How NetFlorist’s laser focus has meant saying no to revenue now for greater growth prospects later.
NetFlorist might have been launched by accident, but it’s three founders, Ryan Bacher, Lawrence Brick and Jonathan Hackner soon realised exactly what they had, and although they chose to follow a lean-start-up approach that has meant slow but very stable growth, they’ve also taken the view that it’s important for a business to know exactly what it is, and what it does.
For growing companies that start to gain traction, this is often one of the trickiest things to get right.
New opportunities present themselves, clients start making additional requests, and because it’s always difficult to say no to revenue, before you know it you’ve lost sight of who and what the company really is.
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Trying to do too much is actually counter-productive to achieving real and sustainable growth.
Strategically saying no
“Over the years, we’ve said no to anything that we didn’t believe suited our core offering,” explains Bacher. Samples and banner advertising are two good examples.
“As we grew, opportunities started coming our way, but they didn’t always suit the business. For example, from an outsider perspective sampling is great. After all, it looks like you’re giving your clients a value-add. We didn’t see it that way though. We’re sending flowers from a husband to a wife, and she receives it with a soap sample? We thought it would actually confuse what the brand stood for. Saying no meant losing revenue, but that was okay, we stuck to who we were.”
Banner advertising was another ‘no’ from the NetFlorist team. “We got a lot of requests for banner advertising because of the amount of hits our site received. From the outside it looked like a nice, easy additional revenue stream, but we decided against it anyway,” says Bacher.
“It goes back to knowing who you are. We’re a retail company, not a media company. If we chose to put banner advertising on the site, what would come next? A media sales team? How many resources would be redirected to this new division? Would we start losing focus? Always stay true to your brand and your model.”
Knowing exactly who and what you are doesn’t always happen overnight though, and NetFlorist didn’t always get it right.
“Between 2001 and 2003 we were just focused on gaining traction in the market,” says Bacher. “All we cared about was getting revenue into the business.” Their solution was the concept of white label site, which they’d seen in the US in 2001.
“We were the first company in South Africa to create an ‘affiliate’ marketing strategy. We basically offered our services to other brands, using their name and access to customers, but our product.
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"We turned some big South African brands into florists at that time, for example 083 139 was MTN’s flower business. At first we thought it was great. Our clients were marketing to their customers, which meant we were transacting without spending any money on marketing ourselves, and they loved it because it was a hassle-free branding exercise for them.”
The strategy boosted NetFlorist’s sales, but the founders soon realised how detrimental it was to their brand.
“In retail, all you have is your brand. You need to be one or the other, the brand, or the company behind the brand. You can’t be both. We had massive revenue growth, but no-one knew who we were. It was an incredibly precarious position to be in. We were reliant on a few big contracts. What happened if those went away? We realised we needed direct control of our market.”
By 2003 NetFlorist changed its strategy and took the brand back. “Instead of Discovery Vitality Flowers, it became ‘Discovery Vitality brings you NetFlorist’. Many of our clients were fine with the switch, but some weren’t, and we had to make the painful decision to let those clients go. It meant losing revenue, which is hard for a start-up and even established businesses to do, but we needed to stick to our guns.”
Staying true to your core
It would be a decade before the founders made their second big mistake, once again linked to a departure from their core focus.
“By 2011 the Internet in South Africa hadn’t really taken off yet – that would only happen in 2012 – and we were getting impatient.” So what did the team do? They opened eight retail stores.
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“It was a terrible idea. The Internet is really scalable. Retail stores aren’t. We’d have needed 50 stores to make the business work, or become a franchise. It ended up being a costly mistake.
"We made the decision to close most of the stores, digest the mistake (and the costs involved), and move on. Sometimes you have to put your pride aside, accept the mistake and walk away. Never hold on to an idea because you don’t want to admit you wasted money.
"That’s a great way to just lose more money. We still have two signature stores that we’ve kept open, but on the whole it was a bad foray into an area that isn’t our core focus.”