Sometime back, a scribe who covers marketing and advertising for a leading publication, asked me how the tele-marketers get her number and call her on her mobile, often at hours more uncivil than appropriate.

Before answering her question, I asked, “Do they address you by your name?” She didn’t exactly remember but said, more often than not, they didn’t.

Next I asked, “Do they offer you something that you are actually looking for?” “Never,” pat came her answer. But then she hesitated, “Once in a while they do. Recently, this guy called me and asked about home loans. How did he know I was planning to buy a house and was exploring a home loan?” She looked concerned about invasion of her privacy.

A debate has ensued on the subject, thanks to PIL filed in the Supreme Court. The SC’s response has heightened it, making a lot of practitioners nervous.

As both a direct marketing practitioner and an aggrieved consumer, I will attempt to provide a view that’s pretty close to what actually takes place at the back-end?

There are no databases to begin with!

Yes, in at least 80% cases, tele-marketers making unsolicited (cold) calls don’t have any database at all. They know absolutely nothing about you, not even your name!

Surprised?

Actually, the way these calls are conducted is pretty uncomplicated – the tele-marketers list a series of mobile numbers, and keep calling these numbers one after the other. For example, an executive is ordered to call a list of 1,000 numbers beginning with 98101. So she calls 98101–00000, then 98101–00001 and so on till she reaches 98101–01000. Her co-workers dial similar lists.

This explains why you’ll rarely find them addressing you by your name, leave alone having any idea if you’re in the market for what they’re trying to sell, be it personal loans, or credit cards, or phone connections.

Question: Isn’t this a rather expensive, time-consuming and irritating way of making contact with prospects with whom you intend having a long-term business relationship?

The answer is simpler than you might imagine.

All mobile phone users, especially those using services of private GSM operators, belong to the most affluent segment in the society – after all, anyone spending a minimum of Rs 300-400 month must be earning at least five times more than an average Indian. Calling each one of them is like reaching out to the readers of premium magazines. Even if a miniscule number say ‘Yes’ they more than compensate for the time and money wasted on the ones who say ‘No’, more so when the products sold via cold calls often have very handsome margins (personal loans, credit cards).

The second reason is more powerful – by calling you on your mobile number, the tele-marketer actually gets to make her pitch to you PERSONALLY; she doesn’t have to wade through filters like secretaries and receptionists.

Most cold calls are over in less than 15 seconds, and the tele-marketer is free to dial the next mobile number! This means, the tele-marketer can make three to four times the number of SUCCESSFUL contacts than she could if she were calling landline numbers. Their benefit is obvious: overall cost of contact drops dramatically as each tele-marketer becomes thrice as productive!

The entire approach is not too different from door-to-door selling: the salesman knocks your door, rattles off his pitch in a few seconds the moment you open the door; if you’re interested, he continues, otherwise he goes to knock the next door.

This sort of ‘interruptive advertising’ is completely against the principles of direct marketing, where you use the information about prospects (database) to market your products and services. For instance, if you were to receive a tele-call (even at an odd hour), where tele-marketer offers you a tax saving insurance plan when you are actually scouting for one, will you be irritated by it? No. If you are busy, you’ll ask the tele-marketer to call later. If you aren’t, you’ll be all ears.

By using this ‘interruptive advertising’ approach over what is perhaps the most personal of all media – a person’s mobile phone – tele-marketers run an enormous risk. Sooner or later, prospects are bound to protest, threatening to have all such calls banned.

Why then are tele-marketers taking this sort of risk?

Before we answer, let’s first find out who are the heaviest users of telemarketing?

The heaviest users are certainly banks, who sell a basket of products – credit cards, personal loans, car finance, home loans, opening of a bank account and now insurance. The second most frequent user, a distant second as a group, are insurance and telecom service providers. Then there are the rest – all kinds of brands from pizzas to hotels to magazine subscriptions to donations – but these are few and far between. Between the three groups mentioned above, banks probably account for 90% of the calls. Henceforth, for sake of convenience, I’ll address ‘tele-marketers’ as ‘banks’ and vice versa.

Let me tell you something that’ll probably startle you: Banks don’t spend any money on outbound telemarketing! It’s their Direct Selling Agents (or DSAs) who do telemarketing, entirely at their own expense! As compensation to cover their cost, they receive from their principals, i.e. banks, ‘result-linked-compensation’, traditionally referred as ‘commission’.

