Give your customer a comprehensive solution not just a product!

 

In 1988, I was appointed the distributor for Photophone India Ltd., the manufacturers of Hot Shot- the first cameras that were introduced in the 35mm and 110mm format. These were supposed to be a replacement to the Click III from Agfa which were old and archaic.

Image courtesy Digicam History

I was expected to distribute their Konica color films, photographic paper, chemicals and equipment in the eastern India Markets. I was asked to handle the states of West Bengal, Bihar, Orissa and Assam and all the North Eastern States of India. Yet the brand that I was supposed to promote, Konica, had little or no market share in the Eastern India Markets. Apart from that, I had never even been to Calcutta, let alone have an understanding of that market! I was both ecstatic and afraid at the thought of chartering a new territory! Folding my entrepreneurial spirit on my selves, I told myself challenge accepted and went straight ahead with the distributorship.

Back then in the erstwhile Calcutta, the photofinishing market was controlled by the Sanghvi family under the brand name Snap Fotos. Today the famous Sun Pharma belongs to the same family. The only other brand that controlled the market belonged to the Roy Choudhury family. The market there was otherwise highly localized in areas where the labs were. We called these labs “stand alone” as they were unlike the “chains” mentioned above. During those times, the two main competing brands in the photofinishing businesses were Konica and Fuji.  Although priced the same, Fuji was clearly the market leader.

Market Contenders

Beating a market leader in a market that you have very little knowledge of is a feat in itself, so instead of getting intimidated by the task at hand, I decided to use strategies that had worked well for me in the past. To break through the market, I didn’t try to break into large consumer markets in my first go. Instead, I focused on the smaller ones who were largely ignored by the major players. I also worked at becoming their solution provider and not just their product distributor.

To execute the above strategy, I created a service I called “The Konica All Clear Service”. I requested Photophone to provide me with a Ph. meter and a Densitometer, complex electronic equipments that required some training and skill to read. The Ph. meter checked the Ph. of every chemical used in the process of photofinishing, while the Densitometer checked the final results and ensured that the color balance of Red, Green and Blue  was perfectly matched, thus giving you a bright, consistent and superior quality of prints.

Now every chef knows that the proof of the pudding is in eating it, so in order to get my pitch perfect for the stand alone lab owner, I got a set of prints printed by either Snap Fotos or at Roy Chauhdhari’s “chain” of labs, depending on the area where my “stand alone” lab customer was located. Armed with this set of negatives and prints, I went to the “Stand alone Lab” and requested them to print the negatives, like any other normal customer did and paid them for these prints.

Stand alone labs

Once I had their product, I would then take out what I had previously printed at the “chain” and compared the two right in front of the owner. Quite naturally, the lab owner would get defensive about his quality and service. It was precisely at this point that I would ask him if he wanted his prints to look as good as or even better than the one I was comparing his work with. With a look of sudden surprise on their faces and a bit of suspicion in their eyes, they would cautiously say yes just out of curiosity to see what magic I could do.

I would then roll my sleeves up, and ask to be taken to their processing room. Once there, surrounded by the owner and his staff, I would then open my bag and take out my instruments one by one and display it on the table. Using these instruments I would then take my time and check the Ph. of their chemicals and  proceed to give them my diagnosis. I would always go one step ahead and make the necessary corrections in their chemicals and print the same set of negatives right then.   Lo and behold! The prints would turn out better or at least as good as the competitor “chain”.  What the stand -alone lab customer didn’t understand was that quality is 99% based on the conditions of the chemicals used in your photofinishing equipment!

After every one of these sessions, I would always be invited to the back office for a cup of hot chai and snacks! Most of these lab owners had become my friends as I had given their businesses a lease of new life! I would send my engineer every 15 days to check their chemical parameters and make corrections by adding additives, if necessary. We would then issue an “All Clear Certificate” from Konica Corp. (Japan) to the lab owner, provided he met our more exacting quality standards, and of course bought our chemicals, photographic paper, and films.

Getting the Konica machine installed at the lab.

