Moving CRM from Behind the Scenes to the Sales Floor

This article recently came out in the Retail Merchandiser. Read the original article here.

For the longest time, Customer Relationship Management (CRM) solutions have been kept hidden from the sales floor, residing somewhere in the back or at a brand’s headquarters. This is exactly where it shouldn’t be because the sales floor is where customer relationships are formed and strengthened over time (which is what a CRM is meant to help with). Customer experience solutions (such as CRM) as well as sales associates play a powerful role in influencing what customers actually buy. Certainly store location, prices and selection are important but most brands also optimize for these factors so these don’t play as strong of a role in the battle for the customer’s heart and mind (and dollar).

The best sales people long ago recognized the importance of forming good customer relationships and even maintain black books on their best customers. But the question for a retailer is: How can we institutionalize this practice and make it a central pillar of success? If sales associates are well empowered, they are known to not only create loyal customers but increase customer spend by three- to four-fold which can have a significant impact to the bottom line.

However, a few challenges remain that need to be overcome before retail brands can fully take advantage of the capabilities of customer experience solutions:

Access to Relevant Data – Today, a good amount of relevant customer data sits at the back of the store where talented analysts are able to tie the data from multiple channels together, turning it into useful information by analyzing it and teasing insights out of it. Typically, this information is not readily available or easily accessible by sales associates. In addition, there is often high turnover among sales associates so utilizing the insights from the analysis to form deeper customer relationships is harder to maintain.

Customers are ‘Omni-Channel’ – Retailers are constantly striving to reach their customers through all of the channels their customers frequent, whether it’s social, the mobile phone, the website or in a retail location. The challenge is that when a customer walks into a store, a sales associate needs to be aware of not just what the customer browsed or bought when they were in the store in the past, but what they browsed or purchased on the online storefront, which products they liked on Facebook, and how they interacted with their brand on Twitter.

So, what is a retail brand supposed to do? Here are a few suggestions to overcome the challenges:

Take Back the Power – Leading retailers are now opting for solutions that can take all the power from the analysts in the back office and can place it in the hands of sales associates through portable devices such as tablets or in-store POSs. For example, Nicole Miller, a fashion designer whose modern designs can be purchased from boutiques and over 1,200 specialty and department stores, ties online and in-store transactions together, giving its sales associates relevant info at its POSs. Now, when a customer wants to purchase complementary accessories to match a dress purchased online, the sales associate is able to pull up the relevant online transaction, view the customer profile and receive cross-sell and upsell information tailored specifically to that customer.

Utilize Technology and Make it a Fabric of Customer Engagement – A leading best practice is to tie different technologies together to create a better user experience regardless of the channel. For example, if a customer self-identifies through a Foursquare “check-in”, the retail CRM solution should be able to immediately alert the right sales associate so they can help them. Furthermore, the sales associate should also be alerted via an in-store tablet or the POS when a premium customer is in the store so they can make the customer’s experience special while shopping.

Weave Analytics into the Experience – Analytics should be used to provide customers with appropriate recommendations about complementary products and also provide instant coupons that can be redeemed for additional purchases to those customers who are most likely to buy. Analytics can also alert sales associates via the POS to capture relevant customer info, if missing, such as the month of birth so a retail brand can send a special birthday offer to incent the customer to visit the store again.

Win Associates Over – Successful brands give store associates the relevant productivity tools that help them boost their ability to engage with the right customers, manage tasks, and, in general, get a lot more done. To ensure sales associates’ success, give them tools so they know which relationships are most important and support them to nurture these relationships over time so their customers continue to buy again.

In conclusion, an engaging and relevant customer experience delivered by sales associates is within the grasp of retailers of all types and sizes, not just the ones with large budgets and a team of analysts. Today’s rapidly changing technology, including the availability of mobile devices such as tablets and the availability of cloud computing, make the suggestions described above easier and cost effective to put into practice.

Capillary in World Economic Forum

Capillary gets featured as a Case Study in the World Economic Forum report on Entrepreneurial Ecosystems around the world. Learn about our growth in India & in Singapore. View the Case Study here. Pasting the text below for easy access:

Overview

Capillary provides easy-to-use, high-ROI cloud software solutions that empower retail businesses to engage intelligently with their customers in real time through mobile, social, online and in-store channels. With a vision to build the first billion-dollar product company out of India and to become a major player in the booming mobile and retail sectors, the company got its start by providing businesses in emerging economies (mainly India and South-East Asia) affordable access to state-of-the-art customer relationship and loyalty management technology. By emphasizing paperless mobile technology, real-time analytics and consumer engagement, marketing life cycle automation and sophisticated, innovative analytics that surpass capabilities of much larger, more expensive and complex customer relationship management (CRM) solutions, Capillary quickly attracted the attention of large global retail brands – and venture capital. Rapid growth has enabled the company to build out a complete, end-to-end software-as-a-service (SaaS) CRM platform, encompassing customer engagement, clienteling, loyalty, big data analytics and social CRM suites. Capillary now serves over 140 major global brands, including Pizza Hut, Puma, Jack Wills, Marks & Spencer, Benetton, Courts, Nike and Nokia, across 10,000+ stores and over 70 million consumer interactions. Clients have attributed up to 10% growth in same-store sales to Capillary’s solutions. Capillary has received numerous awards, including the Gartner 2013 Cool Vendor award and Marketing Magazine’s CRM & Loyalty Silver Agency of the Year Award 2013, and was also named one of Forbes’ 12 Hidden Gems. Capillary is backed by prominent institutional investors Sequoia Capital, Norwest Venture Partners and Qualcomm Ventures.

