Fizzback to be acquired by NICE Systems
Posted by Mike Chalfen on September 19, 2011 @ 8:43 am
FIZZBACK: REAL TIME CUSTOMER FEEDBACK THROUGH MULTIPLE CHANNELS AT MASSIVE SCALE
Fizzback is at the very centre of some major themes that we continue to pursue at
Advent. These are massive trends that we believe will continue to drive profitable innovation over the next few years. This blog will take you through what makes Fizzback’s proposition so compelling; why it has been a good investment; and what it tells you about Advent.
Fizzback’s SaaS (Software as a Service) offering is a real-time operational Voice of the Customer solution. It sends consumers requests for feedback relating to a specific interaction or transaction via mobile, web or social media. The consumer is engaged at the point of experience, for example in the contact center, branch, point of sale (POS), mobile application, or web, so giving feedback a "Fizzback" on a specific interaction with the brand, very soon after that interaction takes place. The "Fizzback" is analyzed by the system to determine a relevant response, and automatically conduct a dialog with the consumer in natural language rather than a survey format. Analyses are available at a granular, customer comment-specific level which can be aggregated flexibly to varying degrees all the way up to a company-wide executive-level dashboard.
Fizzback’s unique approach generates game-changing response rates of up to 50%, significantly higher than industry norms at well under 10%, as it motivates consumers to provide relevant feedback, at the moment of interaction. Additionally, consumers provide feedback about their specific interaction rather than only about what was asked in a survey. With more than 150 million "Fizzbacks" collected annually, the offering enables organizations to better understand their customers’ perceptions, and optimize operational efficiency, while improving customer experience at the various enterprise touch points.
The combination of scale and real time response is unique. It allows brands to take immediate action for increasing customer loyalty and driving efficiency across the enterprise. This has resulted in extremely high usage rates for Fizzback's customers, who use the system as a strategic driver of decisions that affect customer retention in particular. This is a powerful driver, especially in businesses with a high customer lifetime value.
FIZZBACK AT THE CENTRE OF MULTIPLE HUGE TRENDS
The business is driven by a number of big trends that were at the heart of the Advent investment thesis:
Customers at the heart of enterprise investment:- Fizzback has succeeded because brands have put customer retention at the heart of their organisations. Most have now have nominated Chief Customer Officers (or variants thereon) to their management boards over the past few years. There are two big drivers for this - in markets that are not growing rapidly, retention becomes critical - and in all markets, customer switching has been lubricated by the power of consumer opinion expressed digitally and spread virally through social media. Managing customer relationships couldn’t be more important. This is one of the drivers of another Advent investment,Vitrue.
Mobile at the heart of multi-channel and real time:- Fizzback was able to scale because mobile is pervasive and that means consumers are “always on.” That insight is at the heart of Fizzback’s ability to engage with end consumers at scale in real time. Along with Zong, Ubiquisys, and OpenCloud, Fizzback was one of the investments we made that “play” this megatrend.
Value to consumers:- As described above, Fizzback engages consumers about very specific interactions. Such specificity soon after a meaningful exchange with a brand is what makes consumers view Fizzback as a relevant tool that has value to them, hence their large-scale engagement. We always look for unusually strong customer engagement.
Scale and granularity at the heart of analytics:- The response rates that Fizzback generates are hard for some customers to believe. Market-facing companies have never had this scale of customer feedback that can be linked to specific contact and that can be analyzed in the context of a specific customer record. That combination of scale and granularity is hugely powerful and represents a breakthrough in enterprise analytics.
Analytics only succeed if they drive tangible operational change:- With massive scale comes statistical significance and a solid basis for decision making. When it turns out that Fizzback’s response rates are sustained, customer-facing teams go on to depend on Fizzback day to day. A meaningful proportion of Fizzback’s customers use it to compensate customer-facing staff every month. They couldn’t do that if the volume and accuracy weren’t best-in-class.
For all these reasons we would have been very happy continuing to back Fizzback to capitalise on its opportunity further. However the founder and team feel that the combination with NICE is the best way to realise the company’s vision, by giving access to global distribution and an enhanced, integrated product offering. We expect the acquisition to provide a different path for Fizzback to become a true global leader in its market.
WHAT HAS MADE FIZZBACK SUCCEED TO DATE?
A compelling customer proposition is the starting point for a successful tech company. Here are some of the other highlights that were central to Fizzback’s success to date:
Customer impact
In all the ways described above, Fizzback has a big impact on its customers. Executing on this powerful value proposition has driven a consistent pattern of high upsell rates: most Fizzback customers adopt the solution to manage multiple “touch points” over time. That makes the value and economics of this enterprise SaaS play very attractive.
