Posted by Conor Cullen
In the midst of a deepening recession, DoneDeal.ie is one of the leading lights in the ailing Irish economy.
This classified advertising website business is nestled in a quiet corner of the Bull Ring in Wexford town and I called in last week to speak to their chief operating officer John Warburton for a feature on Wexford’s leading brands.
You should know from the start I’m not going to tell you about DoneDeal’s origins, its development since 2005 (when it was founded by husband and wife team Fred and Geraldine Karlsson) and I won’t be providing an analysis of its business model (pretty straightforward), but if that’s what floats your boat you should start with this interesting case study.
The questions I’m going to attempt to answer here, through my interview with John, is: what are the beliefs that guide their business activities? Hopefully there will be something in here that you can take away for your own business or that start-up you reckon could be the next big thing!
Now obviously they are doing a lot of things right at DoneDeal (see the figures below), but I’m going to isolate some of the fundamental principles that I believe are driving the success of the business and also some of the things they do that appeal to and interest me.
But before I give you an inside look at what makes DoneDeal tick I’ll give you some of their key numbers:
– During 2011 goods worth €1 billion were sold on DoneDeal, around €300 million more than in 2010.
– DoneDeal hit 2 million unique visitors a month in May 2011 and is now attracting somewhere in the region of 2.5 million. (Disclaimer: that figure depends on when you’re reading this. I can’t stand over that it for too long as Done Deal is growing by at least 10 per cent month-on-month.)
– Based on page impressions, only Google, Facebook and YouTube are now bigger than DoneDeal in Ireland. No shame coming in next behind that trio of online behemoths.
– There are about 160,000 ads on the site and 90,000 of those are new items advertised each month.
– DoneDeal was confirmed as Ireland’s largest website for car sales in September 2011. Va Va Voom!
– “DoneDeal” was confirmed as Ireland’s fastest rising Google search term in 2011, ahead of Pippa Middleton and the iPhone 5.
Let what your customers want inform every decision you take. Simple isn’t it? But how many companies actually do it and how many stick as rigidly to this policy as DoneDeal?
“We spend a lot of time on customer service and keeping those channels open. We get a lot of good ideas from our customers,” said John.
DoneDeal holds regular meetings to discuss customer feedback and look at customer behaviour.
“Every decision is guided by the customer and everyone who sits around the table understands our customers in several different ways and if they think there’s going to be a problem for the customers they’ll say ‘no, we can’t do that, our customers won’t like it’ and I say ‘okay, we won’t do it then’,” said John.
At the moment their customers are obviously happy, but John said that doesn’t mean they can’t keep improving their offering. “We’ll keep doing what we’re doing, but improve it in small measures and where our customers need it,” he said.
Primarily this will involve looking at DoneDeal’s features and functionality, though it’s important, as Fred explains here, to understand the difference between what customers ask for and what they want, as well ensuring that you don’t overcomplicate matters.
So, for example, DoneDeal has made the process of uploading of photos faster and then they allowed people to upload all their photos at once, not one at a time, making the process of placing an ad faster and easier.
“The aim is to make improvements as quickly as we can, but with as little disruption as possible,” said John.
The fundamental aim, he said, is to keep DoneDeal.ie “safe, easy-to-use and affordable”. They obviously realise that the process is as important as the end product when it comes to keeping people happy.
Not only are DoneDeal letting their customers guide innovation, they’re also letting them take care of the lion’s share of their marketing.
“People like to share their stories,” said John, who feels there are important cultural factors working in their favour.
More and more Irish people are not only shopping online in search of better value these days, they’re talking about it.
It seems we love telling people about bargains as much as finding them.
“If somebody goes into a shop and buys something and they get a reasonably good price they don’t tend to share that with their friends, but if they get something on DoneDeal they tend to share it and shout it from the roof tops! That’s a really good form of marketing for us and it’s been very successful,” said John.
“We haven’t done a great deal of marketing, it’s mainly been word of mouth and good customer relationships. Our customers do the sales for us and they’re doing a great job.”
The company has recently entered the Northern Ireland market with DoneDeal.co.uk. Without any promotion it has already managed to attract 300,000 unique visitors a month and is growing at a phenomenal rate of 20 per cent.
When there’s over €1 billion worth of goods sold through your site in one year you need to ensure that your customers are protected from fraudsters and feel confident buying and selling.
“There’s always a trust issue when you’re buying on the Internet and one of the things we’ve put a lot of effort into is we have created guides of how to buy safely,” said John.
“We have a lot of security checks in place, both manual and automatic. We work very, very closely with the Gardai through several units around the country, including the stolen car unit and fraud unit. We give open access to the Gardai, where appropriate. And of course, we tell all our customers about this,” he said.
“What that ends up doing is that customers know that ‘these guys are doing the best they can to ensure that buying is safe on DoneDeal’. Obviously every now and again something is going to happen, but our fraud statistics are shooting downwards, not upwards.
“A lot of sites’ fraud statistics are going up and as more people go on the Internet there’s a bigger risk, but out risk is going down. We have halved the amount of fraud on the site in the past year,” said John.
On DoneDeal you could have bought a custom-built motorbike driven hearse that allows you to “ride to your final resting place”.
There are a lot of other oddities on there! In recent times one person has put their soul up for sale. Another was seeking offers for a bucket of sunshine (not in short supply in 2012 so far, so it’s definitely a buyer’s market!)
John said that women regularly put their husbands up for sale on DoneDeal. He said they leave these ads up unless a husband complains, but none ever have. None have been sold either, but then we all know you can’t sell what you can’t give away!