Selling Konica Photographic Paper and Films, Machines, and Chemicals was a natural extension of our “All Clear service”. It was something that we found that needed hardly any “selling” once we had explained the advantages of maintaining the chemicals and giving their customers consistency in quality. I considered all of the above as the foundation for all my future sales strategies and didn’t charge the owners anything for the services we provided. This was a win-win situation for both parties since it also saved them huge capital investment in the purchase of the diagnostic equipment, the Ph. Meter and the Densitometer and it ensured that they were maintained on my customer list.

By the end of the year, I even persuaded Konica to make their prices at least 1% higher than Fuji, thus positioning it as a superior product based on price. The big “chains” soon followed automatically. Just under a year, the perception had changed as most customers had begun to perceive Konica as a better product. I say perceive because this is the magic of a cleverly designed and executed sales strategy. There was no difference between Konica and Fuji; in fact it was simple case of applying better quality control!

By giving my customer a comprehensive end to end solution and not just a product, I had won over customers for life. I treated them fairly and with respect. In the span of one year, I had managed to raise Konica’s market share from 2% to 24%, an unparalleled feat in the history of Konica, India. We had challenged the Goliath and had managed to slip the carpet from under their feet!

Converting from Fuji to Konica with the All Clear Service.

For all the startups out there, this is the lesson I wanted to share with you too. You have to  provide your customers a solution, not just  a product! By providing my customer a comprehensive service free of cost; ensuring that the quality of his end product was as good as it should be; by saving him huge Capital investments otherwise impossible for him to make; I had offered him a comprehensive solution. Buying my products became a natural extension to the service I provided. Konica began to replicate that model all over India and soon became market leaders in India.

No matter what business you are in, this lesson can be applied to your business. You just have to be genuine and creative enough to execute it!

To be continued…

Parag Shah

September 2012.

 

My First Customer Service Strategy

Under Promise, over Deliver. Easy to say, hard to implement.

 I don’t come from a family of entrepreneurs or businessmen. My father was a renowned and a successful doctor in a small town near Pune called Daund. He was someone I idolized as well as respected. His lessons on how being a good human being have always remained with me till date. He would always say, “Parag our traditions and customs tell us “Matru Devo Bhavo”,  to treat your mother as your first God, “Pitru Devo Bhava” , your father as the second, “Guru Devo Bhavo” , your teacher as your third and of course “Atithi Devo Bhavo”,  your Guests as your last God.” He would then say “For me, I say “Patient Devo Bhava!”

His simple explanation was that his patients are his God because they are his best teacher. He firmly believed and valued the practical knowledge he got from his patients than the bookish one that gathered dust after medical school. I think somewhere there was an internalization of this in my psyche from those days. I am however still working on whether one should really treat his customer his God or not. I feel that, that would be stretching it too far. I guess one can call customer’s your best experiential teacher.

I believe that businesses cannot be as noble as the medical profession. I would trivialize the matter by comparing them.

Trained with these noble thoughts, I started my small photo finishing lab on the third floor of nondescript building. My starry-eyed glass dreams were soon shattered as I sat in my ac office waiting for customers to just walk and hand me over their business! I had no customers for the first few months! Getting customers those days was hard as people were not experimental and fickle as they are now! Luring them with attractive offers or promotions was not an option for sustaining a loyal customer base.

I had to work very hard those days and taught myself every single aspect of my business right from how to raise an invoice, to a maintaining a sales register, a production and consumption report and even a wastage report. I also poached an expert in my industry from whom I learned the technical aspects. How I poached an expert makes an interesting story to which I shall do justice in a different blog!

After months of near bankruptcy and uncountable amount of hard, back braking work my business finally began to show signs of growth. Those days I had vowed that I would eat sweets only on the days on which I would get 100 films for processing. Back then the delivery of a processed film used to be 6 hours and it was a long laborious process. Armed with my first 100 films, on the day after the “Ganesh Chaturthi”, I decided to celebrate my victory with an ice cream party on the house for the staff.