It’s pretty ironical: banks need long-term customers to grow both in stature and profits, and the DSAs need immediate sales to survive. So the banks let the DSAs irritate their prospects to earn their commission, simply because banks don’t pay for the irritation, nor do they directly make any calls themselves.  Banks win when their DSAs win customers or business. DSAs lose if they didn’t succeed. Great situation. And who suffers? Poor consumers, who made the mistake of getting themselves mobile phone connections!

Let’s delve a bit on how telemarketing has grown in our country.

In the beginning there was nothing wrong with the above model. DSAs used telemarketing to ‘prospects’, but you weren’t really irritated. Because calls were far fewer – perhaps one or two a week; and they came over your landline phones – your office receptionist or secretary or colleague often filtered them, or your spouse or child did at home; besides you got time to ask who was calling so that you could decide whether or not to spend any more time on a call.

All these were certainly major problems for DSAs! They couldn’t go berserk with the number of calls made because each call took some time  – 3 to 4 minutes – yet their success rate in speaking to the ‘prospect’ (you or me) was poor. Telemarketing was prohibitively risky. If it was used at all, it was only after a good deal of deliberation.

Then two things happened which changed the situation: first, the proliferation of mobile phone – we suddenly have more mobile users than land line users; and second, no charge on incoming calls of mobile phones.

This gave the telemarketers a new opening: Call the mobile.

The problem was ‘database’. They grappled with it for a while, searching the right prospects. But this proved too expensive and time-consuming. Mobile numbers are not listed, most people use pre-paid connections, and, in the early days, we shared our mobile numbers with only a few select people.

DSAs cracked the database problem pretty quickly. Or rather, they decided to completely bypass it, by simply calling mobile numbers in series.

Now imagine the number of calls you’re likely to receive every week with every bank having up to 10 DSAs for each of their products in each major city. Now it’s easy to explain way you get so many calls from the same bank, trying to sell you a product that you have repeatedly and unambiguously rejected!

This has been going for on nearly two years now, with the frequency of calls increasing steadily.

Without regulation, everything spreads like cancer. That’s exactly what’s happened to telemarketing. We’re called at odd hours, we’re called during meeting and private dinners, and, what’s worst, we’re called when we’re out of town, and have to pay roaming charges to listen to irreverent product pitches. No wonder mobile users are livid, especially if they’re using roaming on foreign trips.

On the other hand, the poor tele-marketer has no way of knowing if you’re in town or not.

Everyone agrees that telemarketing has become a nuisance. But who’s to blame? The DSAs? Or the banks?

My finger points at the banks. Let me explain.

Competition among banks in intense. Retail banking has grown manifold over past few years, thanks largely to low interest rates resulting from low inflation, and lack of investments in manufacturing sector. Flush with surplus funds, banks are going after retail consumers like there’s no tomorrow. They’re chasing unrealistic targets in every product they offer. And to meet those unrealistic targets, they’ve appointed an excessive number of DSAs in every city.

In the dog-eat-dog overpopulated world of DSAs, individual operators have little choice but to somehow ‘get the numbers’. Left with little or no database support, and without any regulation or guidelines to check them, DSAs have turn to indiscriminate telemarketing.

It’s helped them meet targets, so they’ve started depending more and more on it, causing so much irritation that we now have a PIL challenging their right to call us.

The saddest part is that DSAs have, as a rule, done very badly. I’m yet to see even one DSA rake in serious money from telemarketing; most go belly up in no time.

A drop in the quality of their tele-calling and sales staff has further compounded their problems, with most of the better ones going to work for the relatively high-paying BPO sector. As a result, their costs are going up, even as banks keep mounting the pressure to ‘get the numbers’.

Till now, we’ve discussed why we receive calls on our mobiles where we’re NOT addressed by our names. But what about the calls we get on our landline and mobiles where we are addressed by our names? The recently PIL specifically mentions that telecom companies have ‘handed over’ our names and phone numbers to banks (and others) who use these names to make unsolicited telemarketing calls to us.

How do we tele-marketers get our names?

There are two sources from where they obtain our contact details. The first is the banks’ customer list, which they hand over to their DSAs. The second comes from the contest and feedback forms filled by us from time to time.

