The WimLex Show #2

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The future of price comparison websites with Ben Woldring

At the age of 13, Ben founded his first online startup – a price comparison site for mobile services. Today, his company Bencom Group compares nearly everything, from insurance to energy providers via travel deals. He also owns the biggest metasearch engine in the Netherlands, which is available in many other European countries. In this episode, Ben tells us all about his journey as an entrepreneur and how business changed since the '90s. Join us for a journey into the good old days of SEO, and hear how Ben's biggest mistake turned out to be a boost for his business – and how it feels to be one of the first ever Google AdWords clients. Plus, he shares priceless tips for the internet entrepreneurs among you.

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“Surprise your customers, so even a customer who complains becomes an ambassador.”

01:40

Alex: Hello Ben, and welcome to the WimLex show. Perhaps you can give us a little background for our German listeners, who are unfamiliar with the Ben Woldring brand?

Ben: I founded my first company, called bellen.com, at the age of 13, in 1998. It was the first price-comparison website for mobile phones in the Netherlands. Now, the Bencom group consists of ten price-comparison websites in the Netherlands and Germany. We have three offices and fifty employees.

Alex: Are your sites similar to the Check24 business model, something our German listeners will be familiar with?

Ben: Exactly: in Holland, we are the market leader for price-comparison in several markets. We are active in Germany, where Check24 is the market leader and we are one of the runners-up alongside wechseljetzt.de and wirvergleichen.de.

03:20

Alex: Can you give a little background about the business. Specifically, do people in the Netherlands change provider more frequently than Germans?

Ben: When I founded the business in 1998, there was a trend towards switching mobile phone provider, due to increased competition and several new market entrants. When we launched gaslicht.com, a website for finding the best energy deal, customers faced several issues when changing. They were worried about being disconnected from their network, or having trouble with their invoices.

In the first five years, it was very hard to get the business up and running, but we had the telecom comparison business, so could stay ahead of the competition, which focussed only on the energy market. Our vision was that, at some stage, this market would be like the telecom market: people would switch regularly, switch to green energy providers, and make use of the new promotions introduced by new market players.

Since 2008, the market has been maturing and now resembles the telecoms sector more. In 2012, we entered the German market with wechseljetzt.de. We see a big difference between the German and Dutch markets: there are opportunities for much higher savings in Germany.

Alex: Should I go to wechseljetzt.de to find out if I can save on my electricity?

 

Ben: Absolutely. What we see in the German market is that people separate contracts for electricity and gas. In Holland, it’s normal to have one contract for both. Whereas saving opportunities in Holland are €200-300, in Germany you can save this amount on each product, and then you have the heating or gas product on which you can save the same again. There are more market players in Germany: about 1,000 compared to about 50 in Holland

Alex and Ben talk about Alex’s energy contract: as the owner of a small farm, he has a specialised contract from a local provider.

07:40

Alex: I think, in Europe, it’s quite rare for an entrepreneur who founded a business 20 years ago to still be active in the same business. Is that standard in the Netherlands?

Ben: It’s not standard, but I don’t want to be standard. The Bencom group consists of several companies that focus on a variety of markets such as telecom, energy comparison, insurance health insurance, car insurance and we are now expanding. We founded Looking for Booking as a comparison site for hotels.

Willem: Trivago is a big player and TripAdvisor is a metasearch platform as well now. What differentiates you from them?

Ben: As an independent player, we are unique – Trivago, for instance, was acquired by Expdia. We recognised a huge potential in the B2B market, so we launched Looking for Booking for corporate travel, helping corporates save on their administration. So if a company sends employees to a conference, and from client to client and hotel to hotel, normally the invoices would be sent to the office, necessitating various compliance checks and balances. One night’s stay of €100 would cost €150 if you include all the compliance and extra processing and accounting.

Willem:  So your competitive edge is now convenience and efficiency for companies?

Ben: Exactly, combined with finding the best deals. We combine efficiency with booking via the best possible outlet. That could be Expedia, booking.com, or the hotel itself.

Willem: So you’re a pure metasearch player in the way you manage the booking. Does it go through your books, or are you a booking.com affiliate?

Ben: For corporate clients, it goes through our books. They enjoy huge savings on administrative costs, find the best deals for all employees, and can focus on their core business.

11:40

Willem: Knowing how affiliate marketing works, booking.com probably has a different pricing scheme compared to Expedia, hotels or Agoda. How do clients know you are suggesting the best deal for them, not the best for them?

(Alex interjects, asking whether Looking for Booking employs ‘dark marketing patterns’, putting pressure on customers to book now, for example because “25 people are looking at the same booking”... Ben says they do not, before answering Willem’s question.)

Ben: We capture this information for the consumer website and provide it to the business consumer as a snapshot, so they can always see that this deal was the best deal available at the time.

