Entrepreneur

How 2 S'pore Biz Rivals Became Partners, And Saw 800% Revenue Growth In 2 Years

  • Advocado is founders Eric Chia and Joval Gan’s answer to a question many SME owners ask them: “Is there a good loyalty programme or CRM you can recommend?”
  • It took them 18 months of testing and S$300,000 to launch Advocado, and in 2018, they generated S$1.8 million of revenue.

From the bustling kopitiams to small makeshift clothing stalls, to minimarts at MRT stations, and the beauty parlour run by the auntie-next-door, 99% of Singapore’s economy is driven by small, medium enterprises (SMEs) like them and the mama shop at your void deck.

Mom-and-pop shops have, in recent years, been facing many challenges to keep up with the rapidly-changing times – those that evolved continue to grow, and those that didn’t were eliminated.

A bulk of that evolution required these companies to digitalise their business and that is more than just setting up an online store.

Most of these businesses have developed years of good rapport with their customers, creating a pool of loyal and returning patrons that may even be privy to special offers discreetly offered by owners. (Secret discounts FTW.)

But in a bid to attract new customers, one of the common marketing methods they use include giving out loyalty cards to customers which is a system that can be easily abused.

While there are many à la carte solutions in the market that digitise one process or a set of actions, there remains a gap to fill in the Customer Relationship Management (CRM) aspect.

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Eric Chia, CEO and co-founder of Advocado / Image Credit: Advocado

In 2012, when Eric Chia ran a business selling point-of-sale (POS) systems that operated on iPads, he kept getting asked this one question over and over again: “Is there a good loyalty programme or CRM that you can recommend?”

Despite noting that there were already a number of CRMs available such as Perx, Koipy, and Poket, among others, he thought to himself, “Surely [these solutions] would be able to meet the needs of the merchants?”

“But this question was raised so often that I decided to take a deep dive to find out why existing CRMs aren’t working for these merchants,” he said.

So he started up Advocado, a cloud-based loyalty CRM software for B2C businesses of any size in 2016 with his rival-turned-business partner, Joval Gan.

From Foes To Friends

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Eric (left) and Joval Gan (right) / Image Credit: Advocado

Eric first met Joval through a mutual friend when he was investing in an overseas project.

At that time, Joval had lived in Hong Kong for a few years, and when he returned to Singapore, he wanted to do a tech-related business aimed at SMEs so he sought Eric out since he was in the same industry.

“[When] Joval started an iPad POS business in 2015, I asked him out for coffee, shared my insights on how to do a POS business in Singapore, and wanted to explore working with him,” Eric recounted.

But Joval “elegantly” turned down Eric’s offer to join him, thanking him and decided to work on his own businesses “with much success”.

“I knew that while he’s a worthy adversary, when the ultimate business idea came along, the first person I’d need to [have onboard] was Joval,” he shared.

“I believed he would be an amazing leader and co-founder in our next startup.”

The WhatsApp conversation that started it all / Image Credit: Eric Chia

On the inception of Advocado, Eric reminisced, “I remember it like it was yesterday. On 15 March 2016, I reached out to Joval for a discussion and laid out the common pain points that SME retailers have, and interestingly, he too had received similar feedback from his merchants.”

Joval added, “I can never forget that day. We actually met up in Toast Box at NEX. It was a Friday and it was my off-day, father-daughter time. I actually brought her along for that meeting.”

By then, Eric already had Advocado’s Minimum Viable Product (MVP) up and running.

He was surprised to find that someone also had a similar idea and was “drawn to the fact that a merchant can actually enrol members with just a mobile number”.

Joval was impressed, as he found that Eric was a “very confident [and] visionary” person who “knows exactly what he wants”.

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Joval, CRO and co-founder at Advocado / Image Credit: Advocado

“This is exactly what I saw in Hong Kong and I was trying to build one myself when I came back,” Joval said.

That same weekend after meeting Eric, Joval researched on customer loyalty potential in SEA and found that it was a fragmented industry as there were no major players in the field.

Joval decided to try selling Advocado together with his own POS when he met his merchants.

Eric recalled, “He was very careful and cautious about this new endeavour and evaluated the product market fit, market positioning in Singapore and SEA.”

To Joval’s surprise, his customers preferred Advocado over his product and that was when he realised they were “on to something great and meaningful”.

“[After] a few months of testing the market on the ground, winning early adopters, and [gaining] confidence, he decided to join me and we incorporated Advocado in May 2016,” Eric told me.

Eric revealed that he started Advocado with about S$300,000, with the bulk of it going into developing the first version and testing product market fit in Singapore.

Taking this opportunity “to set the record straight”, the 44-year-old revealed to me “something that even Eric does not know”.

“When Eric talked about working together with me in the POS business, I said ‘no’ not because I was arrogant or confident of doing well myself. In fact, it was the exact opposite.”

“I was not even sure if I could do the business well and I did not want to drag him down unnecessarily should I fail,” he said.

Fast, Easy, Engaging, And Affordable Solution

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Eric Chia / Image Credit: Advocado

In his quest to find the answer to merchants’ persistent query for a “good loyalty programme or CRM”, Eric found a few key challenges that shaped Advocado.

First, noting that current processes are abrasive and “too tedious”, he wanted to make customer registration at the store “lightning quick and easy” without having to issue loyalty cards or download apps.

Second, Eric observed that it’s delayed potential revenue when loyalty campaigns are gamified using points and stamps to keep customers coming back.

So he wants to help merchants generate instant revenue from loyalty campaigns instead and eliminate upfront costs.

Next, he wants to automate the engagement between consumers and business, remarking that most SMEs assign staff to manually communicate via email or calls to encourage customer retention and return rate.