First, the customer list. This is the most desirable form of telemarketing and should have worked well, but for a major glitch: The same list is handed over to all DSAs. What’s more, the data that’s doesn’t follow even basic list hygiene, not to mention data mining. While the DSA may know your name and phone number, and sometimes even your address, they have no idea which bank products you already have! I keep receiving calls from the same bank (actually different DSAs of the bank) offering a product that I’m using!

Naturally, I find this ridiculous and awfully irritating. Also, on each occasion I receive such a call, the bank’s image takes a nosedive in my eyes. Why can’t they practice the basic list hygiene? Why don’t they spend a little time at the back-end in mapping my existing relationships and potential needs before getting in touch with me? Beats me. But I can hazard a guess – such an exercise will cost the bank some money; simply handing over the data costs them nothing, as they don’t spend anything on calling you up.

That most DSAs, unable to support such monumental inefficiency, have to shut shop is hardly the banks’ worry… as long as there are enough replacements around.

Banks are also digging their own graves too, by causing their brand names incalculable harm (remember, they are also spending crores in mass media to build image). I doubt if I’ll ever value any loyalty initiative from a bank that keeps bothering me several times every month to buy a product I already have! In other words, ill targeted telemarketing is a sure-fire recipe for never building long-term, lasting relationship with customers.

The worst is that legally you can’t label these calls as infringements into your privacy (not even in USA, despite their new law against unsolicited tele-calls). So, such calls will never stop, and never stop irritating us, unless banks take a long-term view.

As I said earlier, the second source of telemarketing calls where the caller has our contact details originates from us, through contests, lucky draws and feedback forms. Much of this data eventually reach DSAs hungry for lists of prospects.

To prevent such calls, should we stop participating in contests or offering feedback?

Certainly not!

Government can step in here and bind such sponsors to seek express permission from respondents before sharing their details or calling them on their own. The Government could make it mandatory for such forms to contain in big and bold (not small print, as is often the case) the sponsor’s request for using the respondents’ data for making telemarketing calls. Respondent should have the option of turning down this request. Such legislation will go a long way in protecting the privacy of consumers who don’t want unsolicited calls.

The PIL however mentions that telecom companies share such data. Nothing can be further from truth. In my past 4 years of working with telecom companies and DSAs, I’ve never come across a single instance of a telecom company allowing anyone other than its own DSAs to use its customer data.

But there may times when such data has accidentally leaked to DSAs who don’t sell telecom products. (By same count, data of banks’ customers may land up with DSAs selling non-banking products.). I’d advice telecom companies to practice far greater and far more stringent regulation in controlling their customer database, to prevent it from reaching anyone other than own DSAs.

Finally, the government can’t escape its share of the responsibility. It’s the only party that gets unadulterated gain from the state of things. By not laying down any guidelines, it has let telemarketing explode. So that it may earn 10.2% service tax on each call, and another 10.2% on every bill that tele-agents raise on their clients. The government is making easy money by simply abdicating responsibility and letting telemarketers invade our privacy!

In a nutshell then, the banks are the biggest culprits, with the government as their all-knowing accomplice.

Two questions remain:

1.      Is all telemarketing bad? Are there no benefits of taking a telemarketer’s call?

2.      How can we regulate telemarketing to get it rid of its present ills?

Benefits of telemarketing

Take a look at these possibilities:

My bank calls to warn me that one of cheques will be dishonoured because the signature doesn’t match. Would I want to prevent that call?

I get a call from bank selling car finance, reminding me that I mentioned in a recent communication to Ford (contest form) that I’d like to test drive the new Ford Fusion. Is that unpardonable intrusion?

A telecom company calls to say that their data shows that I travel to Mumbai at least three times every month, and if I were to shift to their telecom service in Delhi, they’ll waive my entire roaming charges in Mumbai. Would I rather the call be blocked?

The above cases are of tele calls I’ll actually welcome. Why? Because they are all relevant to me.

So the key to positive telemarketing is relevance.

This brings me to the next question, on regulation of unsolicited telemarketing calls.

I believe there are two ways to do it: first is strict, self-regulation by banks and other brands that use telemarketing to acquire customers; the second is a couple of positive legislations by the central government.