Timeline/Key Events

Aug 2008
Receives US$ 30,000 seed loan from Entrepreneurship Cell, IIT Kharagpur.

Aug 2009
Wins first client – Indus League (Future Group). Launched Mobile CRM and Loyalty offering.

Sep 2009
Obtains US$ 500,000 in funding from Qualcomm Ventures (QPrize – India Winners & Global Runners Up) and angel investors.

Mar 2010
Launches instant in-store cross & up-selling for retail brands.

Feb 2011
Wins first international client – Store 21 (United Kingdom).

May 2011
Launches Capillary Customer Intelligence, Big Data Analytics & Campaign Manager.

Jan 2012
Launches Capillary Lifecycle Marketer, predictive intelligence-powered customer engagement.

Jul 2012
Launches Capillary Social CRM for better social conversations, engagement and monetization.

Sep 2012
Raises US$16.5 million in series A funding from Sequoia Capital and Norwest Venture Partners.

Dec 2012
Wins coveted awards: 2012 Red Herring Top 100 Global, Forbes’ 12 Hidden Gems and Techcircle’s Top 10 SaaS Companies India.

Jun 2013
Named Gartner 2013 Cool Vendor in India, wins at MarketingMagazine’s Agency of the Year Awards and named one of SiliconIndia’s Top 10 most promising ventures founded by Indians.

Jul 2013
Powers 10,000+ stores for 140+ leading consumer brands, engaging 70 million consumers across 16 countries; 11 offices globally employing staff of 15 different nationalities.

Aug 2013
Launches Capillary Clienteling, store associate task management & customer experience management solutions.

Quotations

Aneesh Reddy is co-founder and CEO of Capillary Technologies. A visionary who believes that advances in technology lead to significant advances in business value and ROI, Reddy works with enterprise consumer businesses to help them put the right communications for the right products into the hands of the right customers at the right time. He is a featured entrepreneur in leading publications such as Forbes, Harvard Business Review and The Economic Times. Reddy is a frequently featured expert at global retail, marketing and technology forums and premier educational institutes such as Wharton and the Indian School of Business. He participates in discussions around entrepreneurship and major technology trends such as cloud, mobile, social and big data. He is also an early-stage investor in various ventures including Tynker, Studypad Inc., ANTfarm and Verious Inc. Reddy holds a Bachelor’s degree in Manufacturing Engineering from the Indian Institute of Technology, Kharagpur (IIT KGP).

Krishna Mehra is co-founder and CTO of Capillary Technologies, where he drives product vision and strategy for the company. As a technology evangelist, Mehra believes that true innovation happens at the confluence of technology and business. At Capillary, he has created powerful products that address large gaps in retail customer engagement and enable hundreds of consumer-facing businesses worldwide to embrace cutting-edge paradigms – including customer engagement technologies based on real-time analytics integrated mobile and social media.

Q1: What was the source of the initial idea, and how did that idea evolve into a viable growing company? How did it change over time?

Reddy: “Capillary was founded during the global economic recession (2008-2009) in the belief it could help emerging economy retailers engage with customers better using CRM technologies comparable in sophistication to those used in more developed economies but made both simpler to use and less expensive through cloud hosting. Unlike many first-time entrepreneurs who wait to validate their million-dollar ideas, we picked two areas – mobile and retail – which were both ‘next big things’ in India at the time. We spoke to many Indian retailers about their critical business problems and identified that even large retail chains had minimal understanding of why customers were not returning to stores to make additional purchases. E-commerce firms have the advantage of knowing their customers well and we wanted to bridge the knowledge gap for traditional bricks and mortar retailers. This turned out to be a game changer for our early-stage customers and was a key growth driver for Capillary.

Two aspects of the company stood out:

We carefully selected angel investors who could add value as the company grew, bringing on board as many as 17 angels over a period of three years, who were all experts in their own fields, including Rajan Anandan, Head of Google India; Venkat Tadanki, CEO of Secova; and Harminder Sahni, MD at Technopark (previously KSA Technopark).

We focused assiduously on both client and investor acquisitions by selling assertively through relationships and demonstrating our ability to win large companies as clients.

