Amid the coronavirus pandemic, Dauren Makenov, hailing from Astana, took innovative steps to rescue a family business by founding the platform Flowsell.me. Initially, the platform solely sent WhatsApp notifications to clients, providing updates on the operating hours of beauty salons owned by Dauren’s wife. However, as time went on, this enterprising entrepreneur expanded the platform’s capabilities to include a range of tools, simplifying and expediting the process of making repeat purchases for users.
What strategies can enhance client retention? How does Flowsell.me impact businesses across different industries? Why has the project found success in 54 countries while struggling to gain popularity in Kazakhstan? Dauren Makenov delves into these questions and more in the collaborative initiative by Digital Business and Astana Hub, titled “100 Startup Stories of Kazakhstan.”
“Numerous entrepreneurs in Kazakhstan lack a solid understanding of how to effectively utilize technology.”
– Shortly after the product launch, you recommended that developers create a system capable of analyzing client visits. What inspired this idea?
– Every business possesses a client base, but not all entrepreneurs are proficient in managing it. When we conversed with proprietors of various establishments such as beauty salons, dental clinics, and representatives in the HoReCa industry (hotels, restaurants, cafes), a common consensus emerged. They all shared the belief that having a dedicated individual responsible for client interactions is crucial. This person, often a manager, would engage in tasks like making calls, sending messages, grouping clients, and analyzing information.
So, I contemplated the idea of automating this procedure. We readied several message templates that would be sent automatically to specific individuals. Those who hadn’t visited in six months would receive one offer, while those who hadn’t visited in two years would receive a different offer, featuring a more substantial discount or an additional service to enhance the likelihood of their return. We achieved success in this endeavor.
We also implemented a feedback management feature. After a client had their hair cut, they would receive a message within two hours, requesting them to rate the service. If the client gave a high rating, their feedback would be automatically posted on various platforms such as Google Maps, Yandex Maps, and 2GIS. Conversely, if the feedback was negative (less than three stars), it would be directed to the internal system for further review and resolution.
– You originally developed Flowsell.me to alleviate the challenges faced by your own beauty salons. At what point did you make the decision to offer the product for sale?
– Once, Igor Stoyanov, the owner of the Russian franchise of the beauty salons “Persona” with whom we had been collaborating, visited Kazakhstan. After observing our solution, he inquired, “Dauren, can we have something similar?” At that time, our product was completely tailored and finely tuned to meet our specific requirements. Nevertheless, we recognized the potential for expansion.
When we identified a growing demand, we tasked the developers with creating profiles for business owners, enabling them to tailor the process to their specific needs and seamlessly integrate with the system. About a month and a half following Stoyanov’s visit, we introduced three beauty salons in Moscow, followed by an additional five, and eventually seven more. The numbers continued to rise steadily, and it became clear to me that the project held strong commercial potential.
– In the beginning, you introduced your solution via specialized chats for business owners. Did this approach prove to be effective?
– Yes, indeed. The conversion rate was nearly 100%. These chats had a highly focused audience. The key was communicating with them in the right manner.
What was my strategy? For instance, when a beauty salon owner in the chat mentioned losing a significant number of clients after a hairdresser’s resignation, I would join the conversation and explain how to effectively manage the client base and employ tools for client retention. Only after that, I would introduce our solution.
– Through this strategy, how many businesses from Kazakhstan were onboarded?
– To be frank, the number was quite limited. I don’t mean to criticize anyone, but many of our local entrepreneurs have a limited grasp of technology and overlook the importance of retaining existing clients. A lot of them are accustomed to advertising on platforms like Instagram, Google, and Yandex to attract new leads. One owner even mentioned spending around 500,000 tenge for this purpose. However, we propose purchasing our solution for 50,000 tenge and achieving similar results.
And even if we manage to convince them, we face another challenge. Many people simply do not go through the end-to-end analytics. They don’t assess how many of the clients who received our texts actually returned. When we inquire about the impact, we often hear responses like ‘We did have some clients, but we can’t determine if they came from your efforts or not.’ Clearly, this kind of approach reflects a lack of appreciation for the value we provide. Therefore, I concluded that this isn’t our primary target audience at the moment. As of today, the share of revenue from clients in Kazakhstan is less than 3%.