Willem: Does that algorithm take into account the margins you make on the booking?

Ben: No. It’s fully transparent to the end consumer; it’s as though they searched 10 or 20 different booking platforms themselves.

 

Alex: Is Looking for Booking available in Germany?

Ben: Yes, we offer world-wide hotel bookings for more than 400,000 hotels.

Alex: I’ll go to wechseljetzt.de after our podcast, and will tell our back-office staff to have a look at Looking for Booking.

(Alex explains how he and Ben first met at an event for entrepreneurs in Hamburg ten years ago, and how Ben inspired him to become an entrepreneur – Alex was in his second year at the Otto Group at the time. He explains how, back in 2008, performance marketing on Google was more or less at its peak.)

16:15

Alex: Can you explain how traffic generation has changed since those performance marketing times, and how customer acquisition works now?

Ben: Being a first mover was a big advantage. The first domain, bellen.com, goes back to 1998 and gaslicht.com, 2003, so they have lots of domain authority. This helped a lot with organic search. We generate lots of free publicity with articles on the energy and telecom markets. For example, when an acquisition is happening, or a merger of two energy companies in the Netherlands: journalists will ask our opinion – about the impact this will have on the consumer when energy prices change on 1st January, or when health insurance prices change for the new year. This is really good for the brand and direct traffic. To sum up, direct traffic is highly important to our success.

Willem: How does customer your acquisition strategy work, looking at PPC or social advertising?

Ben: The SEA advertising model has become more expensive. Who doesn’t wish they could have 2008-style CPCs now?

Alex: Can you indicate how much more expensive it has got? Taking a popular keyword such as “gas comparison” as an example.

Ben: Today, it’s five or six euros per click!

(The trio take a walk down memory lane, reminiscing fondly about the early days of Google AdWords, from 2004 onwards. Ben voices the opinion that, actually, the prices are particularly bad, but that businesses need to be more creative, into the data, and combine all the sources. If it doesn’t work, he continues, immediate optimisation is of the essence. Then again, prices have developed in a similar way to Google’s stock price, so CPCs really have increased. Alex asks whether iPhone users get higher prices on his portals; Ben replies that, on Looking for Booking and the other sites, the providers set the prices, so he can’t differentiate by device type.

Ben explains that price has a big impact on a provider’s place in the ranking. But if they have very bad customer satisfaction, they have to be super cheap to stay in first place. Some offers are very cheap due to “window dressing”: health insurance offers that drastically limit the choice of hospitals; in Germany, there used to be “package deals” that limited electricity use to 3,500kWH with excessive prices for overuse and no right to carry over unused capacity to the following year. Bencom sites warn customers about these offers, and introduced filters, which would remove them by default.)

26:40

Ben: When we introduced wechseljetzt.de in Germany, for instance, our radio spot said nur seriöse Anbieter (“only scrupulous providers”). Only if you, as a customer, were aware of package deals and deselected the filter, would you see the “window dressing” products which weren’t favourable to consumers. By introducing this filter, and focusing our radio adverts on this element, we attracted the listeners’ attention. Nowadays, I don’t think these kind of misleading offers are available – I think consumer watchdogs got them banned. So that worked out well for us, because, thinking from the consumer perspective, you don’t want to connect your visitors with those kinds of offers.

Alex: Car-rental comparison sites operate in a similar manner, but they offer a premium deal, which, while it is sometimes twice the price of the cheapest deal, does include fair insurance and refuelling policies.

Another question: people don’t usually change contracts more than once per year, and low-frequency websites have a very hard time retaining customers. How do you ensure a loyal customer base?

Ben: We introduced the contract reminder service as far back as 1999. On the first day, 1,000 people subscribed. When the contract was approaching its expiry, you would get an email with a Word file to print out and sign, then send to your provider. About 100 people – for whatever reason – wanted a reminder one day later. Unfortunately, there was an error in the software. The first person received their own reminder, the second person received their own and that of the first person; the final person received everyone’s reminder, including personal details. My inbox exploded: some said they couldn’t sleep and demanded compensation; others threatened to go to the media.

The next day, I gave a presentation to a group of entrepreneurs. At the end, a lawyer came up to me. He said the situation was like a pressure cooker and advised me to wait until it cooled down, then surprise them with a gift in three weeks. We sent them a postcard with a voucher for 100 guilders. The reaction was positive: many said it wasn’t necessary, that they were very pleased, that they would promote the service like hell!

This taught us three lessons. In a panic, stay calm. Second: when a new service is introduced, test it like hell – it was a stupid comma-separation error in the software. Third: surprise your customers, so even a customer who complains becomes an ambassador.