As Capillary began delivering amazing results in tough economic conditions, our Indian clients such as Pizza Hut, Puma and so forth began referring us to their counterparts in other markets such as Singapore, Malaysia and the UK, enabling us to scale up globally. The key to Capillary’s success has been our ability to keep delivering new products that increase our customers’ sales revenues and their marketing ROI, and to ensure the continued usefulness of our product suite to customers.”

Mehra: “We started on this journey with a consumer-focused product search and coupon idea. We wanted to do something that combined mobile with retail. Mobile was growing rapidly in India, and retail was beginning to happen. Our first idea was to launch an SMS-, location-based discount search business. However, our early client prospects told us that, while discounts are fine to attract consumers, retailers really wanted more capabilities for understanding, retaining, nurturing and engaging personally with their customers. We shifted our focus drastically, from building technology for consumers to building technology for businesses that would help them to extract more value from consumers using a cloud computing model. Over time there have been many changes to our technology – we have added major product streams, including social, big data and instant engagement.”

Q2: What were the major growth accelerators for your company in the early years of high growth?

Reddy: “Market focus: We started Capillary not with a ‘Big Idea’, but rather with a vision of creating the first billion-dollar SaaS solution company out of India with an extraordinary passion for being leaders in an entrepreneurial ecosystem. That helped us enormously because, instead of fixating on a single idea, we took our direction from market forces and found a unique focus in results achieved with early-stage clients. We were acutely aware of the exponential growth potential in India’s yet-to-be-organized or technology-enabled retail sector. Our vision evolved to accelerating retail growth via personalized and targeted customer engagement.

Availability of clients: Since our value proposition was built on the core problem of driving sales during an economic recession, we were able to quickly convince top Indian retailers such as Pizza Hut, Puma, Madura Garments, Raymond and so forth to come on board as EAA customers. Our ‘land and expand’ strategy – opening accounts with three-month proof-of-concept trials – worked tremendously well. Also, our well connected investors and advisers delivered some of our best long-term customers.

Business model: Within months of launch, our clients were seeing good success with Capillary, which enabled us to build a fairly straightforward business model – a hosted SaaS, pay-as-you-go solution, requiring no upfront investment and placing a minimal burden on resources. A retailer, for example, might agree to pay US$ 300-500 per point of sale per month based on solutions chosen, without any prohibitive hardware or other resource costs. We empower clients to experiment with our platform in a few stores for a three-month pilot engagement and then extend use of the software to more stores and for longer durations, depending on outcomes.

Funding & client references: We received the QPrize recognition from Qualcomm Ventures and US$ 500,000 from angel investors at the right time. This helped us to invest substantially in our initial product offering while the Qualcomm brand association made us a household name. Our international expansion started quite rapidly as domestic clientele referred us to their offshore counterparts. For example, Pizza Hut India led us to Pizza Hut accounts in Singapore, Hong Kong, Thailand and the Middle East; Puma India connected us to Puma businesses in Singapore and Malaysia; Robinsons Singapore got us into their Malaysia business; and Alok Industries in India took us to the UK and helped us to obtain Store Twenty One as our first international client.”

Mehra: “The Capillary team: From the very beginning we focused on building a strong, empowered organization. We deliver exceptionally high-quality work, which differentiates us from our competition and fuels our growth. Most of our early hires were people we knew personally either from previous workplaces or through collaboration in robotics, entrepreneurship and other IIT KGP clubs. Hence, we knew the passionate performers on our team even before we hired them. Today, we employ over 150 highly capable technology, R&D and analytics professionals holding degrees from premier technology and business institutions across India. This has helped us lay an extremely strong foundation for our technology, R&D and analytics functions: a highly capable team, which has expanded without the need for big budgets and through personal connections alone, which has always been our key strength. With almost 400 employees in total, we have virtually zero attrition, especially among staff at the mid-senior level and above. Capillary’s core team has always believed in giving complete freedom to its team members; this keeps our talent engaged and focused on innovating at all times.”

Q3: What role did key aspects of the entrepreneurial ecosystem surrounding your company play in the growth of your company?

Mehra: “The tactical shift in operations: We started the company in Kolkata, a Tier 2 city in India that was in the early stages of becoming an IT destination. We quickly realized, however, that Bangalore – India’s Tier 1 IT hub city – would provide a better ecosystem in which to build our company. Indeed, moving to Bangalore turned out to be an important strategic move for our company since it gave us access to the right investors and advisers. It was in Bangalore that we learned of Qualcomm’s Q prize at an open coffee club and later went on to win the prize, providing a major boost for our nascent company. We also made connections with Qualcomm Ventures, which later invested in Capillary.

Availability of talent: India has one of the strongest technology talent pools in the world, and since Bangalore is home to most of the country’s R&D centres, there was an abundance of talent available to help build our product suite. We built a strong technology and R&D team by acquiring top talent from noted companies such as IBM, Microsoft, Oracle, Salesforce, Dunhumby, Fair Isaac, Box.net, Infor and Dell, while also attracting fresh talent from the world famous IIT and IIM educational institutions.”