Self-regulation

1.      The banks must prohibit all their DSAs and their own tele-callers from making any call unless the person being called is a customer of their principal or has explicitly expressed the intent to receive such calls. I believe a clause to this effect in their agreement with DSAs will be adhered to.

2.      The banks must ask their customers about the products they would like to explore in future, and pass on the data of interested customers to their DSAs. Banks can do that in two ways – by doing a periodic survey along with their monthly/quarterly statements, and by offering their customers an SMS or an IVRS based service where the customer can register for a product he or she is looking for. Such services or numbers can be advertised in their mass media or through direct mail. If all banks offered such a service, I’ll probably register myself with three or four banks whenever I’m in the market for a particular financial product.

3.      Banks continuously study their customers’ usage data. This will help them to identify ‘hot’ prospects, whose details they can then pass on to their DSAs. In other words, they can practice list hygiene, and at an advanced level, data-mining.

4.      In all of above, the purpose of self-regulation will be defeated if identical lists are passed onto different DSAs. It’s critical that banks pass on such lists in ‘batches’, never sending the same list to more than one DSA. This will automatically reduce futile calls dramatically.

5.      Whenever a DSA makes a call to anyone who is not a customer, he must announce to the customer the source from where his name was procured and in what context is he or she is being called? I believe this will instil a great deal on confidence among the prospects receiving such calls.

What the government needs to do

1.      Government must make it mandatory for sponsors to disclose on the contest and feedback forms that the information given by the respondents will be used for telemarketing only if the respondent grants them the permission. Such declarations must be explicitly stated and clearly visible. Any violation to this effect must be punishable.

2.      Similarly, any call made to a person without knowing the receivers’ name must attract punitive action.

3.      The Government can ask all users of telemarketing (including DSAs) to register with appropriate authority where they can make a declaration to comply with all the above regulations.

To sum up, let me reiterate two things. Carpet-bombing consumers with irrelevant cold calls at inappropriate hours isn’t just invading privacy. It’s a criminally wasteful way to market, guaranteed ruins your agents on the short-run and your own reputation before long. Regulation is one part of the answer, relevance is the other.

I have a friend who runs his own editing studio. He has three or four regular clients, and a whole lot of ‘one-off-ers’, who land up at the studio once in a while

His clients include advertising agencies, and references play an important role in getting new business. These depend as much on his long-standing relationships as they do on whether the client’s last experience at his studio was delightful, good, so-so or… horrible.

Recently, he asked me, “Raj, can I use direct marketing to grow my business? More important, can I increase business from my regular customers? Isn’t my business too small for direct marketing?”

His question set me thinking about thousands of SOHOs and SMEs who are in similar positions. There are two typical characteristics of such companies: (a) the owner is the nucleus of the business, and is often more important than his entire team; and (b) a handful of regular clients not only ensure his bread and butter but also determine his cash flows.

Here’s my view on how most of these businesses can use direct marketing effectively

3 simple steps

Direct Marketing is a process, a way of doing business. It’s an interactive system of marketing, where information and activity details are stored in a database. Meaning the information is formatted and can be easily retrieved and used. For example, you can easily find out which ones among your customers bought your product for three consecutive business cycles and increased their purchase quantity on each occasion.

For a small business, direct marketing involves three simple steps, which require little financial investment and can be easily done in-house. These are:

1. Storing sales and customer information in a proper format

2. Using this information to identify your key customers, and then

3. Putting into action a plan for getting closer to them.

How to select your VVIPs?

The first step is to store your sales data in form of invoices, with each invoice linked to a customer name. Using this information, you can precisely identify your key customers

Sort invoices by customer, then calculate each customer’s average invoice amount, and the customers in descending order of averages.

Prepare another table, where you rank customers by the number of invoices over the past 12 months. You now have two lists of your customer, one where they are listed by the average value of purchase and another by the number of such purchases

Now split each of the two lists. In the first list, set apart the customers whose average transaction values are higher than the overall average. In the second list, separate out those who have had more transactions than average.

Club the two new lists, remove duplicates, and you now have a list of core customers. Let’s call them your VVIPs.

Try and find as much as possible about them. Delve into their purchase history – when did they become your customers, what’s been their purchase behavior, how satisfied are they with your product or service, who else do they source these products from, what fraction of their total requirement is being met by you, what are the terms others offer, and if your competitor accounts for larger share, why do they prefer your competitor over you?

