BSI in BRW: 'Reinvent and thrive'
Article by Julia May in BRW, November 16-22, 2006
A small telecommunications company has reassessed its operations and structures to stay alive in a cutthroat industry.
A determined start-up company will reinvent itself if that is what it takes to improve sales and expansion prospects. VRoam Global changed its market positioning when its co-founders, Danny Nathanson and Ian Basckin, realised they were on the wrong track.
The company uses an advanced call-diversion technology to provide international SIM cards which allow travellers to receive calls to their Australian telephone number. By tapping into local networks overseas, VRoam says the cost of international mobile calls is dramatically lower than regular roaming services.
Between 2002 and 2005, Nathanson and Basckin pitched VRoam as a telecommunications provider to the telecommunications divisions of big companies by promising to reduce the communication costs of staf travelling overseas. The company rolled along, notching up sales of $1 million in 2004-05.
But when external investors, including venture capital firm Business Strategies International, took a stake and joined the board, Nathanson and Basckin realised VRoam was putting its clients in a difficult situation. In it s pitch for business, the company was effectively asking them to undermine relationships with bigger telecommunications suppliers that also offered roaming services.
To overcome the conflict, VRoam reinvented itself through marketing as a travel services company, pitching to the procurement divisions of companies and travel agents. Nathanson says that procurement departments, with their focus on reducing travel costs rather than meddling in telecoummunications contracts, feel less conflict and are more interested in the service.
The pair engaged a public-relations company that specialised in the travel industry and focused publicity in travel publications rather than telecommunications media.
Nathanson says the overhauled sales and marketing strategy required a shift in thinking for him and Basckin (who both came from the telecommunications industry) in the way they perceived the business. The strategy appears to have worked: sales doubled in 2005-06.
Nathanson balances relationships with clients and suppliers carefully, and liaises with his suppliers which are also competitors (many of the carriers have their own roaming services).
He says it is simple: he creates a ‘win-win’ situation. International carriers have a fair chance of picking up the signal for overseas mobile-phone users who do not use VRoam; for example, if a region has three mobile carriers, each has a 30 per cent chance of gaining that business. But when VRoam sells the carrier’s SIM card, Nathanson says, it is guaranteed to receive all of that business.
A good track record also helps. Nathanson and Basckin are great believers of in the ‘foot in the door’ strategy, using pre-existing relationships with carriers in the United States, the United Kingdom and South Africa to gain referrals to other carriers. Being a minnow dealing with large conglomerates can be daunting, Nathanson admits, but he says:’We were too gung-ho for it to be daunting. We were also a bit aggressive and brash. Because of that we had some good early successes.”
The company is in its final stages of launching the service with local carriers (its competitors) for overseas visitors to Australia. It has also introduced a pre-paid product and a service focusing on leisure travellers, which Nathanson says will counter the customary December-January sales dip when business people travel less.
Tips for reinventing:
- Ask clients for testimonials.
- Create relationships with industry associations.
- Attend conferences and expos in the sectors you want to sell to.
- Engage a public-relations company to sell your story and advise on communications.
- Seek investors with expertise in areas you lack.