Reddy: “The Great Recession: 2008 was quite an eventful year for Capillary. Just as Lehman Brothers was filing for bankruptcy, we were busy procuring a US$ 30,000 loan from our alma mater IIT KGP to start our company. The recession came as an unexpected boon for us – we did not have to pay premium wages to attract outstanding talent and we got great discounts on major upfront investments. We were also able to position our solutions as a good recession strategy: increase share of wallet, sell more high-margin items, cross- and up-sell more assertively, identify and win back lapsed customers, convert new customers to repeat business and so forth. We had a winning value proposition amidst difficult economic conditions.

Largest series A round: With all we had going for us, Capillary was able to raise the largest series A funding for Indian product start-ups (US$ 16.5 million) from leading institutional investors Sequoia Capital, Norwest Venture Partners and Qualcomm Ventures. These firms provide great advisory services and have helped our leadership team to acquire amazing confidence, to build ambitious growth plans for international geographies and to fund accelerated product development.

Moving HQ to Singapore: Singapore is becoming the Silicon Valley of Asia; start-ups are popping up all over, attracting substantial investment wealth. Investors, shareholders and entrepreneurs are all realizing Singapore’s advantages, experiencing fast growth and gaining entry to Asia’s untapped developing market economies. Favourable regulations and extensive government support for start-ups made Singapore a very attractive choice for our new corporate HQ location in early 2012.”

Q4: What key aspects of the entrepreneurial ecosystem surrounding your company that were absent (or existed only in a weak form) created the greatest challenges for growing your company? Please describe and discuss how you met/were impacted by these gaps in the ecosystem and their resultant challenges?

Reddy: “In 2008, India and the rest of the world were experiencing economic recession – not a very encouraging environment in which to start a business. However, we saw this as an opportunity rather than a hurdle. We bootstrapped for the first three years and functioned with very little funding because the investors were cooperating and customers were willing to pay. In the early years, one of India’s largest venture capital firms wanted to invest in Capillary, but they also wanted to change our business model to focus on consumers. Our core team believed firmly in our vision and the direction in which Capillary was moving. We turned down the investment offer and, despite limited funding, grew rapidly over a very short time span by sticking to our focus areas.

Another prohibiting factor was friends and family and the societal mindset in general. The start-up scene in India was very young; most people were willing to work only for large corporations that offered stable careers with job security, which made it difficult early on to attract the right people. Even when our top candidates were convinced to join Capillary, peer and family pressures to settle down and avoid risks caused many to back away from the opportunities we offered. The solution we found was to nurture talent rather than acquire it. Instead of focusing on job descriptions, we focused on people, which led to outstanding early results. Now, as we scale up, we are bringing on board senior leaders across all departments to drive the next phase of growth for Capillary. We intend to invest significantly in the professional and personal development of the people who work for us.”

Mehra: “In the early stages, we faced a lot of infrastructure and regulatory challenges as is the case for most entrepreneurs. But our focus on cloud technology helped us to grow easily and to offer substantial value to customers, while also maintaining great operating margins. But we did spend a lot of our time doing things that were not adding value, as we were part of the first wave of young first-time entrepreneurs in a country still bound by legacy corporate environments and no successful history of product technology companies.”

Q5: At what stage did you invest significant resources seeking to grow your company internationally/beyond your domestic country or region? What factors were pivotal in deciding when to seek growth internationally and where to seek that growth?

Mehra: “After successfully rolling out our solutions for Indian clients, stabilizing our client base and increasingly carving out niche leadership positions domestically, we decided to investigate neighbouring markets. We observed that retailers in regions such as South-East Asia, the Middle East and Western Europe were facing similar problems and using solutions and technologies that were far behind best in class. We knew our solutions could help these businesses and were able to make strong business cases around potential revenue opportunities. Early successes in international markets inspired us to dramatically accelerate our offshore market explorations.”

Reddy: “After our series A funding round, we decided to invest significantly in international markets. For some of the early markets into which we ventured, for example the United Arab Emirates and the UK, it took a long time to deliver results and cost our company millions. Investing in those markets was a very bold move for us, but we stood by our decision and, by the time Capillary started operations in Singapore, our international businesses had begun generating significant revenues and looked extremely promising. In the early stages, much of our R&D investment went to preparing our products for global markets. We started slowly receiving proactive inquires from international accounts and understood there was a strong market for our products globally. Our first few international clients came as references from existing successful clients in India. Those early experiences gave us the confidence to quickly scale offshore operations.

Q6: What were the biggest challenges in building growth internationally? How did you meet or adapt to those challenges?

