How we built a business out of recession - chapter 34 - sales people always say yes
The story of CitNOW*
This is the 34th chapter about CitNOW, the company started from a kitchen table in Winnersh, Berkshire. If you’d like to read from the beginning, here’s a link to chpt 1. Each chapter is a 5-minute read. It’s an early draft of a book.
CitNOW was founded by Andrew Howells and Donna Barradale in 2005, although it was only registered in 2008. In February 2018, we sold the company to Tenzing, a UK private equity company, and it has been sold again since.
There wasn’t a neat business plan with 5-year cash flow projections when we started the business. It had morphed out of a consultancy, so the numbers on the spreadsheet were genuine as we continued to do what we did. Nothing much was written down, which wasn’t an aversion to planning but more a reaction to our situation. We were already running a business, and our research and future direction were primarily dictated by our experiences with a few dozen car dealers.
As a result, our first two years reflected the consultancy and the work done for Honda’s TV channel, with a small but vital contribution coming from what would soon become a software development business called CitNOW.
I mention it because it proved to be a successful approach. When the UK largely rejected a live video presentation tool, we created a pre-recorded version. A resourceful John at L and L Hertford even pointed this out to us. He used the existing live equipment to make his own pre-recorded videos. As he said, it was far more helpful for most customers who were too busy during the day.
It’s also interesting to note that even though the technology was ready and available in 2008 for a live presentation, and even though the British public buying cars was ready, the dealers were nowhere near ready. The most significant single barrier was an existing business practice. Cars were sold in a particular way, and persuading otherwise took a lot of time and effort.
The explosion of YouTube was one of the best things that could have happened to CitNOW. The passive reinforcement that started to creep into decision-makers’ lives did a lot to persuade them that video was a valuable tool. Bizarrely, the pandemic probably finished off any latent resistance because selling a car became a remote process—click-and-collect schemes, call centres, and video presentations were essential if dealers wanted to survive.
So why did we get Germany so badly wrong? It wasn’t our only gambit, either. We also had a nightmare in Japan. I can’t remember which costly mistake came first, but the issues were all too familiar.
It’s worth remembering how we grew in our home market to understand why. The clue is in those two highlighted words. The board had extensive UK dealer experience, culture and language were a given, and our product development closely reflected what the market was already telling us.
When we released the workshop app, sales were immediate and healthy. For the first time, we also experienced significant engagement with many manufacturers who could immediately see the benefit of selling more parts. We added new licensing revenue to our dealer base that was already using the sales app and opened up more dealers who only wanted the new workshop app.
The board also had a significant weakness, including Donna and me. We were nearly all salespeople first. Often, a software company in start-up mode cries out for salespeople—great product, no sales. Our bias created different problems. We had a bad habit of chasing down leads wherever they happened to be, Germany and Japan were no exception.
Japan was a similar opportunity to Germany, a result of our early BMW success. A senior BMW manager who knew the Japanese market had seen CitNOW and recommended that we take an exploratory trip there to meet the local BMW team. Sales were proving more difficult than usual because of the incumbent Japanese brands.
The thinking was CitNOW could enhance the customer’s sales experience, providing differentiation from the local competition.
What could possibly go wrong?
Even though the first trip was received positively—I think Alistair and Gordon went—it was impossible for the board to judge the true value of the opportunity presented. But that didn’t stop us from hiring two Japanese employees, translating the app into the local language, and then wondering why Japanese dealers weren’t buying six months later.
Similar to the UK, dealers were generally warm to the idea, but decisions were painfully slow and had to be made at the group level, usually by the top man (it was always a man). An individual dealer principal did not have the authority to say yes. Our Japanese salesperson resigned a year after selling very little.
These false attempts made board meetings in the UK more vociferous. We now had two expensive failures on our hands. It wasn’t that we couldn’t afford to fail, but we couldn’t afford to keep making the same mistakes again in another market.
Our expectations were also far too high. Even in the UK, a market we knew well, it had taken 3-4 years to see a real return, albeit with a lot of product development. And that was being managed by at least three board directors who knew the product well, understood the UK market, spoke the local language, and had the skill and gravitas to make a sale.
If you start reflecting on our history and the time we spent in the UK, the question of where to go next would immediately discount Asia completely. The opportunity cost was simply too high. We needed countries with lower barriers to entry, which either meant they were geographically close or they spoke English. Culture was also key. How did people behave towards their cars and the dealers who sold them?
We needed to find a delicate balance, resisting the charms of our manufacturing partners without causing upset. On the one hand, they flattered us, treating us like a much bigger company than we were; on the other, we’d go bust if we continued to explore every market suggestion.
There was absolutely no need to double down when it became clear that Japan wasn’t working, yet we chose to spend even more money by investing in China. Well, it was only a short trip west across the East China Sea.
*CitNOW was our company’s trade name before we sold it in 2018.
Alistair like collecting stamps in his passport and placing the CitNow flag despite advice from others who had international business experience and lack of thought through business case. A prime example of ambition exceeding ability.
(Also, as an aside, do you remember the £10,000 roaming charge when he was on holiday in Cuba)