguishes Casengo from our competitors.’

Business model

‘It’s very simple: the complete software comes free with one agent license. As soon as a company wants to hook up more than one employee, we charge €39 a month.’

Sales and marketing strategy

‘We sell our customer service software in the Cloud. Every company with commercial activities online is a potential customer. At the moment, most of our customers are web shops. There are about 40.000 of those in the Netherlands. To entice customers to give our product a try, we offer a typical retail proposition: a solid and simple product for a low price forever.’

Results

‘We launched Casengo officially on December 12, 2012. Over 600 people now use our product actively. We connect about ten customers a day. Those are great results that we achieved without any big sales or marketing efforts.’

Ambitions

‘Our target was to have 2.000 active users at the end of 2013, but it seems we’re going to exceed these numbers easily, so we doubled our targets. If we could find an external investor, we might even double them again. Extra funding would enable us to speed up our sales and marketing activities, and increase our market share considerably. Our turnover will keep pace with the number of active users.’

Robert Verwaaijen’s (Prime Ventures) opinion of Casengo…

Robert Verwaaijen, principal of Prime Ventures, made a nice discovery on Casengo’s website: Thuisbezorgd.nl, one of the businesses in which Prime invests, is also one of Casengo’s customers. That was of great help to assess the product. ‘When I realized that Thuisbezorgd uses Casengo’s hybrid messaging technology, I obviously got in touch with them. They told me that their customer support group thinks it’s a really fine tool. That’s 1-0 for Casengo.’

‘When I signed up, I must admit I was up and running having completed only a few simple steps. The system produces a support email address for you, and you can forward all your existing support emails to that address. Afterwards you can handle customer queries right from within the app. Retailers dispose of a handy knowledge base (‘What are our own guarantee conditions again?’), and there’s also a useful tool to monitor Twitter keywords, so you can manage that increasingly important channel. Plus, Casengo looks ‘slick’ and can be used on your mobile and tablet. That’s 2-0 for Casengo.’

Prime does see a couple of opportunities to improve the product. ‘This tool would be a real ‘killer’ if you could connect it to existing customer relation management systems. Thuisbezorgd, for instance, would benefit from knowing whether a specific customer is a loyal customer – there are people using Thuisbezorgd on an almost daily basis – and deserves to be prioritized. Maybe it’s already on Casengo’s road map. These kinds of integrations could be really powerful for Casengo’s customers. Another crucial aspect in the world of ‘multichannel’ customer support is the phone. I don’t know whether Casengo already has a solution for handling customer calls, but if they can integrate this in their tool too, you’ve got a complete package right there.’

The market in which Casengo moves has a huge potential, says Verwaaijen. ‘Casengo operates in the market of Customer Relationship Management (CRM) software, and the segment of customer service & support software in particular. Gartner estimates the total CRM market at USD $13 billion, of which customer support software takes more than $4 billion. This is an enormous market. But it’s dominated by lots of big gorillas (like Microsoft, SAP and SalesForce) and innovate startups. One of those startups is ZenDesk, which I’m sure Casengo looked at closely. ZenDesk is a Silicon Valley Company, offering this type of solution since 2007 thanks to major funding ($85 million). Casengo should concentrate on feature parity with ZenDesk, which means it should aim at offering at least the same main features. After that, it should differentiate in terms of user friendliness, and delve into the software stack of its customers. That’ll make the product really sticky, and customer retention is the name of the game with web service models.’

According to Verwaaijen, Thuisbezorgd is an ideal first customer. ‘In the battle with its competitors, there’s something just as important as product development: knowing who your sweet spot customer is. Thuisbezorgd is an excellent reference case for Casengo, because this company has loads of customers in short time frames (say Sunday night between 6pm and 8pm), and many things go wrong during food delivery. Being able to respond quickly and touch base with the end consumers can prevent them from being overly frustrated. Floris and Thijs obviously thought well about where to alleviate the biggest pain. Casengo’s focus on the e-commerce world is a logical choice, and perhaps they can broaden their solution to other categories later on. Think airlines, travel operators, etc.’

Casengo’s business model also finds favour in Verwaaijen’s eyes. ‘You can test the product for a single agent, and if you like it, start paying a monthly fee for each additional agent. It’s a combination of a typical ‘Software as a Service’ (SaaS) model and the traditional approach of software licenses per user. As Casengo already remarked upon, it’s important not to put too much sales energy in small customers. They should only be served online, using their credit card. It’ll be tough to expand sales otherwise. If, for instance, Bol.com or Amazon.com would use this tool, you caught a big fish, and great credibility.’

Casengo’s done everything necessary to score a top grade from Verwaaijen. ‘Casengo scores points on many levels that matter to venture capitals. They have a solid product and are active in a big market in which they picked a clear segment, with a sales model that allows for quick expansion. If they also have a great team that shows a lot of momentum in the business, they’ll definitely get funding. Early-stage venture capitals should definitely keep an eye on Casengo.’

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