There are several easy ways of collecting this data, like face-to-face discussion (most of your customers will be actually eager to share their views) noting down your or your employees’ observations, tele call, satisfaction surveys, complaint records, and so forth.

Here small businesses have an enormous advantage over big ones here, because the owner knows the majority of clients personally, and deals with them on a day-to-day basis . This helps in three ways:

1. Clients know that their feedback will go to the top man, and things will get done… unlike in big companies, where the feedback is often stowed away in some marketing department file. So they are more likely to talk.

2. Predicting a client’s future worth is, at best, an imperfect science. Judgment and experience, which the entrepreneur has in plenty, can be worth a great deal more than raw data.

Once you have this information, you’ll have a fairly clear idea of (a) who your most important customers are, (b) which of them are likely to be important in future, and (c) why? Even more important, it will help realize your strengths and weaknesses. (Critical: please continue to do this exercise every year)

What do you do for your VVIPs?

Now take the list of your VVIPs and add up the total revenue they contribute to your business. (You’ll discover Pareto’s principle – they contribute close to 80% of your revenue). Take a small percentage of that revenue – 0.5% to 2% – and plough it into strengthening your relationship with each of them, through their key personnel.

I don’t mean lunches, dinners and Diwali gifts. I know you’re already taking care of these things. I mean the things that will make them feel you are committed to their business and its growth. Extra service, better quality checks on their assignment, deploying your best people to service them, mailing them articles and information they’d find useful, inviting their key personnel to visit your office and get to know your processes and people.

If entrepreneurs take these steps, and you’ll reach levels of customer delight that most big businesses can never hope to attain, in spite their high-priced software and highfaluting consultants. You’ll also discover the truth in the following quote: “Take care of your key customers and they’ll take care of your business”.

(Also published in Business Standard in 2001)

The most used and abused word in Direct Marketing is database. Those who have it, think of it as their most prized asset. “Once we know about our customers, we will able to turn this knowledge into cash, profits and loyalty,” they feel. They are not wrong, and in most case the expectations are fair.

However, in majority of the cases, databases actually yield nothing for their proud owners, leaving them skeptical, sometimes confused, and often clueless. Why?

There are several reasons, and most of these relate to the quality and the use the database is put. But, far more importantly, there is limited or no knowledge of what a good database is all about.

List vs. database

Let me start with the most frequent mix-up, that between a list and a database. What’s the difference?

Invariably, a list is a name and address, sometimes accompanied by a telephone number, with little else known. A telephone directory and yellow pages are two best examples of a huge list of names, residential and corporate, respectively. A list is only a notch above the mass-market method of defining your target audience, as SEC A, B, C, and so on.

There are hundreds of lists floating in the market, though their vendors prefer to call these databases. Some popular ones are luxury car owners, computer owners, income tax payers, and credit card members. Majority of these lists have found their way into the market through the data-entry vendors.

In my experience, they’re an absolute waste of money, not even worth 50 paise a name.

How does a list become a database?

Only when we have the profile, or can guess the profile with fair a degree of accuracy, can you say you have graduated from list to database.

Information on age, gender, and occupation are mandatory for any reasonably good quality database. By adding these three, you can target your communication quite accurately, saving yourself unnecessary spill over and huge costs. To illustrate, we used a list of luxury car owners for one of our mailings. 40% turned out to be names and addresses of organizations, and the communication went to the ‘Director’. What a waste!

But just having data doesn’t make the database powerful on its own. Date of birth, a frequently asked question in database capture forms, is pretty irrelevant unless you offer a product or service which can benefit from such information. Example: items that are frequently used as birthday gifts, like perfumes, books, and clothes.

In fact, even the phone number is irrelevant, unless you plan to call these people over during the next 12 months. After that, high churn sees to it that all telemarketing activity becomes grossly inefficient.

Remember, every bit of information you seek, increases the size of your questionnaire, your cost of inputting (data entry), and data-management. Besides, the length of the questionnaire is inversely proportional to the response you get! It’s very important to get your database strategy in place before you actually get down to capturing information.

