How I used my customer data to create a new business

Nicole Kersh is the founder and chief executive of 4cabling, a wholesale cabling company. The business has grown from strength to strength over the last few years, but it recently expanded into a curious new enterprise.

Kersh started noticing some interesting customer data, and discovered an entire group of people were buying certain products after business hours. So she did what any savvy entrepreneur would do – created an entirely new company to service the demand.

The website, cablemanagement.com.au, has been running since last year. Kersh spoke to SmartCompany about how monitoring data can deliver big rewards.

How’s this year been for 4Cabling?

We’ve had an excellent year, and there’s been a lot happening behind the scenes. We’ve been working on our new venture, which we’re very excited about, and we’ve moved again as well. We’re looking at acquiring a local manufacturer as well, so we’ve been very tired and sleep deprived.

Last time we spoke you were turning over just over $5 million, in 2011. What’s that figure looking like now?

We’re on target to get over $8 million this year.

So how did your new venture come about?

So 4Cabling is primarily wholesale based, but we started noticing through our online store a lot of smaller transactions, after hours, so at night and then early in the morning. They were for smaller retail consumer based products as well, and they were being sent to home addresses.

We watched this quite closely for a while, played with our product range a bit, and then added more consumer lower priced products to see how they’d go. We started to notice quite a rise, and growth, but we were cautious in separating out the two so we could concentrate on our brand message as being wholesale.

So we did a soft launch and did cablemanagement.com.au, a very consumer based website. The design was focused towards individual consumers, and we let that run and just started seeing the sales increase. We thought we’d spend a bit more time developing our range and getting the site right.

You’re not really a retailer; it seems like an interesting move.

I think it’s something we were cautious of up until this point, not wanting to position ourselves as a retailer. We’re still maintaining our wholesale pricing, but focusing more on consumer products.

It’s pretty different from what you’ve done before, just selling wholesale products

It really is, because price is still a quite strong link in perception between price and quality, but we don’t want to be one of those retailers that passes unnecessary margins on just because we can. So I think it’ll take a while, and that will be a challenge for us, to try and translate that message that you can still have the quality without the price.

Why create a new site, though? Why not carve out a section of the old one?

There are two points that I think are important here. One is that there is so much value in niche marketing, especially in the online space, because everything there is targeted. You’re not trying to sell someone something they don’t want, because they’ve come specifically due to what you have to sell. I think there’s a lot of value in that. If you look quite closely for who’s searching for what on Google, and you marry those results with our own findings, you start to notice growth areas. And we had a closer look at Google to see what the search trends are. And from there it’s just grown and grown.

Our product range is huge, with over 3,000 products now, and our database is so varied and constantly growing in different areas. So instead of growing our website into a beast of sorts, we want to start narrowing down. And depending on how this one goes, we’ll think more about narrowing out into a niche within a niche.

It seems as though there’s a risk either way – you either go big to create a massive site that’s too hard to navigate or you chop yourself up into a lot of different sites that don’t get much attention.

Too much choice can be a negative thing, especially with cable management products. You’ve got to be a certain type of person to want to buy something like that, it appeals to a certain personality type. So we did quite a lot of testing with our current site, and we noticed that people really wanted as much information as possible.

If someone comes to you for a solution to clean up their cables, they already have cables, so it’s not valuable to try and sell them something they already have. It’s a distraction and you lose the opportunity.

What do you think this new strategy will mean for you in the future?

The challenge for us is going to be working out where the legitimate need, we don’t want to create competition within ourselves and I think there’s a fine line where you can bombard your customer with so many options.

We’ll have to monitor this one quite closely, but I think as we grow, and tech becomes more accessible to home users and people in general, I think our range keeps expanding so we might try to break it down into even more customer bases.