Marketing automation startup Rocket Reach gets $24 million to expand

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Retail Rocket, a retention management platform for brands, today announced it has raised $24 million in a Series A round led by Cypriot private equity fund Fintera. In addition to Rocket’s fundraiser, Rocket announced that it has acquired SailPlay, a startup that develops software that helps retailers create loyalty programs and bulk messaging.

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Prior to the acquisition, New York-based SailPlay raised $3.3 million. Founded in 2013 by Leonid Shangin and Yakov Filippenko, the company offered a service of collecting customer data and using it to create games, texts, and tasks designed to encourage repeat orders.

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As for Retail Rocket, it was launched in 2012 under the leadership of Moscow School of Management classmates Nick Khlebinsky and Andrey Chizh, who tried and failed to succeed with several startups. Lessons learned from their previous efforts became a springboard for Retail Rocket, which, after several spins, eventually grew its customer base to over 1,000 companies, including Nintendo, Puma, and Decathlon.

“The digital marketing world is growing very fast and the demand for highly skilled professionals is constantly growing,” said CEO Khlebinsky. “The complexity of digital marketing tools is also skyrocketing – just a few years ago, we couldn’t have imagined the kind of technology we use today.”

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According to Khlebinsky, Retail Rocket uses a mathematical model to segment new buyers of a company’s product. By analyzing their actions — for example, the links they click on — the platform tries to figure out their desires and preferences.

Retail Rocket

Image credits: Retail Rocket

Retail Rocket also offers campaign management tools such as email marketing and web push notifications, as well as a mechanism that attempts to determine the best time and communication channel (such as SMS) to create personalized offers. According to Khlebinsky, the goal is to create a “loyalty and retention management system” for both online and offline customers, which ultimately drives business.

“We work with e-commerce on a performance-based pricing model,” Khlebinsky explained. “In most countries, due to the pandemic quarantine, online sales have increased dramatically, so we received a temporary increase in revenue. After the end of the lockdown, there was a decline, but to levels higher than the months before the lockdown, because many people were forced to change their shopping habits in favor of online shopping.”

In the absence of independent reviews of the Retail Rocket platform, it’s unclear whether its approach can outperform competitors such as SalesForce, SAP, Bloomreach, and Dynamic Yield. But the promise of software that predictably encourages repeat business is enticing. According According to HubSpot, increasing customer retention by as little as 5% can increase revenue by 25% to 95%.

Retail Rocket has about 150 employees spread across offices in the Netherlands, Germany, Spain, Italy and Chile and plans to double its mergers and acquisitions in the coming months. Sources close to the company told TechCrunch that Retail Rocket has set aside $50 million just for acquisitions.

“Retail Rocket attracted our attention due to its international expansion and ability to build sales teams in Europe and Latin America,” Fintera partner Sergei Vasin said in a statement. “We were impressed by the results of the company, given the limited amount of investments raised. The company began its growth after the seed round. Despite this, the performance of Retail Rocket’s products outperforms those of international competitors. We expect the global e-commerce market to continue growing at over 10% per annum, with Latin America leading the way.”

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