Like most startups today, I too had popped the Champagne when the things were just about to go bad! Remember when things are going good always be on your guard! After the party, when we all got back to work we suddenly realized that we did not have the efficiency to deliver all the 100 rolls in 6 hours! I had not accounted for this as I had not done my ground work properly!

We were up the whole night processing those films. Even my front staff stayed behind the entire night to help finish the orders. At around 7 am, having worked all night, we had still not finished half our order! I and my staff simply didn’t have the physical stamina to continue. At 8 am which was our opening time, we had customers streaming in to collect their films only to be met by bleary eyed owner and staff and told that their order was not yet ready! That day we were like lambs in the slaughterhouse!

My customers looked something like this to me at the time!

Guilty and ashamed, we somehow managed to finished deliveries over the next 24 hours but we had lost our reputation in the market! The cost of over confidence can sometimes be much more than one estimates! All the hard work that I had put into building my brand in the last one year had simply been washed away in those two days! Not ready to give up and fold shop easily I wiped my slate clean and started all over again. It took us almost 6 months to win back their confidence and their business.

True that!

I had learnt my lesson by burning all my fingers following which I set proper systems in my startup. Here’s how we did it at Snap back then. I made a production chart given to the staff at my collection counter on a daily basis. The minute a film came in, the counter staff would estimate the delivery time based on the production chart and hand over receipt with the estimated delivery time to the customer.

The delivery time always had an additional hour added to it as a buffer in case of unexpected challenges like power failures etc. Whenever there was a power failure, the counter staff would then call the customer in advance, and inform the delay and apologize, and sometimes offer an extra discount or a photo frame.

Even though this added slightly to my costs, it is always better to tell your customer in advance about a failed delivery. No one likes surprises, least of all your customers, who expect nothing less than the highest standards from you even if they pay you peanuts for it.

But always remember, a happy customer is your best advocate! Customer Delight can give you more satisfaction from your business and can even bring in more business than any marketing gimmick or sales promotion. 

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How to build bad-weather friends for your business!

Treat your supplier as you would treat your customer.

Sometimes, it’s amazing to see how small little uncalculated gestures towards people who you work with can actually become your business’s lifeline somewhere in the future!

One of the best lessons that I learnt very early on during my snap photos days was to always, always treat your suppliers with respect. I had learnt that if you treated your suppliers with respect, they will go out of their way to help you, when times are bad for you. In business only they can be your best bad weather friends! Let me narrate an anecdote to drive my point.

I don’t understand why most purchase department managers think that their suppliers have to wait long hours, be treated shabbily and should always be put to a fight with another supplier to get the better of them. Having been at the receiving end of such treatment when I was running around for my loan, one thing I was dead certain of was to never treat another human being like that ever again!

I was once travelling by car to Mumbai, in my second-hand  Maruti 800 that I had bought from someone who had worked with me for a several years.  It was a family trip for a relative’s marriage. Back then the old Bombay-Poona highway was a nightmare to drive upon and would take anything from 5 to 8 hours to commute between two cities that were barely  159 km from each other.

We had our customary halt at Khandala for the famous Sangam Batata wadas and as we were coming out, I saw a gentleman standing near the parking. Upon closer look I recognized him as I had met him a couple of times. He used to work with Agfa Germany India Ltd in their sales department. He looked pretty stressed out so I went up to him and asked him what was wrong? He pointed towards his bus which had a breakdown.

Although he didn’t tell me why he was stressed, I felt sorry for him and decided to ferry him to Bombay and informed my wife and children that he was joining us. Now, it was one of those trips where the family was going together after many days, and hence the children and my wife took this as an intrusion, but had no courage to argue with me. Judging the intrusion by their crestfallen faces, Jayant offered that he would manage on his own. In any case there wasn’t enough space to accommodate passenger number 5. But as usual I would have none of it and convinced him to join us.