Lastly, a point he considers most important as well, is how they can offer accessible, enterprise-grade tools to SMEs at “really affordable rates”.

With these points in mind, he made an MVP and tested the concept for 18 months before launching it.

All merchants need to do is to register their customers’ phone number with the store’s tablet or smartphone on Advocado and they can run loyalty programmes they craft themselves like perks, cashback, stamps, or store credits, and manage customers.

Upon registration, customers can click on the link in the SMS that will direct them to the Advocado web app where they can see the details of the campaign run by the merchant.

For example, if you have earned points after spending at a store, it’s likely you can spend the points to redeem rewards in the form of a freebie or a voucher.

Customers can also scan an Advocado QR code and the offer or deal will be automatically stored in their account for use in the store or at check-out.

“In short, we empower SMEs with tools that previously only big companies like Starbucks and Uniqlo could afford, now priced within reach of any SME.”

Advocado’s CRM cloud software is available to any business for a monthly subscription of S$150 per outlet.

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Image Credit: Advocado

In January, they partnered NETS to allow customers to use NETSPay for their purchases and redeem their loyalty rewards on the platform at the same time.

With this, customers only need to enter their mobile number and scan a NETS QR code with their preferred bank app when approached by staff, so that’s payment and rewards done in one sitting with no hassle.

He explained that because it’s a dynamic QR code, there is no need to enter the bill amount – just scan and go.

“In time to come, as QR codes gain popularity in Singapore, we will see more and more Singaporeans using their bank apps to scan NETS QR codes and enjoying perks at the same time, and we are happy and privileged to be part of the movement to help Singapore go cashless,” Eric said.

Been Around The Block

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Joval sharing on stage as Eric snaps a picture of him / Image Credit: Advocado

If you thought ‘Advocado’ is a wordplay on the fruit, you aren’t alone.

On how the name came about, Eric explained, “A desperate person could be referred as a desperado, when a customer is more than an advocate, we call him/her an Advocado.”

“It’s our mission and commitment to empower merchants win their Advocados.”

Advocado would be Eric’s fifth startup in 19 years.

The 41-year-old had ran four other startups, beginning on his first venture in 1999 as the CTO of Allegro Auctions, an online auction platform similar to eBay during the dotcom boom.

In 2002, he started Xplisite, an IT web security business, then a social commerce platform called, Quaffs, in 2006, and then the iPad POS business, Launchstars, in 2013.

“While all these startups have a certain level of success in Singapore, the problems they are solving weren’t substantial enough to make a huge impact in the SE region,” he said.

“[This] led to the inevitable pivot where Advocado now has the opportunity to be the hero of SMEs, to help the small and medium business owners have a better life.”

But that doesn’t mean this experienced businessman is spared from startup woes.

“We needed to solve the key catch-22, chicken-and-egg issue encountered by every early startup: How can we win customers without success cases, and how can we have success cases without customers?” he deliberated.

Another problem was how can they grow the business without strong capital backing.

“With good product market fit and clear positioning, we did every possible thing (legally and ethically) to acquire merchants quickly and furiously,” Eric explained.

He highlighted having “a strong and precise plan” and a “brilliant” execution from lead generation to business development, to conversion to marketing, adding that the end goal is to create value that users will start paying for it.

“This is crucial because this is how we’ve grown Advocado for more than 30 months without external funding,” he said.

But just acquiring merchants is not enough as it’s also important that merchants see success and results with their technology.

Internal factors on the merchants side also come into play as well, like the change in management and the rate of adopting new tech.

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The Advocado team / Image Credit: Advocado

He’s not fazed, though, as he tells me, “Having gone through the dotcom boom and bust, 911, SARS, [and the] global financial crisis brought on by the Lehman brothers, I’ve been blessed to arrive at certain key insights to build and scale Advocado.”

Noting that especially in Asia, sustainable businesses are down-to-earth, have strong buy-low, sell-high business fundamentals, and are “elegantly structured for growth and scale”.

“Don’t chase after money, focus on creating value and when the value created is huge, money will chase after you.”

The resilient entrepreneur believes that in most situations, it’s possible to create win-win situations for both merchants and consumers so they “strive to create more all-win situations”.

Now, the company has nearly 1,000 paying outlets and more than 600,000 end-users, with over 30 employees in five countries including Singapore, Thailand, Philippines, Hong Kong, and Malaysia.

In 2018, Advocado generated about S$1.8 million in revenue compared to S$220,000 in 2016, which Eric considers as “pretty fast growth” for a B2B SaaS business.

They hope to achieve 10,000 paying outlets in SEA in the next three years and also by the end of 2021, they want to reach S$10 million Annual Recurring Revenue (ARR).

Their “relentless pursuit” in making life more convenient for SME owners drives them to expand Advocado’s capabilities, features, and partners network, Eric stated.

While they work towards their goals and becoming the “hero of SMEs”, they managed to gather plenty of accurate and valuable data by serving their customers.

On that note, he assures that personal data given to Advocado by customers to merchants is for membership and loyalty purposes and users can withdraw their consent anytime they want to via a link on the web app.

“No personal information is shared with anyone without the permission of the consumer and Advocado will never sell any personal data to any party,” Eric said.

With the data collected, Advocado is able to make sense of consumer patterns that mainly help merchants.

Eric said they are currently exploring the infusion of AI and machine learning into Advocado’s services and promised “deals like none other” for consumers.

“Let’s face it, we all hate spam ads and it would be awesome to know that there’s a system out there that understands what we truly want before we even know it, and other than just analysing transaction history,” he explained.

“Recommendations are based on composite information like weather, traffic, current affairs, etc.”

He added that they are committed to delivering an “amazing and incredible consumer engagement” AI technology recognised worldwide “that’s made in Singapore by Singaporeans”.

Featured Image Credit: Advocado

 

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