It's part of our role as venture capital investors in the Middle East to assess the readiness of our region to adopt technology. We've often been guilty of looking at the high-level facts: internet penetration is over 50% with ca. 123 million users, and smartphone penetration is anywhere between 80% to over 90% across the GCC, and we assume that these statistics imply that people and businesses are ready to consume and transact online, when in reality, this is not entirely the case.
People can complain about cash on delivery, lack of adequate payment and logistics infrastructure and lack of trust when it comes to adoption, but I firmly believe that by focusing on educating the user and providing them with the best possible service, one can overcome a lot of these hurdles, while building high brand loyalty. Customer service is an area that is tremendously neglected by most startups in the region today, yet it is a vital component of building a business in an age where people are not ready to shop online and pay through credit/debit cards. It also provides significant advantages over rivals and allow companies to scale and get traction in new markets more easily.
We've seen it with our prior businesses and some of our portfolio companies. While at Bayt, Dany Farha, my cousin and partner at BECO, built a call center out of Jordan. In fact, Bayt built a call center in every country it served, and then centralized it in Jordan, once they achieved enough scale. This was critical to the success of the business and in beating the competition. The call center was used to cater to the needs of their corporate clients, walking them through the process of posting jobs on the Internet, at a time when job sites were a totally new experience to businesses, similar to how e-commerce is today to the average MENA user. The call center was staffed with Arabic and English speakers, and it grew to become a crucial part of the business, especially in less tech savvy markets, like Saudi Arabia and Egypt.
In fact, the advantages and utility of a call center are not limited to B2B businesses. We've seen it with Careem, when we first invested in the company. The call center was a big differentiating factor to its biggest rival, Uber, giving the user the ability to issue complaints, help find the driver when lost, call to book and talk to Careem instead of the driver (especially important when considering women in Saudi Arabia and their privacy and security concerns). Although it's an extra overhead on the business, it allowed Careem to build trust and closer relationships with their customers than their rivals at a critical time, bringing an enhanced overall experience to the customer, which would likely increase the average customer lifetime value.
Call centers have also been active components of several startups in the e-commerce space, including one of our old portfolio companies, TravelerVIP. When we installed customer service, we found a significant increase in conversion rate from visitor to shopper, as well as higher repeat frequencies in our cohorts. Some customers needed such a high degree of handholding that they would even call the customer service team directly to make a purchase and submit all credit/debit card information over the phone. Most startups we’ve seen that employ customer service witnessed a significant increase in conversion rates and retention. This really shows that the average Middle East consumer, especially in KSA, Egypt and Jordan, require hand-holding, education and a person to talk to that will allow them to build greater trust with the brand and entice them to transact.
Over the medium-long term, this type of education will give the customer enough comfort to start shopping more online, and we will then see real adoption in the region, and real customers. Customer service and call centers also act as a great feedback loop on product (both existing and new feature suggestions), cross-selling opportunities for new products, scaling into new markets (the call center can behave as the first port of call for the customer when a business enters a new city), and also allow the company to adopt new forms of communication across multiple platforms (messaging and chat).
Overall, I'm a big advocate on businesses adopting call centers to educate and support their customers. I believe it's one of the most important elements in building defensibility against new competitors (especially international ones), and should be considered in the growth plans of most startups in some form or another. In addition, it will have profound effects on the ecosystem by educating consumers and businesses on technology and driving greater adoption and consumption. We will continue to support our current and future portfolio in establishing call centers, and will keep you posted on the progress and any new findings.