KiotViet's journey from 'trotting to galloping'

The user experience at small retail stores has improved significantly in recent years, a fact not all customers may have noticed, thanks to KiotViet, the sales management software developed by Trần Nguyên Hạo and Nguyễn Tiến Trung, a duo who have been together since elementary school.

One gloomy day eight years ago, a customer knocked on the door of Citigo Software Joint Stock Company's office on Tran Khat Chan Street (Hai Ba Trung District, Hanoi ). The customer, a furniture retailer with 20 years of experience, met with the company's leadership to complain about the KiotViet sales management software, which they found inconvenient and unsuitable for their industry.

The KiotViet product development team at Citigo listened attentively to feedback, then took it into account and adjusted the features of the product, which was then one year old. In the first five years since the KiotViet sales management software launched in 2014, the number of similar complaints sent to the company was countless. However, this served as motivation for the product development team to meet the needs of diverse industries.

Choosing the slogan "Together we get rich," KiotViet places customers at the center of all its activities, seeking answers to questions ranging from where the company should focus to what products need to be designed for the future.

“The important thing is not whether customers give more or less feedback now than before, but to create opportunities for them to give feedback. We share the same business philosophy: to listen to our customers and satisfy them with valuable products, not to ‘run’ over to see what our competitors are doing,” Nguyen Tien Trung, co-founder of KiotViet, told Forbes Vietnam in an interview at the company headquarters.

The founders and CEOs of KiotViet are technology engineers. How did they manage to make KiotViet a software for managing and operating services used by 200,000 businesses across 20 industries with unique characteristics? Their overarching principle: Listening to the customer. The company's team of 2,000 people, including 1,200 sales staff and 400 technology engineers, has focused solely on this goal throughout its history.

According to estimates by the Ministry of Planning and Investment , Vietnam has approximately one million SMEs and about five million individual business households. According to Nextrans' 2022 Vietnam Startup Report, it is estimated that there are approximately 533 software-as-a-service (SaaS) startups in Vietnam.

In terms of age in the SaaS field in Vietnam in general, KiotViet is a relatively new name compared to Misa , Maybanhang, Sapo… However, if we consider only the group providing sales management software for family businesses and micro-enterprises, especially traditional stores, KiotViet is considered to be leading the market.

Several businesses in the same industry as KiotViet, interviewed by Forbes Vietnam, have commented: “KiotViet is positioned as a game changer in the SaaS sector serving small-scale businesses”; “KiotViet excels in services catering to traditional retail stores”; “The KiotViet team is somewhat unconventional and discreet, but focused on the product because making money from software is not easy.” According to their own statements, the total monthly revenue of stores using KiotViet reaches approximately three billion US dollars.

In the point-of-sale (POS) and multi-channel sales software segment, Nextrans considers KiotViet to be the leader. In 2021, the company announced the completion of a $45 million Series B funding round led by KKR, bringing its total fundraising to over $53 million.

In Forbes Vietnam 's May 2022 special feature, "Searching for the Next Unicorn ," KiotViet was listed as a promising startup with the potential to develop into a unicorn – a startup valued at over one billion US dollars. Currently, KiotViet representatives have not disclosed the exact valuation but estimate it to be around "200-300 million US dollars." The company stated that it had worked with approximately 100 investment funds before finalizing the deal, receiving investment from KKR, a private equity fund that previously invested in Vinhomes, Masan Nutri-Science, and others.

It is estimated that there are approximately five million small businesses, ranging from medium to micro-sized enterprises, in Vietnam, primarily operating in the retail and food and beverage sectors. Before the advent of sales management software, these family-run businesses managed their operations using traditional methods.

Software like KiotViet helps business owners perform simple tasks such as printing invoices, basic accounting, inventory management, and customer data management. The challenge for service providers is that each industry has its own unique characteristics. For example, the fashion industry needs software to manage inventory by size and color, while the cosmetics and grocery industries will need features to manage by expiration date, and the F&B sector will need tools for managing ingredients and synchronizing orders from the kitchen to the table…

According to Citigo, there are 200,000 paying customers using KiotViet, the company's core business product. Of these, 43% are in the fashion retail, grocery store, and mini-supermarket sectors; 99% operate fewer than 10 stores; approximately 40% have monthly revenue under 240 million VND, and 28% have revenue over 600 million VND. They have three service package options, from basic to premium, with daily prices ranging from 6,000 to 12,000 VND per store.

With three stores generating approximately two billion VND in monthly revenue, Ms. Nguyen Thi Minh Khanh, owner of the Megafashion brand, said she chose KiotViet from the very beginning when she opened her stores in 2015. The reasons were its simple interface, easy-to-read colors, large font, simple features suitable for small stores, and direct support from KiotViet staff until she became proficient in using it. “Friends recommended other software, but I found the interface a bit difficult. KiotViet was very cheap back then, only half the price of the other software, and I could even negotiate the price,” Ms. Khanh recounted.

Starting with one store using KiotViet, this business owner opened two more stores and purchased the software to apply to all the stores she owned in the electronics, pharmaceutical, and F&B sectors. Customers like Ms. Khanh initially only used KiotViet's simple features such as printing invoices, managing orders, or integrating with e-commerce websites.

After using the service for a while, they learn how to value assets at the end of the period, how to use promotional advertising, and how to analyze customer demand data to order goods… The more features you help customers use, the more loyal they will become to KiotViet. Like the anchor and satellite principle, customers start with an anchor service and over time, they continue to purchase satellite services.

