Vision Critical thinks it may have the key to what motivates buyers
As Vision Critical Communications Inc. prepares for a possible initial public offering, founder Andrew Reid remembers the group of runners responsible for shifting the company’s focus.
It was 2003, three years after Reid launched the company at the height of the dot-com craze with the help of a $200,000 venture capital investment. The dot-com bubble had burst the following year, leading him to buy it back for all of $1.
At the time, Vision Critical provided a range of technology services for companies, from building prototypes for new products to making interactive, three-dimensional simulated shopping programs that allowed companies to test how customers might behave in a store. But sales were lacklustre, with family and friends starting to ask how long he was going to hang in.
Then a client, a running shoe company, asked Vision Critical to set up an online community of its female customers it could ask for feedback on an ongoing basis. The project was a success, with about 300 women joining.
Reid started to think about how every company has the same problem as the running shoe company — figuring out what motivates their customers. The software template he built to allow the running shoe maker and its customers to communicate could be reused by any company that wanted to do the same thing.
Vision Critical shifted its focus to that software, called Sparq. That turned out to be a smart move.
About one-third of Fortune 500 companies use Sparq, including Adobe, Univision Communications Inc. and Molson Coors. Demand continues to build and revenue is increasing with it at a rate of about 30 per cent a year before a recent divestiture, making Vision Critical one of the fastest-growing companies in the country.
Reid’s first job was to convince the business world it needed what he was selling. At a time when the Internet was still relatively new and executives thought of customer research as something that required expensive telephone surveys, that was no easy task.
“This was a very progressive way of thinking about things. A lot of people kind of laughed us out the door,” he said. “You have to have that passion and that belief.”
Reid’s father Angus made his name in that old model of customer research, selling his famous firm Angus Reid Group to Ipsos in 2000, to form Ipsos-Reid. Not wanting to follow in his father’s footsteps, Reid attended the Vancouver Film School, but ended up realizing he could apply his love of visual communication and new technologies to the research field.
Angus joined Vision Critical as chief executive shortly after the firm’s pivot, making an investment of an undisclosed amount to help the company scale its technology. When asked what advice he would offer other entrepreneurs, Andrew Reid half-jokingly tells them to hire their fathers, or another respected mentor if possible.
“If you can get someone you respect to buy into your company, not only are you getting the money, but you’re getting the mentorship and the leadership,” he said. “That gives you more confidence and more momentum than you could ever imagine.”
Meanwhile, there were forces working in Vision Critical’s favour. The business world was entering what Forrester Research has dubbed the “age of the customer,” with companies forced to confront consumers’ newly Internetenabled ability to compare prices, read and write reviews and post customer service complaints for the world to see.
“Customers now sit in the driver’s seat. They control the conversation,” said Kate Leggett, a customer relationship management expert with Forrester Research. “Companies have to be obsessed with delivering customer experiences in line with their expectations.”
Yet even in the age of social media, it can be difficult to figure out what those expectations are. Vision Critical said companies that use Sparq software to create opt-in advisory committees of customers get much higher response rates when they ask for feedback, compared to sending unsolicited email blasts or making cold calls.
In 2012, Vision Critical hired Scott Miller from the market research firm Synovate, where he had been chief executive of North American operations. Miller is now Vision Critical’s CEO after first working with Andrew Reid as a co-chief executive, helping the company secure a $20 million investment from OMERS Ventures shortly after joining.
By that time, Vision Critical had amassed a large consulting business, helping companies who weren’t comfortable using Sparq on their own by managing the online customer advisory committees for them. Miller’s task was to refocus the business on its core software product.
In February, the company spun off its North American consulting business to the newly-formed MARU Group, with the division’s 160 employees keeping their jobs and their clients.
Miller said the deal took more than a year to come together. The arrangement has many advantages: Clients get uninterrupted service, Vision Critical gets another infusion of cash in addition to the approximately $45 million it has raised since inception and the company becomes easier to understand and more attractive to future investors.
“I don’t want to say it’s the perfect solution, but it’s pretty darned close,” Miller said. “Our confidence level is very high.”
Miller is now getting things in order for a possible IPO, although he’s prepared to wait until the time is right. Many tech companies with lofty valuations have suffered through writedowns in the past year and Miller said he’s glad he didn’t give in to pressure to go public a year ago. “We would have a lot of really unhappy shareholders right now, given what the marketplace has done,” he said.
Miller said he would like to see Sparq evolve to serve more sectors and handle more data, with tailored software solutions for clients.
Meanwhile, Andrew Reid is dreaming really big. “I think we have the opportunity to be a billiondollar revenue company,” he said.
“I can’t understand why any company in the world wouldn’t want to have an ongoing dialogue with a superset of their customers.”