“Our solution has gained popularity in Turkey, the UAE, Thailand, and Israel, and we are steadily growing our presence in Brazil.”
– Previously, you mentioned that Flowsell.me can reliably increase a business’s revenue by 26.7% within three months. How is this accomplishment realized?
– This is achieved through smart data management. For instance, if you have a client base of 1,000 people and send them the same messages, you won’t see any results. What do we propose instead?
Initially, it’s essential to categorize clients according to their spending capacity: high, medium, or low. Next, each of these groups is further segmented into multiple layers based on factors such as service usage frequency, last visit date, and more. This segmentation results in a total of 21 distinct clusters, and a tailored message should be crafted for each of these clusters.
Diving deep into the process proves to be instrumental in achieving high conversion rates. On average, out of 100 push notifications, businesses receive 30-35 visits, leading to an increase in the number of clients and, consequently, revenue. We are currently also in the process of integrating AI.
– How will it help?
– Initially, it will analyze client feedback and, within a few minutes, provide a relevant response based on the context. For instance, when it detects negative feedback, it will attempt to address the situation by offering a discount or a bonus for the next visit
Secondly, we will be capable of facilitating thorough online communication with the client. For instance, if no response is received to the initial message within an hour, the AI will send a follow-up message asking, ‘Have you received our offer? Did you like it?’
Then, after some time, we can inquire if the person has used the service. This approach enables us to evaluate the effectiveness of client engagement.
The main objective is to maintain communication with the client, ideally through three to five messages. This significantly enhances the likelihood of converting notifications into actual visits and purchases.
– Who constitutes your current target clientele?
– Besides beauty salons, we’ve also integrated with medical centers, a dental clinic, HoReCa establishments, auto services, and more. We recently surpassed the milestone of 1.5 thousand clients. I anticipate that by the end of September, we will have onboarded approximately 1.7 thousand institutions.
We have a strong presence in the CIS countries, with a primary focus on Russia, as well as in Turkey, the UAE, Thailand, Israel, and the Czech Republic. We are actively expanding our footprint in Brazil. Overall, Flowsell.me is operational in 54 countries.
– It’s certainly an impressive feat. What factors contributed to your rapid scaling?
– Our fast scaling has been greatly facilitated by integrating with tracking systems like Iiko and Yclients/Altegio. They have internal marketplaces that allow businesses to easily connect to our solution. The data fields we require, such as client name, phone number, date of the last purchase, frequency, and average receipt, remain consistent throughout the process. To adapt to different regions, all that’s needed is to translate the interface of the profile, video guides, and technical support into the required language.
“When I contemplated starting a business, my goal was always to generate revenue in foreign currency while covering expenses in tenge.”
– What is your monetization strategy?
– We offer a subscription model, which can be purchased for either six months or a year, with an average monthly cost ranging from $50 to $70, depending on the pricing plan and the features utilized by the business.
– You mentioned that Flowsell.me has an annual turnover of $1 million. Does this mean the project is profitable?
– We maintain a strong EBITDA rate, ranging from 45% to 50%. When I founded the business, my goal was for it to become profitable within the second or third month, and we were able to achieve that.
At present, all our earnings are allocated towards development, hypothesis testing, and scaling efforts.
– To the best of my knowledge, you rank among the top 20 IT exporters in Kazakhstan. Does this achievement make you proud?
– We have mixed feelings. On one hand, we are pleased to generate income and contribute positively to the country. On the other hand, it saddens us to see that many IT companies in Kazakhstan have relatively modest turnovers, considering our position in the top ranks.
– Many IT companies and startups in our region simply don’t make an earnest effort to expand beyond Kazakhstan’s borders…
– And that’s the unfortunate aspect of it. I’ve always strived to build a project that could operate in other countries, including Russia. Many people used to question me, saying, ‘Why Russia? Who needs us there? It’s better to focus on our own market.’ However, I remained steadfast in my vision, and now 97% of our revenue comes from exports.