The majority of KiotViet's customers are involved in the fashion industry.

According to KiotViet's own statement, the customer retention rate currently exceeds 50% (depending on the sector, such as retail being higher than F&B) and is rated as "good" in the field of sales management software services. If customers are satisfied, they not only continue paying for the service but also refer new customers. The company maintains a policy where if existing customers refer a new customer who purchases KiotViet software for at least one year, they can receive a commission of 200,000–500,000 VND depending on the service package.

The two co-founders of KiotViet, Tran Nguyen Hao and Nguyen Tien Trung, were both born in 1981. They were friends from elementary school in Vinh City, Nghe An province, but went their separate ways in university. Nguyen Tien Trung majored in electrical and electronics engineering, while Tran Nguyen Hao majored in information management systems.

They founded Citigo in 2010, with a business strategy focused on software outsourcing, primarily enterprise management software targeting customers in the US, Australia, and Singapore. However, seeing an opportunity in the domestic sales software service market, where millions of small businesses were still using paper documents and manual record-keeping, KiotViet was born.

Tran Nguyen Hao is currently the CEO and head of technology, while Nguyen Tien Trung is the deputy CEO in charge of investor relations and several of the company's partners. In the initial phase, the founding team of KiotViet outlined three directions to establish a competitive position.

Firstly, the focus should be on developing products with simple, user-friendly features that address the specific needs of millions of small businesses engaged in traditional sales, avoiding the pitfall of developing a comprehensive sales management solution. Secondly, the product should be closely integrated with market development and customer care processes.

The sales team directly advises, installs, and guides customers on how to use the software, and continues to listen to feedback to improve the product. Thirdly, they apply a pricing policy that is 10% cheaper than competitors and does not charge installation fees. As a result, many competitors had to eliminate installation fees after KiotViet appeared.

From the moment KiotViet established itself in the market, the two founders envisioned a bigger picture: the product lifecycle. When they acquired their first 1,000 customers, KiotViet prepared the operational processes, sales staff management, and systems to reach 10,000 customers, and once they reached 10,000, they prepared for 100,000.

After five years since its launch, KiotViet has transformed from a trot to a gallop: reaching 10,000 customers in 2016, 50,000 in 2019, 150,000 in 2021, and 200,000 in 2022. KiotViet's sales staff in 28 provinces and cities receive basic training lasting 1-2 weeks, depending on the department, before beginning to approach customers and continue with further training throughout their employment with the company.

The majority of KiotViet's existing customers subscribe to a two-year package, with 50% located in the two largest cities, Ho Chi Minh City and Hanoi; 20% are young customers who can explore and learn more about the features on their own.

“When meeting with clients, we don’t aggressively pitch our software; instead, we take the time to care for them and understand their needs,” said Mr. Do Tuan Anh, Deputy General Director in charge of sales, sharing his experience after eight years at KiotViet. In a 30-day month, this leader spends only about five days at the headquarters, dedicating the rest of his time to expanding the market.

In the SaaS sector , KiotViet views customer service not as an obligation but as a business opportunity. Based on feedback, they listen and develop many new features; for example, the timekeeping and payroll feature, or KiotViet's current My Kiot online store, were created from the requests of many customers combined with market needs analysis.

KiotViet has approximately 150 customer service representatives, divided into groups according to product categories, who listen to customer feedback and suggestions from 7 AM to 10 PM. Outside of these hours, customer calls are automatically transferred to a hotline staffed 24/7.

In 2022, this department received an average of 2,000 calls and 1,000 messages per day through the system. Each month, they received approximately 600 requests from customers regarding the addition of new features, which were forwarded from the sales department.

Based on observations from investment funds investing in SaaS companies in Indonesia and India, Vinnie Lauria, founding partner of Golden Gate Ventures (GGV), assesses that most small and micro-enterprises in Vietnam are still in the early stages of using sales service software compared to other countries in the region.

Therefore, the biggest challenge for most domestic service providers is educating the market, convincing customers why they need to use the software. The SaaS software that helps them retail smarter, integrate online and offline (O2O), and achieve better financial results will be chosen.

“There are opportunities for SaaS companies in Vietnam to learn from the development paths in other markets like Indonesia. But any lessons must be adapted through a lens suitable for the Vietnamese context,” Vinnie Lauria shared with Forbes Vietnam via email.

The SaaS business model offers several advantages, such as not being limited by geographical or offline factors, a stable cash flow from recurring fees, and the potential for mergers with larger companies or acquisitions. However, founders and investors need patience to invest in the system until they generate their first profits.

After more than 10 years of "burning money," KiotViet's leadership team projects the entire company will be profitable by 2023 and will dominate the market with 500,000 paying customers by 2025 out of a target of approximately 1.5 million customers in Vietnam. With $3 billion USD in transaction volume through KiotViet each month, revenue from software provision is just the initial step in Citigo's development journey, according to the vision of its two co-founders. They are confident they have found the formula to "move quickly and cheaply."

The remaining two areas, connecting suppliers and providing financial services, are currently being tested through KiotViet Connect and KiotViet Finance, respectively. Specifically for KiotViet Finance, they aim to act as an "extension of the bank," helping store owners open accounts, make payments via the app, and obtain loans to pay partners and employees, as it can assess the credit score of merchants.

“KiotViet is entering a new phase (the next 10 years) to truly be loved by customers and considered their ‘first screen,’ so that when they open their phones, they will open KiotViet to start their workday,” Mr. Nguyen Tien Trung expects.

According to forbes.vn