Mehra: “We initially found it difficult to build sales presence in international markets. For a specialized industry like ours, it is essential to attract sales talent that can build the company’s brand with their existing know-how and business networks, and are passionate about how entrepreneurial workplaces thrive. Since we were looking at three large potential markets – South-East Asia, Western Europe and the United States – we had to be careful not to spread our resources too thinly. What has worked well for us is the three markets approach – every year we decide to open three new territories. First we stabilize the territories, put our teams in place and acquire at least five early-stage clients rapidly, and, in parallel, invest aggressively in the three markets we opened the previous year and that have now stabilized. Markets like Singapore, the United Kingdom and United States are showing great results for us with such a focused expansion.”

Reddy: “One of the biggest challenges Capillary faced was a lack of brand awareness outside India, which made it difficult to generate new business leads. And while our Indian clients helped us move to international locations through word of mouth, this was not a model for fast growth. We solved the problem by creating an inside sales team for lead generation and a powerful outbound sales team operating out of India. While we had always used a push sales format in India, we found this did not work well in western countries. We realised western retailers were looking for more consultative approaches. We also found a large market gap; there were plenty of very expensive CRM solutions aimed at the Walmarts and Tescos of the world, but far fewer serving lower enterprise and mid-market retailers. We positioned our Intelligent Customer EngagementTM suite, which combines CRM, big data analytics and campaign automation, to serve these neglected markets in a cost-effective, value-driven manner.

Another obstacle was hesitancy among large retail brands to work with a very young, seemingly inexperienced team. We overcame this hesitancy with a highly effective ‘land and expand’ approach, initiating engagements via small, high-ROI pilot projects to prove the efficacy of our products and to close increasingly large deals with world-famous brands. Over time, as we have worked with more than 140 retail brands around the world, we have developed deep retail trade expertise and extensive intellectual property, which has become a unique selling proposition for us with larger accounts.”

Q7: What major role, if any, did key aspects of the ecosystem in the country (or countries) you first sought international growth either promote or impede your ability to grow in those international markets?

Reddy: “Expanding to international markets had a great impact on how our company functioned and made decisions. As a young start-up, we followed the Jugaad (frugal) innovation style, making short-term fixes under tight deadlines driven primarily by clients’ whims and priorities. That made it difficult for us to stay focused on our long-term product development vision and may have cost us some growth. As we became more internationally driven, we had to drastically change our development and service delivery style, aligning with our longer-term business strategy and making a strong commitment to long-term planning, effective project management and reflective decision-making – taking time but delivering high-quality work by agreed dates.

Our international expansion has also enabled us to bring on board industry veterans from the CRM, analytics and consumer loyalty domains, a group of experts to which we did not have access in our domestic market and who have made our corporate portfolio quite strong. Now we have the right capacity to tackle large accounts and win massive deals all around the world.”

Q8: Seeking international growth often has both high moments and dark (low) moments. Briefly describe one high moment and one dark (low) moment in seeking international growth.

Reddy: “High moment: The highest moment for us, so far, was winning our first international client, Store Twenty One in the UK. It was an important milestone in our history and we look upon the accomplishment with great pride. It had a dramatic impact on the way we run our company and completely transformed our long-term business plans. What followed Store Twenty One was a series of early international wins. I still remember one of the deals we won, which was at five times the market pricing and one of our first engagements in a new region and taught us a great deal about how to compete with established competitors without compromising on price. Today, we are not less expensive than contemporary competitors but we do deliver much greater value, faster and with less effort.

Low moment: We have experienced great learning on our journey into international markets. For example, sales cycle times were much longer than we had expected in early UAE and UK market ventures. We spent millions and waited months for decisions to be made. It took time for us to figure out that we needed a combination of stable lead generation, steady filling and strong management of our opportunity pipelines and dedicated brand building to establish our credibility in new markets. Patience and how to make decisive, smart manoeuvres in complex sales processes are two things we have learned along the way.”

How to Build a Global Tech Business from India?

I just off from a talk I gave to Wharton Students and Alumni at IIM Bangalore. The talk was organized by Prof. Kartik Hosanagar who focuses on the internet space at Wharton. Building a tech business out of India has its own share of frustrations, challenges and advantages and having beent through the journey, I would not mind sharing the same with other fellow entrepreneurs who are embarking on one.

Here’s the slides from the talk. They don’t say too much (for that you’d have to listen!) but I would be happy to answer questions!

 

Retail Store Systems 101

I gave a talk recently at the Groupon office in Palo Alto, on “Retail from the Other Side: Learning from Working with POS Systems”, and wanted to share the slides for the same.

Retail Systems are a complex bunch. If retail is all about detail, their systems are all about variety, and the variety that I have seen in retail systems over the last few years is mind boggling. If you want to build anything for these systems, you have to take into account the store layout and architecture, whether they are on a POS system, a regular PC, or a thin client, or even on a virtualized environment like Citrix. You have to deal with antiquated system configurations, low memory, challenging connectivity issues.