“It’s all usually taken in good humour. As long as it’s good clean fun we don’t really mind,” said John. Once an ad is not breaking the law or abusive it’ll be put up there.
The company is keen to retain a sense of fun and a light-hearted touch, all of which not only makes the DoneDeal experience more enjoyable for the customer, but also helps greatly with that crucial word-of-mouth marketing.
As Seth Godin has pointed out quite clearly on many occasions, something “remarkable” is merely something worth making a remark about, something out of the ordinary. Why be boring when you can be a purple cow?
Done Deal even keeps track of some of its funniest ads on its blog. Have a look, there’s some great ones.
It’s not just fun to use DoneDeal, it’s fun to work there too, John assures me.
“It’s a fast paced, fast moving, fun industry. It’s fun to come into work at Done Deal,” said John.
“There’s a strong company culture in Done Deal. The people here are really tight and it’s my job to make sure that isn’t disrupted because, to me, this company culture is what makes Done Deal what it is,” he said.
“There’s lot of technology and stuff, but the company culture is what has made Done Deal what it is today and if we lose that we’ll lose a lot of things so we have to continue that,” said John.
Due to its phenomenal growth, DoneDeal expects to double its workforce, from 10 to 20, this year, which John said will help them get to “the next level” and avail of opportunities in 2012 that they haven’t had time to explore yet.
“We’re in a growth cycle now so managing that growth without disrupting the culture is very important for us,” said John.
6. GIVING BACK
DoneDeal donates 10 per cent (30c per €3 ad) of its ad fees to charity every month. The company has now raised over €250,000 with its monthly charity drives.
John points out that DoneDeal adopted this policy a few years ago before the business had really taken off and when giving away 10 per cent of its ad revenue was a far bigger consideration than it is now – but they felt it was the right thing to do.
“It’s an important philosophy, not just for Fred and Ger, but for every DoneDeal employee,” said John, adding that they don’t just look it as giving back to the community, they also look on it as a benefit of working for DoneDeal.
Each month a different employee gets to nominate the charity of their choice. Everyone gets their turn. The Irish Heart Foundation has received €26,000 from December’s charity drive.
Think of the best benefits you get (if any) from your employer. Now imagine being able to hand over a cheque worth more than €25,000 to a charity that’s close to your heart.
Putting customers before cash is not easy. Short term opportunities to spin a profit can blind many companies to the damage they may be causing to their core business.
DoneDeal respects its customers and that respect extends to their personal information and privacy too.
The best example of this is that DoneDeal refuses to use email marketing, which is rare for a business of its nature and size.
“We don’t use our customers’ email addresses and we never will. It’s an invasion of privacy, it’s tacky and it’s spam – it’s not something we do,” said John.
There is a newsletter that people can sign up to receive and, to date, more than 280,000 have opted in, making it one of the largest newsletters in Ireland.
“I can’t tell you how many times I have been approached for that email list. Lots of money has been offered for the sale of it and I tell them every time ‘no chance’. Our customers are our bread and butter – we don’t want to piss our customers off,” said John.
Another area where DoneDeal could cash in massively is on display advertising, but it has just two banner ads on its site.
John reckons they have “one of the lowest percentages of direct advertising income to paid income in classified sites in the world”, but, if anything, this will be reduced before it’s increased as they don’t want their customers bombarded with distracting ads as they go about their browsing, buying and selling.
John also said that they try to make the content of those two banners ads relevant or of some value to customers. So car insurance would seem to be a natural fit as a lot of people are buying and selling cars on DoneDeal. But teeth whitening products? Not so much.
So it seems that while DoneDeal will happily help you sell your soul, it’s going to try hang on to its own.
8. SOCIAL MEDIA
There is a big community of “DoneDealers” and social media is one of the key ways in which the company interacts with them.
One out of DoneDeal’s 10 employees is dedicated to social media full-time – a significant investment in a small company. Donna is that 10 per cent and she is, in effect, the voice of DoneDeal.
A lot of companies use social media, but how many are really engaging customers? The truth is that meaningful participation is not easy.
John said that Donna is very good at what she does. She goes “above and beyond” the call of duty as a matter of course and some of the interactions she has with customers are great.
However, John is not overly concerned about the numbers, which many are obsessed with and which has led to an endless stream of heavily promoted competitions to attract “likes” and “follows”. In many other cases they are simply paid for.
So how do you separate quality from quantity? “A lot of companies will look for return on investment. It’s a bit like marketing in some aspects, in that it’s very hard to see a tangible return, but you should have a feeling about it,” said John.
“When we do reports and meetings some of the times I’ll look at the Facebook stats and say ‘that’s great, but how do you feel about it? How do you feel it’s going?’ Donna is now giving talks at social media conferences and they should listen to her because she takes the bullshit out of social media and tells it straight up, as it is,” said John.
“It’s about interacting with your customers, it’s responding to what they want to hear and not selling to them. A lot of people look at it as a sales medium and it shouldn’t be a sales medium,” he said.
DoneDeal evidently understands the value of social capital and doesn’t seek to “measure” social media success (or otherwise) solely by return on investment in terms of the bottom line, which is the point where so many (including some very astute) business people miss the point completely.
However, John points out that there could definitely be better ways of gauging your impact through social media and DoneDeal is sponsoring Measurement.ie, which is organised by Mulley Communications, and takes place on February 15 in Dublin. It will look at what is worth measuring in social media and what you don’t need to measure, while John is hoping it may inspire more effective ways of measuring the impact of your social media efforts on your customers.
“Social media is something we intend to move forward with it as a strategic part of the business, not as a fun thing to do. Social media should be a strategic part of everybody’s business, especially online companies,” said John.