As a customer services platform, it was only natural for us to double down on helping our customers work through these challenging times.
- Finding the right balance of investment in innovation to delight our customers and capital efficient growth is our priority.
- We are still growing very fast, but the business is healthier in many ways.
- It is no longer acceptable – if it ever was – to grow fast despite the costs and the consequences.
In the third episode of our “Reimagining” podcast series, Mads Fosselius, Founder and CEO of Dixa, shares his COVID experiences, rescuing, recovering and ultimately reimagining his business and industry.
The impact of the COVID crisis affects people and companies in many different ways. Mads is the CEO of Dixa, a customer service platform which helps brands build stronger relationships with their customers to deliver a better experience, by unifying all the customer communication channels and data into one platform. Many of their customers have seen a massive increase in customer traffic and, at the same time, all of their customer’s customer services people are working remotely. This combination puts Dixa’s customers under a lot of stress.
Let’s jump straight in. When and how did you realise the significance of this pandemic crisis?
I’ve been giving a lot of thought lately because so many things have changed in just two months. The day after the Prime Minister of Denmark actually locked down the country we received the first desperate requests from existing customers but also prospects we’d never heard from before. Initially, this was driven by the immediate overnight need for customer agents to work from home. Customer service teams are a mission-critical part of almost any company, so they really needed to be ready. Some of them had a combination of point solutions and the majority of solutions and processes fitted around a team sitting together in an office. So we had to step in to help many customers.
Some of them started to get severely impacted in terms of customer demand. Some of our travel customers were impacted negatively of course but gaming companies and online groceries actually saw significant increases in traffic.
So it was pretty chaotic. We are a SaaS company and growing fast, but we hadn’t seen anything like this in our lifetimes. At the same time, we of course also had to transition to working from home overnight, with 120 people in four offices in Germany, Denmark, Ukraine and the UK. So March was a really weird time.
How did you come to terms with the changes that you needed to make?
We spent the first three weeks of the crisis on lockdown getting our arms around the challenge, helping our people work remotely and supporting our clients in their remote transitions. At the same time, we also saw some big prospects within verticals that had been really hit hard by this crisis asking for help. Some, of course, were telling us they just couldn’t pay. It was lucky that we are so diverse with our verticals but we also saw some challenges arising.
We were also set up for hyper-growth. We just received a great funding round with you guys as the lead investor (Notion Capital) in February 2020 and we were very proud about that and had set plans in motion for accelerated growth, gearing up the commercial sales and marketing teams especially. Just a week after the crisis hit us we could see it was really serious, way more serious than we had anticipated.
We started scenario planning and, six days later, we invited the whole board to a pretty tough meeting. We had three scenarios: classic best case, worst case, and medium case. We worked through these scenarios over the next two weeks. Unfortunately, many of the assumptions we had on the negative side proved to be right, even though we saw good things happening with verticals that were thriving. We didn’t know (and still don’t know) how long this crisis will last, so we had to make a really tough decision to reorganise our commercial organisation to be far leaner and smaller. That was really tough.
The other thing we had to do was a quick turnaround on our messaging on the problem we solved. We needed to become very crisp and very direct on “fast, efficient and effective” customer service. Customers were now either growing massively or were challenged by layoffs in their teams and, of course, all teams were working remotely. In most instances, we started seeing smaller customer service organisations having to do much more. So the need around having an efficient, unified customer service platform went from mission-critical to a burning platform. We utilised the situation immediately, testing many different messages to find what worked. However, personally, it was a really tough time because we had different scenarios and a reorg of our commercial organisation to complete. Then we saw some customers struggling and others thriving like never before. Even the businesses that were struggling needed to consolidate 3, 4 or 5 siloed systems because that set up did not work anymore. On a personal level, I was being pulled in many different directions, feeling many different emotions.
The leadership team worked flat out. I wouldn’t call it 24/7 but it certainly felt like that. Throughout Easter, we did the final planning on having to, unfortunately, say goodbye to 25% of the organisation, going from 120 down to 90 people. The majority from the commercial organisation as we couldn’t continue to aim for hyper-growth. We’re still looking to double our revenues, so it’s not like we’re not growing but we are looking far more closely at the unit economics for driving a healthy business in the future, especially as we don’t know when we’ll have another funding round (if at all!). We had to extend our runway and be sure we would have a sustainable and strong business coming out of the crisis and for many years thereafter.
You’ve gone from a hyper-growth plan to survival as the imperative. How did that feel as you went through that as a team over Easter, working around the clock?
It became quite clear that we needed to make some organisational changes and at the same time, we needed to embrace the crisis as a window of opportunity. A big part of that was being there for our existing customers and helping them whether they were thriving or struggling. We helped out some of the Notion portfolio too.
It became quite evident that if we were smart here, we could become a stronger business. We decided to keep on investing in our product engineering teams and our customer success teams and getting really close to our customers, to know how they are doing.
Our leaders have had to say goodbye to a large number of people in their teams and have been deeply affected. When we presented the plan to the extended leadership team, which is all our VPs, Directors and Managers – an amazing group of 20 people – they took it hard and they could see in my face and hear in my voice how hard it was on me too.