Basic information goes a long way

Let’s take the case of a bicycle manufacturer, planning to introduce an extremely snazzy, premium priced 16″ bicycle, aimed at 12 to 16 year age group. Being an expensive product, the manufacturer expects its demand to be limited. How can he use a database to both create awareness and drive traffic to his dealers to buy the cycle?

This is what I’ll recommend:

To begin, take out names from cities where you don’t plan to sell. In a world where everything is so expensive, every saving helps. (I’m not saying people can’t go from one city to another and buy bikes. I’m saying we must prioritize.)

• Take out three groups:

a)      Men and women over 40 years

b)      All boys and girls between 12 and 16, and

c)       Young people in the 16-20 age groups.

• To the first group, I’ll market it as a bike for their child, niece, or nephew. To the second group, I’ll try to sell it directly, as something they can enjoy. And the third group, I’ll request to recommend to their younger relatives and friends. I may even throw in a little gift for recommending.

Without age information, this exercise will be just a shot in the dark, as bad as to mass media in mail.

But what about gender information? That’s important too. Because addressing a teenager as ‘Ms Shefali’ instead of ‘Shefali’ makes a world of difference to the response you can expect from her.

For your database to be actually classified as an asset, turning a list into a database is the first step. Let’s talk about the next step in my next column.

Who is Raj? = What can I sell him?

You know my name, my address, how old I am, whether I’m a man or a woman, and you know what I do for living. Is this sufficient information to practice one-to-one marketing with me?

Yes, and no. Why yes? Because you have some idea about me, and what I may buy.

To begin with, since you know I’m a man in my mid-forties, you can target me for men’s products like deodorants, shirts, shoes, men’s magazines, etc.

Since you know that I’m an entrepreneur, I could be a good bet for certain products and services, like seminars, entrepreneurial development programmers, books, magazines, car loans, credit cards and banking and investment services.

My address in Bangalore gives you an indication of my economic status and income. (Even the fact that it’s a fifth floor flat and not a bungalow may mean something.) This could further help you classify me as ‘very likely’, ‘likely’, ‘unlikely’, or ‘very unlikely’ for your products.

Educated guesses

You don’t yet know my marital status or if I have children. But in our country, you don’t find too many childless, single men of my age. So you can take a chance, and add at least two prospects to me. First, my wife, who’s likely to be my age and profile. Second, a child, who’s probably between 16 and 13. (Actually, my son Rahul is 10, but you were guessing, so it’s OK.)

Actually, when you think about me, you’ll realise you know a lot about me. And by doing some simple analysis, you can do fairly precise targeting.

The power of investigative dialogues

But most important, you can begin a dialogue with me. Which means, you can get to know me better.

For example, knowing that I live in my own apartment, not a rented one, can change your plans for me significantly, as will confirming your guesses about my marital status, and children.

If you could find out my wife’s birthday, I’ll suddenly find scores of gift suggestions in my mailbox, sarees, salwar kurta, jewellery, perfume, watches, and what not.

If you knew I have a Maruti 800, and that it’s five years old, you might be able to sell me both a car and a car loan. And if you knew that I love non-fiction and my favorite food is raan kabab, you sure can make yourself rich.

If you are wondering that’s far too much information for anyone to give, or for you to seek, STOP. Go back and re-read the paragraph. Because, you actually got to know ONLY six bits of information about me – marital status, my wife’s birthday, status on my car and house ownership, and about two of my favorite indulgences – books and the cuisine I relish the most. Yet this information can be of great use to hundreds of marketers.

The best part is that you don’t have to make me answer all these questions in one go. Most people will be happy to share little tit-bits of information about themselves, provided someone asked them honestly, and in simple, unambiguous language, explaining the reason the information is desired.

No incentive is necessary. It’s important to make me appreciate that this information will not be misused and that it is of mutual benefit.

In fact, one of the classic error committed by most over-enthusiastic marketers is to load the questionnaire with tens of unnecessary questions, the answers to which they are never likely to use. A little well planned information is all one needs to enrich one’s data.

A few examples

Let me take a few more examples to explain: If you produce and sell cosmetics, it will help you if you know the tone of the skin, length and type of hair, frequency of using cosmetics and frequency of visit to the parlors for personal grooming.

If you are selling music CDs, knowing my taste of music, whether I own a CD player or not, the amount of money spent on purchasing annually, last five CDs bought, and when, will suffice.