The trip to Mumbai thereon was obviously a long stone cold silent one.  Just as Jayant was getting down from the car, he said “Thanks Parag. I will be ever grateful to you for this help.” He mentioned that this meant a lot to him since his son was unwell and that it was crucial that he reach home as soon as possible. We dropped him near his house and proceeded for our wedding. And for a long time I had forgotten about this episode until many years later.

Jayant would often visit Pune and we did go on to do business together for many years. He said he loved “Puneri” food and I would often take him out for a customary meal of “Puneri” food on Laxmi Road. He always appreciated the fact that I treated him with respect. I would never ask him questions about how my competitors were doing, what price they got their raw material, who was doing what expansion. Most suppliers are privy to very sensitive competitor information. But I realised that I would be putting him in an ethical dilemma if I did ask him. But whatever, information he would give during the course of a casual conversation, I would listen to intently but not respond to it. Besides, as a matter of principle I never ever criticised competition.

About 3 years later after the incident, the Indian economy went into a major financial crisis. Photographic paper for which India dependent on imports was not available anymore and you could only get to import the photographic paper if you deposited 250% of the value of the goods and that to 3 months in advance! There was no way anyone of us in the business at the time could raise that kind of capital overnight. Moreover that would be 750% more than the usual requirement.

Those days were equivalent to the Wall street collapse. As the months progressed most of my competitors had to shut shop. I too was on my wit’s end and that’s when I one day called up Jayant and said, “I am running out of stock. Can you help?” “Parag, there isn’t anything anyone can do for you. The whole Economy is in shambles and not much hope left.” He ended the conversation by saying he will try to do something for me.

Seven days later, I got a call from Jayant saying that their principals from Germany are here, and he has arranged a meeting for me with the Director of Bayer Germany. He suggested that I could request them to trust me and ask for credit for the purchase of photographic paper. And so I left for Mumbai the same day.

Before my meeting with Director, Jayant had done the groundwork and had pitched me as one of the most loyal and honest customers of Agfa Germany. He knew that the German’s appreciate honesty and loyalty as against volumes. I was a small player at that time and did not contribute much to their total sales. Agfa was a large conglomerate, but Jayant made sure that I got 15 minutes with the Director. I used all my persuasive powers and persuaded him to give me credit for the imports. He said, he would give me 180 day credit. The man liked me! So here was this little guy in Pune who was the only one who had access to imported paper. I was expecting, that business would double owing to the fact that many labs would close down. I placed my order for the 1^st month and had my stock and my lab was up and running!

Jayant the supplier, who was not treated well by other competitors, went out of his way to make sure that my business survived. Why?Probably because I helped him when he needed it and I have always respected him even as a supplier.

The lesson for me was to know that all human beings are equal, and they all deserve our help and respect. Don’t ever do it with an expectation of anything in return. And treat all your suppliers with warmth and respect. My wife would go to market yard every week to buy her vegetables from the largest vendor. I would fret over the fact that she was trying to save a few bucks! I soon realized that she looked at it as a great social event!

She would go to this particular vendor who is the largest wholesale supplier of vegetables in the market.  That man ignored her for months. But she persisted. She slowly got him on her side. She seized the opportunity when he said he wasn’t  getting an appointment with a leading heart specialist in Pune. She drove him to the heart specialist in her car. Got all is investigations done. Helped him with his surgery and made sure the family was at comfort. The old man today sends us his best vegetables every morning, at a real low cost, and picks and chooses the vegetables my family will have .

The next time I am going to talk on trust your employees.

Back them , when they need it most!

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Welcome to my blog!

 

Welcome to my blog and thank you for spending time here.

If you don’t know me or what I do and haven’t yet read my about me page then here is a brief on where I come from and what I do.

I’m a serial entrepreneur turned teacher/coach/mentor. Over my career spanning 3 decades, I have started three successful ventures and one not-for-profit Educational Institute-FLAME.

While at FLAME I taught Entrepreneurship and actively mentored the start-ups and students there.

This blog is an extension of the classroom learning and a platform for meaningful interaction and  exchange of knowledge and wisdom.

Hope you enjoy my coming posts and do contribute so that we both can benefit from this opportunity.