Perhaps some of the biggest challenges are human related – in adoption and training – retail being a very geographically distributed operation, it becomes very difficult to retrain and ensure the associates are best positioned to use complex systems, but in a simple and efficient manner. You have to deal with language issues, remote connectivity, and busy store hours.

No wonder building store system, and building for store systems is not for the faint hearted.

Pluses and Minuses

Facebook Vs Google, Round 2

The whole world seems to be going gaga over the new kid on the block, Google’s Facebook Killer, Google+. I have tried it, since I hardly every like verdicts (they sound good in retrospect, but most people eat their own words when they don’t go right), I would just share some thoughts.

Overall, Google has delivered a kickass product. It’s a great bit of engineering. For the first time in its life, Google seems to have come out of its engineering style product development and has delivered something that is quite well polished. There are hardly any kinks, the product has been thought through well, including deep integration across all google services. It’s even gone ahead and published Google+ like themes for Gmail and Gcalendar. It takes a lot to introduce a new product across all your properties (the top bar in Gmail, Google Search etc.) on day one, and I commend Google on its confidence. And its welcome change from half dash efforts earlier (Buzz, and Orkut while well done was abandoned).

At the same time, however, the product lacks any irresistible feature that will make me switch. The usual: wall/stream, notifications, @/+ etc. have been added. Circle’s is great UI but not something facebook won’t have in two weeks. Sparks and Hangout are cool, but not at the core of social networking. I don’t think I will ever have the time or inclination to “hangout” on the web with friends, unless its work. And if its work, I would rather keep out of Google+. Sparks is something that I have still not understood, and it seems something Google News should have added.

Moving the Social Web is a Mountain. I don’t imagine people suddenly switching to the new kid on the block. There are pictures, friends and family on facebook which people wouldn’t switch on day one, and I doubt given the way facebook is so deeply integrated in most people’s lives (its the first website I open after email), I doubt making the switch will be that easy. I also don’t expect my mom, my dad and so many other people to just jump on Google+, also because of its (slightly) geeky interface.

Getting rid of baggage is also a good thing.  That said, I do want a place where my new social life is better mirrored. Facebook seems to have so much baggage now – people I may not even interact with, that having a place where I can interact with a fewer people is actually better. I have heard horror stories of people meeting you after years and still knowing what you are upto (and you knowing nothing about them!). In a world where your friendships become limited to what you know from your facebook newsfeeds, having a new place to locate new content is a welcome change. I also want a place where I can interact with people with whom I share some interests and keep it distinct from the rest of the world.

Is Google trying too many things? An obvious question comes to mind. Google is planning to fight Facebook & Twitter in social, Groupon in local offers, Microsoft in enterprise and search, and everybody else in Silicon Valley somewhere or the other. Suddenly, the company that started with “Don’t be Evil” has enemies all over and is fighting all fronts.

Competition is good for Facebook. I think its going to keep it on its toes as it has suddenly in the last few months become the monopoly on your social connections. It needs to think of quite a few things – helping us keep our friends graph better organized, surfacing new and better content (I hate the spam on facebook!), and figuring out ways to become more pervasive (are we going to see facebook browser toolbars soon?).

Bad news for Twitter. The one to lose out the most may just be Twitter. What works for twitter is the one way friendship that geeks love, and celebrities take recluse in. If Google is able to capture these well (circles is in some way one way relationship – the friend connection in G+ is quite complex), it will mean people won’t mind moving to it. In this three way world of Twitter/Facebook/Google, it will be Twitter which has the least stickiness, most spam, and no way of monetizing. The dollars twitter would have hoped to get, would now get split even more. If twitter has to stay afloat, it will definitely need to start thinking quickly.

The Evolution of Mobile Based Loyalty Marketing

(Originally Posted on the Capillary ShopTalk June 2011 newsletter. To see entire contents click here)

Customer Engagement: a 21^st Century Concept?

Customer Engagement is the lifeline of retail and it has long been established that loyal customers form the bedrock of aprofitable retail business. One of the first known instances of customer loyalty marketing dates back as far as 1793, when a US merchant started giving out copper tokens which could be exchanged for free items in the store.

Gradually, the customer engagement efforts moved through time and space to create newer media to reach out to customer s, including Product Catalogues and Direct Mails and to the most modern ones – plastic cards, electronic mail an d paper vouchers and are very successfully being used by retailers.

Loyalty Programs have become an important part of revenues for many retailers. For instance, in India, according to the Indian financial daily, Economic Times, the loyalty program members in India in 2010 is estimated to be 20 million. Lifestyle, for example, draws 50% of its annual revenue from about 2 mill ion members of its ‘The Inner Circle’ programme, while Shoppers Stop derives 73% of its business from its more than 1.9-million ‘First Citizen’ members(Source: Economic Times).

 

 

The Evolved Customer and Mobile Phones

The arrival of the mobile phone, one of the most disruptive pieces of technology ever developed, has changed the human civilization radically over last decade. With almost 4.9 billion subscribers (77% of the world population) today, the mobile as a device is at once personal; its always on, always present, and always connected, and has changed some of our most deeply set habits.

