RecomN finds a balance for sustainable regional growth: Page 2 of 2

 

New business model builds trust

 

RecomN finds a balance for sustainable regional growth: Page 2 of 2

 

RecomN is currently transitioning from a model where service professionals buy credits and are charged each time they book a job – the same concept Grab operates on – to a transaction model where customers are charged directly and the service professionals are paid once the job is complete.

Lua opines that this model brings greater benefit to customers because it reduces the risk of the service professional disappearing with the money without completing the job. The payments go through a trusted platform and are all protected by insurance, covered by Allianz General.

Allianz covers each job from damage, theft and public liability for up to US$22961 (RM100,000). This partnership pushed RecomN to demand greater quality from its service professionals, which in turn means that customers benefit from better services as well as peace of mind.

Lua reveals that transaction numbers have been slowly growing since RecomN rolled out this model at the end of October in Malaysia and the second week of November in Indonesia, mainly because of the increase in trust from customers.

Sustainability key

RecomN moved away from the lead generation model because margins were too small to sustain, leaving the business exposed to market shifts. “I only wanted to step on accelerator when margins are better and I believe it’s the transaction model that has the highest margins and potential,” says Lua, adding that the new model will be given a few weeks to stabilise before RecomN steps on the growth accelerator in November.

“To be sustainable, we cannot step on the accelerator when it’s a leaky bucket. Once we ensure it’s not a leaky bucket, we’re off.”

This philosophy of reason and caution has been RecomN’s from the beginning; the business started out very lean as the founders do not believe in raising money quickly and expanding quickly. In fact, RecomN only announced their first round of funding in March this year, raising US$1 million from Gobi Partners.

With sustainability as their credo, Lua and Tan – who have about 10 years’ experience each in management consulting and marketing respectively - instead decided to use the lean startup cycle to prove hypotheses and test their ideas, expanding their team slowly and steadily.

Almost two years in, RecomN is still not going crazy on the growth, as Lua put is. “There is a lot of pressure when your competitors are spending big amounts. On one hand, as an entrepreneur, you want to show the same kind of spending on the market but on the other hand, we’re running a real business so we need to make sure that when we spend we get enough back so that we are sustainable,” she says.

“I honestly think that is one of the biggest challenges in a founder’s life – finding that balance.”

Future growth plans

RecomN’s stable growth means a steady increase in revenue, though Lua reveals numbers are not quite where she wants them to be, which has prompted the business to diversify revenue sources.

This means expanding its offering to its service professionals to end-to-end services – helping them with content marketing through RecomN’s online magazine Buzz, providing advice on building their brand, and helping with payments and transactions with their customers.

“It’s more incentive for them to come work with us, and at the same time we get to help good local SMEs grow,” says Lua.

RecomN will also soon be expanding into two new Southeast Asian markets and MSC status is on the books, something that will give it an advantage in terms of talent acquisition, which will in turn help push growth, says Lua.

With these long-term sustainability plans in place, Lua says the business is only waiting for its latest endeavour – the new transaction system – to start showing increased traction. “The moment it does, we will expand the team and kick off.”

 

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