(Alex observes that Ben essentially created a CRM system out of the first reminder service. E-commerce sites often have a problem with customer retention based on reminders: a sock retailer might remind their customers to buy new socks after eight weeks, but this is not particularly customer-focussed.)

41:10

Alex: How do you attract new customers for the Bencompare app? Do you only create services where you can use your existing customer group? Or would you have the confidence to build, for example, a car price-comparison service under a new brand?

Ben: With Bencompare, we focus on a bank reminder service in an app, but you can store all kinds of contracts and receive smart reminders when your attention is needed. When the contract renewal, or expiry, date is approaching, it forwards you the best deals or refers you to price-comparison platforms if you want to do it yourself. This service can be pushed via our own brands.

On each comparison site, you will see promotion of the Bencompare app. But when people switch provider, it’s an opportunity to say: download the app now with the contract you just signed up for as a start. Even if you use it for that contract alone, you will be reminded to renew your deal.

We launched this app recently, and only pushed it via our own channels. But once we get more insights and conduct more optimisation, we can push it via marketing channels such as television, radio, and app-store promotion.

43:30

Willem: You already have an install base, and installs can be arranged through your current audience. But there are loads of apps in the app markets that aren’t used frequently. How do you encourage users to use the app in a broader way, e.g. for their mobile contract, or health insurance contracts?

Ben: We asked ourselves: should we limit the app to Bencom group services, or look at it from a consumer perspective? In the app, you can store your lease contract, or your rental car agreement, or your Netflix subscription – just to increase the probability of you using this app, because it increases the likelihood that you will be reminded of the service throughout the year.

Willem: Have you explored new markets thanks to the app?

Ben: We have an open discussion forum where users can submit ideas. One suggestion was to add the costs of local government, which vary widely in Holland.

This is not a market we would like to enter, as universities already compare them. It doesn’t make sense to compare, since the only way to save money is to move house. We want to focus Bencom on liberalised markets, where the customer has a choice.

(Alex and Ben reaffirm the app’s USP: you can track contracts including Netflix or Sky – Ben adds that you can receive reminders when cashback payments are approaching.)

47:40

Willem: Does the app enable m-commerce via bellen.com or your other comparison sites?

Ben: Right now, we promote the app via our existing platforms, but we are working to integrate into our platforms so you can compare prices in the app, with one brand for the whole group.

Alex: Amazon and especially Google want to control customer access. Customers tend to start their search on Google so they reason they can offer this service themselves, for example flight searches. How do you view this challenge?

Ben: Over the years, only Google Flights has been successful. In other markets, such as insurance, which Google entered in the UK through an acquisition, it was way less successful. They even quit this business after several years. A big retailer entered it, too, but found out that it was quite specialised sector and quit too. It’s a platform business, but you also need to know the market really well from the inside.

For us, it’s a combination of customer service, market insights, and approaching the consumer appropriately in terms of the appearance of the listing. A flight is much simpler to compare than hotels, or a complex product like insurance, telecom contracts, and so on. When investors approach us, which happens all the time, they normally say they love this online price-comparison market so much because the giants haven’t entered it yet.

51:30

Alex: You raise a very interesting topic: investors. Money is cheap these days, so are you not tempted to hire another 100 engineers and push your price-comparison services into Eastern Europe or other markets where you don’t yet have a big stake?

Ben: The Bencom group is 100% privately owned but investors have been knocking on the door since 1999. However, the market we are currently in – the Netherlands and Germany – is a trailblazer. There are indeed opportunities in Eastern Europe and other parts of the world, where the internet and market liberalisation of our sectors is not yet as advanced as in the Netherlands and Germany. So maybe. Time will tell.

Alex: What will the next big thing be in 2019?

Ben: We are experimenting with blockchain.

Alex: So you mean there is an actual use case for it?

Ben: Yes, because in the energy market, trust is an issue – how green is green energy? Is it sold multiple times, or only once? The solution we won the prize with in Groningen was a “pizza tracker” for your contracts, so you are always aware of the status of your contract within the switching process.

(Ben mentions the annual blockchain hackathon in Groningen. Willem notes that Ben’s team won the “energy transition” track last time.)

Imagine switching provider: your request goes through several systems, several databases and siloes. With a pizza delivery service, you know exactly where your pizza is and can almost walk to your door and open it and the delivery guy or girl is there.

You want a similar service when changing your energy, insurance or telecom provider. We have many silo databases in this field, with lots of providers that are unwilling to share data with others in the chain. This is where blockchain comes in: no-one is in charge of the data and everyone has a single view of a particular data point.

(Alex and Willem close the podcast by thanking Ben for being the first guest they interviewed. Alex notes that, in e-commerce, intermediaries such as comparison websites are seldom sustainable and successful business models: Ben seems to be an exception to this rule!)

WimLex Show episode #2 - Ben Woldring, Bencom Group

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