There was lots of good coming from our planning but there were some sad days too, saying goodbye to so many amazing people. On a tough, tough Wednesday in April, we announced the reorg. Given the funding, we had recently received it was hard for people to understand that this was about the survival of the company. However, we still feel that even though this meant saying goodbye to employees, it will make us stronger.
We also launched a campaign that included giving our platform away for free and onboarding new customers in 48 hours.
This has been the most difficult thing I’ve ever done – and I’ve been in organisations with 250 people where we had to let 100 go. But this is my own company with Jacob, our Co-Founder and CTO, and this was not what we had planned for. We had instead planned for becoming 250 people by the end of 2020.
Tell us more about your plans to create a healthier business.
We come from a situation where, at least in 2019, SaaS companies could grow very fast, whatever the costs and the consequences. Sometimes, some of the metrics were not in perfect shape and maybe we did not have the time to look at the business from a very critical point because everybody is just telling you, “Go, go go!”
And we still have a massive market opportunity – if you look at CRM as a whole, of which Customer Services is part, it’s a $350 BN yearly business. So there is a huge growth opportunity.
But when you are going for growth at all times, with capital on demand, it’s inevitable that you will miss things, especially on the people and culture side, and I would say you need to balance that into the growth strategy. There’s the human capital side and then the unit economic side. We now have the chance and the ability to build a healthy business that will, in a sustainable way, create a path to profitability. This isn’t necessarily saying that we need to be profitable in year two or three, but we do have the chance to do that. That was not the case before, to be honest. And that’s not the case for the majority of SaaS companies that I know in Europe or in the US. To clarify, I’m not saying it’s a blessing in disguise, because it would be very wrong to say that about a huge crisis to humans and their health, but I do think there’s an opportunity to embrace aspects of the situation we’re in and it gives a chance to actually look at your business from a more ‘old fashioned’ or even ‘traditional’ way of driving a business and I think that’s okay.
What’s now changed in the business and what are you doing differently?
During the first week of the pandemic lockdowns, we saw requests coming from new customers that made us realise we are looking at really urgent needs for our solution. Customer Experience is always important so it has never been hard for us to get meetings, but this was different.
We had had great success discussing ‘Customer Friendship’ with our clients but this was different and we recognised we needed to be much more punchy and direct saying, “We have built the world’s fastest, most efficient and effective customer experience platform that takes care of your customers and your customer service agents, and we can onboard you in 48 hours.”
We started working with a great branding agency in London – Design by Structure – who gave us the confidence and impetus to change our messaging and be far more direct. So we launched a “Free until September COVID-19 campaign,” and now our website, messaging and collateral is centered around a strategy that is called “further and faster.” And the words “fast, efficient and effective” are the cornerstones of our product platform and go to market strategy.
Before COVID-19 this strategy would have taken months to implement. But we presented to the Board and then to all the employees in the mid of May and then we launched with all the value props and messaging working for us in the market a few weeks later. I’ve never seen anything happen so fast and achieve such fast results. It’s been a gigantic eye-opener for us all.
How do you reimagine the future for your industry and for Dixa over the next 12 – 24 months?
I think it was truly important for us to be there for our customers and to be fast and efficient during COVID-19. At the same time, our “customer friendship” philosophy is increasingly important, that transformation was already happening with many of our customers and moving quite fast. COVID-19 has accelerated that transformation and big things are now happening with some very strong, customer-centric brands.
This move to “customer friendship” will eventually happen to all companies (B2C / B2B marketplaces alike); they all have to do something significantly different in order to understand and engage their customers.
I believe that the future of customer service will be a journey towards a 360-degree customer experience. It sounds a bit fluffy but it’s very important and very difficult to get right. In order to be part of that journey, you really need to look at the hard and soft aspects that customer service people offer.
That’s where I think we are very well positioned. We made hard investments in the early days to build this capability and many times we almost ran out of cash because we were building such an ambitious platform. I know that you guys at Notion Capital have a number of these types of SasS companies that made those brave moves early on and I think the future is much more of a platform and ecosystem play for Dixa and other SaaS companies like us. We will rise to the challenge of being another great platform, platform 2.0 as I call it, challenging the point solutions and a lot of the big guys that still have a very fragmented siloed approach to everything across customer experience and martech.
I believe that Dixa is part of the new generation of SaaS companies; the disruptors disrupting the disruptors, for us the ticketing masters, the call center kings and the messaging gurus. We see them as great inspirations but also as industries that need to be consolidated.
So how do you feel now?
At the start of all this, I was worried for my family – my three sons and my wife – when I saw the terrible news on this pandemic. Then I was worried about Dixa and the many great people we have. And I was worried about Dixa’s future and our vision to become the world leader in customer experience. But now, we are in good shape, with Denmark reopening and other European countries following.
We are in a very good position, all things considered. I believe in Dixa more than ever, and the people we have on board.
I am still worried about the world as are many people, not from a job or industry perspective but from a human perspective. There are so many challenges going on in the world right now and COVID-19 is just one of them.
But in relation to my family and to Dixa, I feel good. Dixa is moving in the right direction. There’s definitely light at the end of the tunnel and I feel very happy about that.