In 2004 entrepreneur Rob Keve had a pivotal moment. The former venture capitalist realised there were changes afoot for customer service and came up with a concept to enable businesses to receive consumer feedback in real-time. And so, with £5 million of investment, his start-up Fizzback was born.
Last year it was sold to Israeli technology provider NICE Systems for $80 million in cash in what was believed to be the biggest UK technology deal of 2011.
UK-based Fizzback enables consumers to provide feedback at the point of experience, such as in store or on the train. Chief executive Mr Keve, 40, says: "As an investor it occurred to me that there was a gap in the market for businesses to better understand and manage their customers. Brands were increasingly trying to compete on better service and customer satisfaction and there was very little for them to use to personally understand the mood of their customer base."
How does Fizzback work? The client's customers are sent a text message asking them to rate their experience. Their response is analysed instantaneously and directed to the appropriate department for action. The service has a 30 to 40 per cent response rate, significantly higher than industry norms at under 10 per cent. The company is generating around one million responses, aka "Fizzbacks", a week.
"When we started we really needed some innovative clients to be early adopters and demonstrate the value," he explains. "We managed to attract some great case studies - National Express, Butlins and Phones 4U - and leveraged on this to reach a wider market."
Improvement in customer satisfaction
Of at risk customers turned into advocates after rapid recovery
Of all retail store feedback is employee related
Redution in company complaints
Today clients are mainly Fortune and FTSE 100 companies. They include Tesco, Virgin Media and BT. Across all clients Fizzback reports a 23 per cent increase in their customer satisfaction.
Mr Keve, who had previously run technology VC fund 3K Digital, says he always believed Fizzback would be well-received. "We felt very strongly that every business should be listening to all their customers all of the time. Once the first few adopted there didn't seem to be any reason why others wouldn't."
Besides, the benefits are clear. "The return for business is customer retention. Companies have the opportunity to identify customers who would have defected and maintain them. Even though these are relatively small numbers - under two per cent - to some, this is worth £30 or £40 million a year." What's more, in 12 months there is an improvement in customer satisfaction of between 20 and 30 per cent. "Many businesses equate a seven per cent gain in satisfaction with a one per cent gain in revenue. So, a 28 per cent increase in customer satisfaction is a four per cent gain in revenues."
Not surprising then that NICE, which provides business solutions to over 250,000 organisations, saw the potential.
Mr Keve says he was not planning to sell when the offer came up. "Our plan was to fundraise in the US to enable expansion across North America. We had six different term sheets of sizeable amounts and this led to a large amount of corporate interest from a few different parties. We concluded that NICE, both strategically and culturally, was going to be the best for us long-term."
Some critics say they sold too soon. "The question of when is the right time to sell is not a formula or something you can work on scientifically. You need to be driven by what's happening in the marketplace and our market place was starting to consolidate. Our customers were starting to look for global solution providers and we asked ourselves what the best way of getting there was. We chose to best position ourselves for the future."
Mr Keve, who holds two degrees from Bristol University and an MBA from Kellogg Business School in the US, hopes the acquisition will set a precedent for future UK technology deals. "The UK punches below its weight. We have most of the ingredients we need here: great entrepreneurs, talent, highly-skilled migrants, capital and a pretty helpful tax regime. What we need is critical mass and I think we are starting to get to that point in London where there is enough of an eco-system to really get working, but it's still a long way off of somewhere like Silicon Valley."
He adds: "Technology is an exponential market and we are only just starting to move up the curve. The amount of opportunity, whether we are in a recession or not, is enormous. Now is the time to be doing a technology start-up –- the capital is still there. It can be done and people are hungry to do deals. Tech is the future."
As for the future of Fizzback, the plan is to expand into other sectors and markets and penetrate those where NICE has a strong presence, particularly North America.