In the same time, the customer herself has changed; she doesn’t carry loyalty cards all the time or remembers the long membership numbers. The mobile phone as a device plugs in beautifully to the changing shopper behavior and rapid proliferation of plastic cards: simplifying the consumer interface and making the loyalty programs easy to participate and maintain.

 

 

 

Mobile Based Customer Engagement Programs

In principle, Mobile Customer Engagement Programs are very simple – the mobile number of the customer is used as the main customer key, leading to simplicity of customer engagement. It enables uniquely identifying a customer, communicate with her easily and cost-effectively, and authenticate her while rewarding – the three most critical aspects of the customer interface for any loyalty programs. Along with this, by combining this with real time communication, m-vouchers, point of purchase analytics, the simple concept of mobile engagement can become a very potent weapon in the retailer’s arsenal.

Simple, Low-Cost and Effective

The most important aspect of using Mobile CRM is to vastly increase the customer base. Our research indicates that most mobile based CRM programs are able to sign up as high as 80-90%, against 10-15% in card based programs. Operating cost of a cardless program is close to zero, cutting out the cost of cards, the effort in logistics and management, paper based forms and data entry, relying on m-vouchers for gratification and  SMS/Email for communication thereby generating massive ROI on investments. The fact that its environment friendly also helps in reducing the perceived cost.

One of the key benefits of mobile CRM is that a retailer can launch a simple engagement scheme with data capture without a formal points based loyalty program. For instance, a simple seasonal milestone program (Buy worth USD 200, and get a USD 25 m-Voucher) program can be used to build customer understanding. After studying the program for a few months, a well modeled points based loyalty initiative can be launched with a far better understanding of the consumer buying patterns.

A few Caveats

Easy as it may sound, its also easy to get the initiative wrong. The systems have to be very robust and simple to use so that data is captured in clean and validated formats otherwise the retailer ends up realizing after months of effort that the data is unusable. Quick search tools across the customer base are an absolute must and the customer database from all the stores must be available at real time at the store level.

 

It’s also very important to instantly communicate with the customer to give her the reassurance that the data has been captured in the system and cannot be put to misuse by the store staff. Additional features can be developed to ensure store staff doesn’t get access to contact numbers to ensure customer satisfaction. There are additional expectations of personalization of communication which have to be met.

In a form free environment, the customer understanding has to be built using past purchases, including the SKUs she buys. Customer Understanding and Analytics become a necessity to ensure meaningful engagement. The ubiquity of mobile numbers also means that fraud detection and mitigation systems need to be very robust and based on analytical techniques to ensure invalid entries are quickly flagged and investigated.

 

Rapid Adoption

Apparel major Indus League was one of the first retailers to adopt mobile based loyalty programs. Within months, the loyalty conversion for One League increased by almost 75% compared to its predecessors. Rachna Aggarwal, CEO, Indus Leagu Clothing Ltd. Said, “The biggest benefit members enjoy is that ONE League is now Instant! Earlier, it took upto 15 days to credit points to a loyalty account, now it is done the moment the purchase is made. . Capillary’s !nTouch allows us to gratify our customer instantly through SMS updates, m-vouchers etc. the moment a transaction is done.” Similarly, marquee Indian brands like Peter England, Dabur’s newU, Odyssey Bookstores and Puma India have also successfully launched mobile loyalty programs.

The simplicity of Mobile Based Customer Engagement means that retailers of all sizes can now use powerful data capture tools to build a large customer data base, learning about them and effectively analyzing their behavior and using insights to drive repeat visits and higher transaction values – all that at a low cost.

 

Apple’s Vision of the Cloud and why its flawed

Yesterday, Apple announced its new iCloud service along with a lot of improvements to the Max OS X and iOS 5, and while I did like what I saw, there are a number of reasons I may not use it.

First, what I liked:

1. I like Apple’s vision of the cloud, as against Google’s. I don’t think the cloud is going to replace our rich applications. Having used both cloud as well as native rich apps – rich apps are here to stay the cloud will make them stronger. They are a lot easier to use, documents look a lot better and they are far more handy. A browser based app may be present as a fallback option when you don’t have anything handy but that’s far from becoming the default.
2. I like Apple’s cloud being a personal cloud rather than complicating with as a “family cloud” or “friends cloud”where everything automatically gets shared with everybody. I think that just befuddles the hell out of things and these have never taken off.
3. The iCloud makes the cloud wire-free. You no longer need to connect your PC / iPhone / iPad and sync all of them. Just importing pictures from a camera is such a big chore usually and Apple’s a master at cutting out chores.
4. The iTunes Match service is a killer. Of course, I still wonder how they managed to negotiate out such a deal with the music publishers but the fact that they did, and hid all the junk under the carpet is very commendable.