– What is the origin of this steadfast stance?
– During my tenure at Samruk-Kazyna, I was responsible for the privatization project. I played a role in preparing Kazatomprom and Kazakhtelecom for IPOs. In our meetings with various major investment funds, including BlackRock, Blackstone, and KKR, it became evident that foreign investors were primarily interested in Kazatomprom. The appeal lay in the fact that the company generated income in foreign currency from abroad, its revenue was linked to spot prices, and all expenses were in tenge, which investors found attractive. Kazakhtelecom, on the other hand, had a different story.
Photo: Ruslan Mukashev
I ingrained this in my mind. When I contemplated starting my own business, my primary aim was to generate revenue in foreign currencies such as dollars, euros, yuan, and Russian rubles, while covering expenses in tenge.
I initially believed this could be achieved through activities involving certain rare earth metals. However, I later discovered IT products that could be sold with zero logistics and export expenses. Given these opportunities, I genuinely can’t comprehend how anyone would confine themselves to a single market, particularly one as geographically limited as Kazakhstan.
“Engaging with startups and connecting with individuals from the science and business community in the USA helped me break free from limited thinking.”
– Recently, you mentioned that one of the marketplaces deleted the Flowsell.me account, resulting in the disconnection of over a thousand clients from the service integration. Have you been able to determine the cause behind this occurrence?
– It turned out to be a technical glitch in the system. I must admit, we initially entertained the idea that it might have been the work of hackers or competitors. However, upon reviewing the log files, it became clear that it was indeed a technical failure.
– What steps do you implement to prevent such situations in the future?
– Our developers adhere to a well-established protocol of documenting and comprehensively analyzing each incident. This approach ensures that we are adequately prepared for any unexpected events.
We also proactively identify and anticipate certain risks. For instance, we foresaw the potential disconnection of Russian banks from SWIFT. Consequently, within a day and a half, we were able to set up a new payment system for receiving funds from Russia without causing any disruption to our clients.
– By the way, you mentioned earlier that 90% of your clients come from Russia…
– It was the case until February 2022. However, since then, some entrepreneurs have either closed their businesses or relocated them to other countries. As a result, the proportion of clients from Russia has decreased to around 70%.
–That’s still a significant portion. Given the current circumstances, I can imagine that it poses substantial risks for you.
– Indeed, there are numerous risks, including currency fluctuations. For instance, between August and January this year, the Russian ruble devalued by roughly 35%. As a result, our revenue decreased because we chose not to increase prices, considering the potential impact on our loyal existing clients.
To mitigate such challenges, we are actively working to expand our client base in other countries. We have a keen interest in the MENA market, where numerous businesses are eager to reengage with their previous clients.
We are also exploring opportunities in the US market. We currently have 17 clients there, and we are closely observing their usage of our solution and identifying their content needs.
– You participated in the Hero Training accelerator program by Astana Hub and Draper University. Did this experience contribute to your expansion into the US market?”
– It primarily facilitated an internal transformation. Engaging with startups and connecting with individuals from the science and business community helped me break free from limited thinking. Prior to that, I envisioned my project’s development within local parameters, much like opening several venues on a specific street in a particular district of Astana.
However, in the USA, the perspective is on a global scale. People there are not surprised by annual revenues of $5-7 million, but $100-200 million is considered remarkable. In reality, nothing stops you from thinking that way. It was an eye-opening experience for me.
I have recently returned to the USA to gain a deeper understanding of the latest global technology trends. This helps us anticipate the market’s direction, estimate its future size, determine the duration of its growth, and assess our competitiveness in comparison to other market players.
– Have you considered seeking investments to support the project’s development in the USA?
– I’ve certainly pondered that possibility, but there are certain constraints to overcome. It necessitates registering a company here and obtaining a special visa. However, the most crucial aspect is identifying a substantial business idea. At this juncture, I’m contemplating whether to enhance the existing concept and persevere with it, pivot in a new direction, or create an entirely new product. Once I have a clear vision, I’ll proceed with the process of seeking investments.