If you market consumer white goods, then the information that can help you could be current ownership of such products, with their years of purchase, intent to purchase in future, and if I’ve ever bought anything on installments.

To build a great database, my advice is, before you ask, ask yourself why you need to know something, how will you employ the information for mutual profit? It sure will make you data-wealthy, and your competition poorer!

Four months back I bought a fridge. Did I buy a product or a service? Is the car I own a product or a service? Your regular department store offers you hundreds of products, but what about its service?

Increasingly, the reasons for buying a product aren’t just its features, or the benefits it offers. It’s the service that accompanies its purchase or usage.

To illustrate, when I began my shopping for a fridge, I actually set out to pick one of the three short-listed brands. I ended up choosing one that didn’t necessarily offer the best value, but it most certainly offered me the best ‘purchase-service’ experience. This comprised of the retailer’s service and ease of finance.

How not to sell?

Take the case of a car. Despite being one of the two most expensive products purchased by an individual, the buying experience provided by most car manufacturers is, at best, lacklustre.

Worst, you are meted out the same treatment whether you visit the showroom to buy an Rs 9-lakh sedan or the ubiquitous small car.

There are no ushers, and the salesman behind the desk looks at customers with suspicion. I’ve yet to visit a car showroom where you get an impression that they are genuinely pleased to see you, where you get immediate attention, and someone welcomes you with a glass of water or other beverage. Yet the poorest Indian is unfailingly hospitable to every guest at his home!

The person who interacts with potential customers is the showroom’s least important employee – he’s the least paid, the least qualified or trained in selling and, not surprising, seems to be the least motivated!

If car dealers sell, it’s because we are car hungry nation, let loose with loads of car loans. And because the market has seen a few fantastic entrants like Swift and Innova.

But it can’t stay this way forever. Will car dealers change then? Let me put it this way, I haven’t seen one old-world make the makeover. Once protection went, and competition came in, they fell on the wayside. There’s nothing to make me believe that car dealers will fare better.

Moreover, since they’re oblivious of customers now, how will they ever realise that they need to change? Are market research agencies going to tell them exactly how disgusted customers are?

Exactly what am I paying for?

I can’t resist talking about the modern-day kirana store, the departmental store. Most do such wonderful job in the areas of comfort, ambience, and display that my expectations of having a pleasant shopping experience are invariably heightened. But once I select my wares and reach the cash counter, my happy spirits turn into angry frowns.

There is a mile long queue. Bar codes do help, but some items still have to be entered manually! Cashiers are blissfully unaware of the freebies that you are entitled to with purchase of certain items.

And you’d be lucky if they have sufficient change! Paying cash, the most critical part of the purchase experience, is the most cumbersome.

Compare it with your local grocer, who politely suggests, “Please carry on. I’ll reach the stuff to your home. Paise aate rahenge!”

One of the leading stores, where I enjoyed my shopping but detested the payment process, has now closed down. I’m happy.

I’m not suggesting that big departmental stores start selling on credit. But I do advise them to ask themselves a simple question: “Once the novelty wears off, why should customers continue shopping with us?”

As they say in retail, “There’s only one rule: location, location, location.” There are only so many people in any store’s neighbourhood. Few stores can rely on single-time buyers; survival depends on repeat business. What are these stores doing to get customers back?

The Moment of Truth

The simple moral is that a No 3 brand can pip the leading two if it provides a significantly better purchase or service experience. The technically backward can make up simply by being helpful. This lesson applies across categories, across borders.

We live in a world where most brands in a category offer just about the same quality and features, use similar technology, and are priced about the same, give or take a percent or two.

Thus, the most critical differentiator for a brand can only be the service that the customer enjoys each time he interacts with the brand. A brand’s past leadership and market share don’t guarantee future success.

Because the service I experience NOW makes me decide whether I’ll buy it NOW.

Jan Carlzon, as CEO of Scandinavian Airlines, turned the loss-making carrier into a highly profitable one within a year of taking over. He refers to these interactions as ‘Moments of Truth’. In his book, by the same name, he says, “During or post each interaction a customer has with the brand, he decides whether he will buy or use it the next time or not.”