Led by an exceptional founder who has created a culture of absolute commitment
Rob, the founder and COE, is a remarkable leader. His great strengths of leadership by example, clear communication, and crystal clear product vision were the pillars on which Fizzback’s success to date has been built. Those core strengths in turn engendered a culture of total commitment that led to a small UK headquartered company being chosen as the partner to help some of the world’s largest and best consumer-facing businesses enter into a dialogue with millions of their customers, and systematically to act based on that dialogue. At the company’s offsite in summer 2010 all of the employees walked over burning coals. I’m not sure how many companies can get that to happen (and not have any accidents on the way…)
Rob was recently described by Fizzback’s Chairman Jonathan McKay as a “one man football team.” Whichever flavour of the sport you know, Jonathan means - that he has spectacular strengths and will take on any role in order to get the job done - with style. Again and again, his performance has been jaw-dropping.
An amazing anecdote
My favourite example of this flair was the emergency board call in late December 2010. Rob opened with a monologue about how hard the previous period had been, and let his voice trail off. He then announced that the company had signed its largest and third largest contracts ever. These contracts massively enhance its reputation and positioning, and gave it the financial flexibility to choose its destiny. What he didn’t say but came out shortly afterward, was that for the larger contract, he and his US sales lead had spent 18 hours continuously on the phone with procurement to get the deal done. To this day I don’t know what he said to them to get them to spend that long on the phone. (Despite that, the same customer just signed a large additional contract with the company; but the procurement team did refuse to talk to Rob until there were only a couple of points left open.)
The entire team at Fizzback has reflected and been galvanised by Rob’s controlled drive. When preparing to go live with a new version of the product, every single member of the engineering team signed up for 3 months of working every evening, and all weekend. The whole company always strives to deliver the best service to its customers. The whole team is to be saluted.
Global ambition and capabilities from a European base
The company has around 100 people in London and operations in the USA, Australia, and China, with customers on three continents. Over the past couple of years it has proven that a relatively small company with a great differentiated product can win business all over the world, and service some of the world’s most demanding customers.
One of the “soft” ways that this has been possible to execute from Fizz’s London base is that London has become the magnet for tech talent from all over the world. Europe is naturally international given its porous borders. Fizzback has become a remarkable microcosm of that. In its approximately 100 London person London staff, there are over 25 languages. Most of Fizzback’s team is in engineering so by definition the engineering talent is international. I can’t think of many other places in the world that we could create such an internationally-capable employee base in one location. It is a strong advertisement for what can be done here.
Controllable capital needs, structurally profitable model
Rob had achieved a lot for a very little investment. In total the company has raised less than $8m to date. To have serviced great blue-chip customers, at scale (150m Fizzbacks collected in 2011), and be on the financial trajectory that the company is on, having raised so little capital, is a remarkable achievement. It was arguably essential to have that profile to continue growing so rapidly during the downturn with only £1.6m of fresh capital since 2009.
The key point for us, and Rob, is that capital efficiency made the exit attractive to everyone concerned. We would have been happy to back Fizzback to continue executing – we would even have preferred to do that. But because there isn’t a large stack of preferred capital, it gave the Board flexibility and Rob as the entrepreneur a choice. Fizzback wasn’t hostage to the financial markets, despite the current volatility.
We’re always looking for more growth deals that have these shared characteristics – fabulous entrepreneurial leadership, strong culture, global ambition, and controllable capital requirements that mean that the Board and team have choices about the destiny of the company.
ANOTHER MILESTONE FOR THE ADVENT TECH TEAM
The Advent investment in Fizzback has illustrated some of the strengths of the new Advent:
Desirable partners: the deal was brought to us by our friends at TAG, who appreciated our mix of consumer savvy, knowledge of mobile, and SaaS expertise, to complement Robin Klein’s fabulous consumer experience.
Impact: Advent brought large customers through our network in both the UK (eg BT) and US (through a relationship with Amdocs); brought in a quality lead, Nauta Capital, that added value through its focus on mobile-related applications, and that invested in a top up round at the very depths of the market in 2009; connected Fizzback to SVB, which rapidly provided a receivables line with a characteristic lack of fuss; defined the role, had the initial discussion with, and closed the deal to bring on board influential Chairman Jonathan McKay; and lined up the teams that advised on the exit.
Teamwork: Frederic Court led the initial Advent investment; Peter Baines negotiated the deal when Frederic was diverted elsewhere; I took the Board seat from Frederic as soon as I arrived at Advent in mid 2008; Advent Principal Stephan helped Rob and I craft the deck for the company; Frederic continued to source enterprise leads and provide intelligence on social feedback throughout. When Advent invests, the whole team contributes.
Returns: Advent’s returns are over 5x, and the average return for all Tech exits from the current Advent Fund is over 6x. We have had four Tech exits since March 2011.