Unlimited HR advice poses growth problems
HRdownloads Inc. is at a crossroads.
The London, Ont.-based company sells a range of human-resource documents and services for Canadian businesses, from customizable policy manuals to advisory and consulting services. Since launching in 2008, HRdownloads has built a roster of more than 7,000 clients.
At first, the firm geared itself toward companies with fewer than 100 employees, founder and president Tony Boyle explains. But these sized companies weren't the only businesses attracted to offers such as unlimited HR advice by phone for $1,190 a year.
"We found that we had priced it so aggressively, the larger players started jumping onboard," says Mr. Boyle, whose 80-plus employee company generated revenue of $6.4-million in 2012.
He sees big opportunity to grow by winning more enterprise-level business - but keeping a diverse client base happy is far from simple.
In the early days, HRdownloads used to give every client the same pitch, Mr. Boyle recalls.
"Now we're finding you cannot say the same message to a director or VP of HR that you can to Bob's Pizza Shop," he says. "The small business is worried about the employees and the day-to-day management, and the large businesses really need their hand held on gigantic decisions that could potentially be incredibly expensive mistakes."
But Mr. Boyle says his company has to offer a product that will satisfy the majority.
"In the last year and a half or so, it's been an interesting challenge for us to try [to] meet the needs of everyone, not change the core product so much that it scares away the small guys but, at the same time, make it robust enough that the large enterprise does see some value and doesn't just purchase it based on 'Well, this is really cheap,'" Mr. Boyle says.
HRdownloads has been hiring senior talent to meet the consulting demands of bigger companies. It's also segmenting its customer base by creating product bundles based on corporate size, Mr. Boyle says.
For smaller clients, who still make up about 80 per cent of business, HRdownloads prides itself on being a one-stop shop, Mr. Boyle notes. "We can't build something for the 1 per cent; it has to be scalable," he says. "And at the same time, we don't want to overcomplicate our website."
The Challenge: How can HRdownloads best serve an increasingly varied client base of small and large businesses?
THE EXPERTS WEIGH IN
Kate McKay, clarity lead, Business Instincts Group, Calgary
I would suggest if they're dealing with larger businesses, that there's some kind of cap, like maybe a certain number of hours per month. A larger business is potentially going to have a lot greater need than a smaller business.
It sounds like the question is "How quickly should we grow?" And I would suggest that it's better to go slow and steady…They need to sit down and build their own growth strategy [by asking questions] such as, "Where do we want to be in three to five years?" [and] "How many clients are we looking at?"
Just because they can take on 100 new clients this month doesn't necessarily mean they should. Some clients are going to be more strategic than others; some are going to require more resources than others. I don't think growth for the sake of growth is always the right move…They need to decide how fast they want to grow rather than just reacting to the market.
They're only going to get one shot at it. HR is so competitive - there's lots of people working on that subscription model…They've got to take some risks, but I think they need to sit down and set some long-term goals.
Colleen McMorrow, entrepreneurial services leader for Canada, Ernst & Young, Toronto
They need to make sure that they're going to be able to maintain the same standards of quality, because they'll have reputational risk if they don't.
The best customers they have are going to be the future references for further business and further growth, so they need to be able to offer solutions to meet the needs of the larger clients as well as the smaller clients if they're going to stay in both of those markets and keep the quality up. I think they need to assess whether or not they've got the scalability and the infrastructure to support both those diverse client needs.
What they might think about doing is …develop some partnerships or alliances or joint venture arrangements with some larger consulting firms so that they can continue to enhance their tools and processes. If that's what their niche is and what they're good at doing, make those even better and then partner with some of the large HR consulting firms to provide the onsite support and human intervention….It would give them more bandwidth with the larger organizations.
Faiz Abdulla, founder and CEO, PaySavvy Canada Inc., Vancouver
Because we face the same challenge, we've decided that… we're going to have almost two separate offerings. We're going to actually have a presence, an entity, that will be maybe PaySavvy Small Business, and then we'll have PaySavvy Enterprise. So maybe HRdownloads can have HRdownloads Small Business. The small-business guy will go on a website that's different than where the enterprise [client] is going, and that way they don't feel alienated because there is a service that's dedicated to them.
But the biggest concern I would have [is] let's be careful if you're extending into a larger area. You want to make sure your resources are scalable, your product is scalable and you can actually service that market. Otherwise, if they move to the bigger market, because the demands will be bigger and more intense and more complicated, they may lose focus on the small guy and the service levels will suffer. And that's when you start losing your smaller clients.
THREE THINGS THE COMPANY COULD DO NOW
Create a long-term growth plan
Rather than reacting to the market, decide how quickly you want to expand.
Offer separate websites
Having two distinct portals for larger and smaller businesses will make both customer groups feel special.
Partner with bigger HR consulting firms
Develop alliances with major players to help serve larger customers.