An aspect of service that often goes unrecognised is that the customer often links the quality of the service to that of the product. Restaurants are a case in point. Perhaps it’s unfair, but that’s the way people decide.

If marketers want to see their customers again, they should be focused on providing them a consistently delightful experience. Or, what they will see, consistently, is their customers’ back!

(Published in Business Standard in 2001)

Have you ever been to Chandni Chowk? More specifically, Chandni Chowk market?

It’s right next to Delhi Railway Station, a stone’s throw from the Interstate Bus Terminal, and bang opposite the famous Red Fort. Chandni Chowk is perhaps the country’s biggest and most crowded market.

It offers everything you can ever need, clothes, books, electronics goods, computer accessories, automobile spare parts, groceries… Just think of it, and you’ll find it.

More important, everything in Chandni Chowk sells cheaper than everywhere else. If you’re smart, you can strike some unbelievable deals.

In the market, there are tens of shops selling exactly the same thing, at the same price, with almost identical setting. All in a row, one next to the other. Clustered within a few hundred metres, all equally accessible.

Whether you visit one shop or another depends far more on chance than intent, though first impression or a reference by an existing shopper can play some small role.

Your shopping experience will be more or less the same, unless the shop you chance to visit offers you outstanding service – probably the only differentiator that can work in a perfectly competitive market like Chandni Chowk.

But why are we talking about Chandni Chowk market?

It’s because the Internet has created a worldwide Chandni Chowk market. Though we address it by a different name – the World Wide Web – it’s not very different. Equally crowded. Equally competitive. Easily accessible. And equally difficult or easy to choose between sites.

What’s the difference between Rediff, Indya, Indiainfoline, Indbazaar, Fabmart…? They are as similar to Chandni Chowk’s perfectly competitive scene.

Have you tried Yahoo Shopping? The icon declares, “Thousands of stores, millions of products.” Click, and you’ll discover most of them offer the same products and service!

To illustrate, let me share with you something from a column by retail expert Martin Lindstrom. He was asked to judge an international web competition between 100 B2B sites. He visited each of these sites, and these are his observations:

• 23% had the picture of company headquarters in their home page
• 19% used a picture of their CEO
• A ‘handshake’ photo appeared in 29% of the sites
• 32% showed a picture of two suit-clad figures engaged in a serious conversation.

The Web offers anything you can imagine, and many more that you can’t. You can buy or sell anything. Get any kind of information, on just about anything. You can get entertained, titillated, educated or experience hitherto unknown virtual pleasures. It’s a magnificent, worldwide bazaar.

The problems too are similar to the real brick and mortar bazaar: limited time, fatigue, traffic jams, chances of losing your way, remembering the names of the stores, finding your way through the bazaar, and searching through a maze of products and services, choosing, paying for them, and then consuming.

If you are planning to open a web shop, what are the chances of surviving? Is there any way you can stand out in this clutter?

In the next article we’ll explore the first device in beating the clutter – the right name. How to arrive at a name that will improve your odds by at least 33%?

(Published in year 2000)

I searched, but couldn’t get anything within my budget. So, I hopped into another shop, couple of minutes…

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Speaking from the ramparts of Red Fort, the Indian Prime Minister thundered, “India is stronger today than it was 25 years ago.

“Our democracy has found roots, our thinking is clear, our goals are determined, our paths are planned to achieve the goals and unity is more solid today than ever before,” concluded Mrs. Indira Gandhi.

She didn’t mention anything about India’s economic progress as we’d made little progress. Annual growth rate over 25 years was barely 3 to 4%. Average Indian had an income of about Rs.5,200 per year (it now stands at Rs.56,000).

Still, there were positives. The bicycle, telephone and schools had reached the villages. India now produced 11 times more electricity than it did in 1947. Surfaced roads had doubled and industrial production had grown 2 ½ times.

Nepotism was high. Corruption abounded across the country. Kickbacks on arms deal, taking cuts on government projects, acquiring land disproportionately larger than known source of income. Sounds familiar?

This was the year India celebrated its 25th year of independence.

I turned 10 years old the same year. I was in the fourth standard.

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News reports are full of impressive statistics. Airlines from India…

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If she accepts you, you are on your way to seventh heaven; if she rejects you, you’ll get her respect. Because, a girl never hates some one who loves her. Never!

Believe me, your customers are no different.

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