 "Co-founders Yashwant Kumar (left) and Raviteja Dodda")
Raviteja Dodda and Yashwant Kumar co-founded DelightCircle, an app to help customers find discounts and other offers in stores near them. When the time came to scale up their business-to-consumer (B2C) venture, the duo realised high customer churn and uninstalls were a hindrance. They spoke to other app companies to see if they were doing things differently. They felt there was a gap in the market for a solution for app companies to retain and engage users.
This prodded the two to start-up once again. "MoEngage helps mobile app companies understand their user behaviour in a better way and engage users through push notifications, e-mails, in-app recommendations and other channels. This helps them drive engagement, reduce churn and improve a customer's lifetime value," says Dodda.
Basics
MoEngage is one of the few software-as-a-service (SaaS) start-ups in India that have been able to raise large amounts of venture capital. The firm has raised close to $5 million from investors such as Helion Venture Partners, former Infosys directors Mohandas Pai and V Balakrishnan's Exfinity Ventures, Snapdeal founders Kunal Bahl and Rohit Bansal, and TaxiForSure's Raghunandan G and Alchemist accelerator, a business-to-business focused accelerator in the US.
"I think the most important thing was they were building a product, addressing a need they themselves had felt. They knew the pain of an app company or an app developer and before they spent a lot of cycles building the product, they got it validated by talking to a lot of users," says Rahul Chandra, co-founder and managing director at Helion Venture Partners.
The company which was incepted in July 2014 profiles and one-fourth of India's smartphone user base. It targets marketing teams within app companies that are looking to automate a lot of their customer relationship management (CRM)-related functions. "The technology team just needs to integrate our SDK (software development kit) inside their applications and the marketing team can then use our portal to create targeted campaigns," says Dodda.
Customers pay MoEngage on a monthly basis. The service is free for customers with less than 25,000 active users. As the number of users increases, so does the cost. "We are sort of aligned with the performance we are driving for our customers," adds Dodda.
Most of the company's customers are paying ones, says Dodda. However, MoEngage isn't profitable. The money it earns goes back into funding its own growth into new markets. The company is targeting to break even by the end of 2016 but says it won't chase profitability over growth just yet.
Where is the opportunity?
Currently, the market for SaaS solutions in the CRM space is around $10 billion a year. While the size of the Indian market isn't known, Dodda estimates only two or three per cent of app companies here have adopted marketing automation solutions.
Chandra of Helion looks at it this way. "The average ticket size per customer is about $50,000. In India alone, there are 500 to 1,000 Internet companies that could use customer analytics products. This equates to a $25-50-million market opportunity for MoEngage.
While the opportunity is huge, the market is crowded. Giants such as Salesforce and Indian information technology products company Zoho have a strong presence. Smarter predictive analytics, which helps an e-commerce company suggest relevant products to a user, is what will drive growth in the future.
Over the next few months, MoEngage plans to include social media as another channel for app companies to re-engage with their users through ads. This will add to existing solutions such as e-mail, push notification and in-app recommendation campaigns.
"We want to be the single site for customer data for our partners and help them engage users through various channels," says Dodda.
What the future holds
"We are one of the few companies that are targeting global markets with roots in India. There are multiple advantages of having a product team in India and building a business targeting global markets," says Dodda. MoEngage will utilise a big part of its $4.25-million Series-A funding to grow its presence in the US. While India still possesses massive growth opportunities, the scale of things in the US is simply too enticing to ignore. The company doesn't yet have a pricing strategy for the US.
"The average revenue per user is less in India compared to the US; so it makes sense to have a different pricing model in the US," adds Dodda.
The company doesn't yet have a pricing strategy for the US, but it sees opportunity in tapping higher yields per customer in more developed market.
EXPERT TAKE: Sunil Padmanabh
Digital marketers who rely on internet and mobile technologies are focusing on the new buying behaviours to gain deeper insights on customer buying patterns. Personalisation and optimised user experience are the new mantras to drive better engagement, retention and loyalty. The user analytics solutions market is crowded but many of them still focus on transactional analytics. However, forward thinking disruptive solution providers in this space will extensively include predictive analytics capabilities to suggest buyer behaviour.
Best in class solutions in user analytics will also factor the social media influence (that impacts user behaviour) and, importantly, adopt geospatial technologies to visually track user behaviour across segments and geographies through heatmaps.
MoEngage's product portfolio promises to address the challenges of gaining better customer insights through better understanding of user behaviour and, thereby, enhances user engagement. B2C companies will significantly benefit from MoEngage's innovation such as 'Smart Triggers', aimed to enhance user engagement through context sensitive personalisation. They are poised to disrupt the customer experience and engagement solution market. However, to differentiate themselves, they need to demonstrate predictive analytics capabilities. They would also need to build co-innovation solutions with leading CRM products to provide 360 degree customer insights, predictive analytics/ loyalty capabilities and address privacy and cyber security challenges.
Sunil Padmanabh, independent advisor (enterprise application and digital transformation)
