Question
How to create additional revenue opportunities for Kamion-Loadsmart with our customer base by scaling the adoption of our tech offers in the market?
Solution
A seamless user experience that allows carriers to integrate with Loadsmart factoring solution.w clicks.
Increasing market knowledge can affect competitive and user experience advantages.
Learning
This project was not initially planned in any of Kamion-Loadsmart squad's roadmap. It really started with finding new product opportunities, based on user and market research - led by me and my Product Manager partner.
What was Kamion about?
At the beginning, Kamion was an internal load management product created by a carrier company named Kamion Company. It was acquired by Loadsmart at the beginning of 2021.
With the acquisition, the goal was to transform Kamion into a SaaS TMS (Transport Management System) branded by Loadsmart. This also led to a name change to CarrierTMS.
Kamion was discontinued due to Loadsmart's strategy and it's currently called CarrierTMS.
Or continue reading for the KamionPay case study.
Before it was branded by Loadsmart and its name was changed to CarrierTMS, I was able to work on understanding SaaS TMS offerings as well as finding monetizable opportunities that could generate profitability.
The SaaS Transport Management System context
TMS services are not critical for carriers - actually, it's pretty usual.
But in the other hand, in the carrier market, fintech products are mission-critical for every fleet, but Kamion has not provided them to customers yet.
And with that in mind, Kamion (as a TMS platform) needed to look out for a high margin new business model that could stand us up in the TMS market and provide more mission critical value add to carriers.
So our opportunity window was to test a fintech business model. But what were the problems behind it?
1. This is a mission critical for carriers:
• As I mentioned before, fintech products are mission critical for every fleet (>75% use factoring services) - a TMS is not critical.
2. Factoring rates are a big pain point for carriers:
• Average factoring rates for small carriers are between 2.5 and 3%.
• For carriers that have <15 trucks, the profit margin is also 2.5%. That means in the absence of a factoring fee, they could 2x their bottom line!
3. If you are a carrier and don't use factoring service:
• You need to wait between 30 to 60 days to get paid from your customer that you moved the load for.
4. We were losing customers because of it:
• Roughly 30% of product-related churn has been due to missing integrations with carrier financial products - factoring companies basically.
5. 70% of Kamion carriers used a factoring company that wasn't integrated with Kamion:
• And that results in a bad user experience and it makes our customers to spend time manually copying data from Kamion and collecting documents and receipts from their drivers to get paid on time by their factoring provider.
6. It would be hard for our competitors to copy it:
• Embedded factoring in Kamion, would differentiate us from them.
Going deeper on what factoring means
Factoring services are provided by factoring companies. And the freight factoring process for carrier companies works like this:
In summary, the factoring business model works like this:
Factoring companies buy carrier companies’ unpaid invoices and advance them a percentage of the amount owed upfront - between 24 to 48 hours on average. The factoring company gets a percentage of the invoice, say 85%, within a few days, and the factoring company takes ownership of the invoice and the payment process.
And factoring companies' fees stays between 2.5% to 3% on average.
So to test the adoption from current carrier customers, we built up a factoring experiment - based on 1.5% factoring rate
We wanted to know the relation between carriers' fleet size and adoption of factoring services from carriers, through survey in the Loadsmart Loadboard:
• As the fleet size goes up, the % of carriers with <2% factoring goes up as well.
• As the fleet size goes down, the % of carriers with >2% factoring goes up.
• As the fleet size goes down, the % of carriers who have factoring goes up as well.
Smaller carriers lose >50% of their bottom line (average 2.5% operating profit) to factoring companies. 77% of carriers with fewer than 15 trucks use factoring and 53% pay >2% factoring rate.
Then we tested the opportunity of factoring, among existing carrier base with a hidden door test on Loadsmart Loadboard and Kamion platform - inviting them to an "exclusive waitlist" for 1,5% factoring rate.
This experiment intended to determine the number of carriers that would sign up for factoring offered by Kamion before actually launching the product MVP.
The experiment was measured by:
• Number of carriers in Loadsmart’s entire network that would use our factoring solution.
• The revenue that these carriers would generate in a period of time.
• The factoring revenue we could generate from Kamion carriers (and potentially from other carriers in Loadsmart network).
IF we provide factoring services for loads booked in Kamion
THEN we will be able to provide lower factoring rates, reduce manual work for carriers, and increase monetization per carrier.
What are the results of the test?
Success metrics results and significance:
• 10% of total carriers that viewed the banner add clicked on the sign up link.
• 2.4% of total views resulted in a sign ups (123 out of 5,086 carriers).
• The 123 carriers have a combined 566 trucks (4.6 trucks on average).
• 566 trucks generate $85k in monthly factoring revenue at a 0.75% take rate (~$1m in revenue)
• 2.4% of the 20k unique carriers that view the load board each month is 1,920 carriers. If average sign up is 4 trucks, that implies $3.5mm revenue opportunity
My mindset is always to provide as much as visual context needed and get feedback from other stakeholders (Marketing, Sales, Engineering, and Customer Sucess) in every part of the process, and for the following ones as well.
Planning the MVP within the Kamion platform to be used by current customers
This process outlines the processes that we executed to pilot a white label factoring.
For the MVP, we partnered up with BasicBlock - a U.S.-based factoring provider - to speed things up and provide us with some back-office work.
• Pilot duration: 60 days
• Target customers: 2 carrier companies that signed up for it.
Designing the MVP KamionPay solution MVP
Before we launched the MVP, I ran usability tests and user research to cover usability issues of it, before the release.
The solution's name reinforces the product and the most critical desired need from carriers as well: getting paid.
I also designed a an overall structure flow to understand the execution behind it. This is the summary of it:
How the user experience looks like
A seamless user experience that allows carriers to integrate with KamionPay, send invoices to factoring, and get paid in a few clicks.
MVP results after 10 days of release
• 2 carriers (9 trucks total) factored 45 invoices worth $65.7k.
• At the 1.5% rate, thats $985 in factoring revenue in 10 days on pace for ~$300/truck per month.
The ongoing results up until December 2022
We consider this a big win.
• 26 carriers factored 1.22k invoices worth $5.95k.
The ongoing user experience improvements
Over time I kept running usability tests and user research with customers that led us to improve the factoring user experience.
Just to mention a few improvements that we did:
• Broker approval status.
• Banking holiday warning.
• Paid invoices automatically updated.
Next steps and current status
In 2023, this project was scaled to the broader carrier experience called CarrierTMS.
Kamion was discontinued due to Loadsmart's strategy and it's currently called CarrierTMS.