And now, what I don’t like:

1. Apple’s Cloud is closed. It essentially locks me in to Apple’s technology. As a person, I like to keep trying out new things – I use a
   PC, an iPad and a Blackberry and I am usually happier to navigate diversity, and the iCloud service means that I either need to change my habits or look for alternatives (Hey you dropbox, instapaper, remember the milk – you still have a future!). I would like to write a document on my PC – read it on my iPad, edit it there and use it on the go with my Blackberry. With Apple’s iCloud, my world would begin and end with Apple, which is a compromise I am unwilling to make.
2. Apple iCloud doesn’t give me any integration options. There doesn’t seem to be a way for app developers to retrieve stuff from the cloud onto other platforms. This is precisely why I don’t use Google’s Buzz but I use facebook or twitter – because they are everywhere!
3. I still can’t get over MS Office. I have not really found an alternative that can make me switch – openoffice, google office, pages – and I really wonder if I will be able to use anything else for sometime to come.
4. iTunes doesn’t support enough regional content, and I hardly buy any music from there as a result. There’s a whole world out there beyond what we see – and I wouldn’t want to close my ears to it. Also, I would want my content to be available on my non Apple devices. And they may not be as good today, but I wouldn’t want to rule out innovation.
5. Apple doesn’t give me a fallback web based interface for accessing my cloud stuff – a lot of times, I end up checking my mail from others computers since I travel a lot and find myself in places where Wifi is locked and I don’t have a data plan on my iPad/phone. I want at least some way to check things out.

I guess, I just like way too much diversity and I will continue to use all the other services that I used earlier – and use the iCloud only for things which don’t lock me in.

We are the Champions: Lessons for a Startup

Champions

Congratulations on the World Cup Victory! A nation’s hopes have been pinned on this victory and this is what our boys have achieved in Mumbai. A billion (and a quarter) hearts pounding together can product a massive impact, and it’s in that din and glory that we will always remember forever our lives.

The Cup of Victory

A victory, however, doesn’t come easy. It takes years of hard work, it takes months of preparation, a lifetime of determination and all that culminates in that one day when all your hard work can either puff up in smoke or create a bang that lifts a nation’s spirits. Champions are forged in this journey – people the nation looks up to, ordinary folks like you and I – who came into this journey as boys but leave as men who leave a mark. However, individual brilliance cannot win alone – the Indian victory was a true team effort – where each man worked harder, complemented each other, backed up his neighbour, and produced a result that far grander than an individual performance – they all gave it their 200% to achieve what not many of us have seen in our own lifetime – a World Cup victory. It’s the story of believing in yourself, it’s the story of the silence that you feel when the whole stadium is erupting but all you see is the next ball. It is the story of chasing a dream – a shooting star, a wish, an idea, a passion – whose true denouement is the victory lap.

In a startup, we chase a similar dream. It’s born of an idea – an idea that we can build something that is larger than ourselves, an idea that one has the ability to build a winning company that the hearts and minds of its employees, customers, stakeholders all around. An idea that innovation can produce a killer product and when you back it up with awe inspiring service – it produces a cracker and the world sits up and takes notice.

Most importantly, it needs the team, its employees to have played like champions. Each an every person – from the smallest right upto the top, has to play his or her part in this larger story, essay a brilliant individual performance in this difficult stage, and at the same time, play the ultimate team sport, come together as a collective, back each other up, and come up with a whole which is far greater than the sum of its parts.

The most exciting part of a startup is not what you build, or what you earn, its about chasing that dream, living that vision, winning in each step, the small battles and the big war, the ability to do something for which one is known always. It’s a long and arduous journey – its never gonna be easy, but its your co-passengers who make sure it never gets too hard. It’s a journey of following an idea till you get to an appropriate climax – and even if the climax is not to your expectations, in most cases you would enjoy the journey. Because at the end of this journey, we would have been there and done that. It’s never about where you end up – it *IS* about chasing a dream.

Congratulations once again on the World Cup win, but remember, the time is NOW.

The Maruti Story

by R.C. Bhargava

Maruti is one of the few (perhaps only) shining example of a public sector companies in India to have achieved global competitiveness and made it big, giving the leading private companies a run for their money, and its story has to make for very interesting reading. What was the vision behind starting a car company in India? Why did they chose Suzuki as a partner? How did they navigate the red tape that ails most of Indian industry? How did they build a leader in quality, changed the rules of the game to make auto manufacturing customer centric?

Who better to tell this story than R.C. Bhargava, the man who built Maruti during its formative years and is still associated with it as its Chairman. In a very intruiguing account spread over two-and-a-half decades, Bhargava describes how Maruti was conceived, nursed, nurtured, grown and built into a giant of our industry.

What makes the story very interesting is the light it sheds on the changing face of Indian industry, since Maruti as a company owed its origin to the Emergency, nationalization, the license raj and saw through the changing economic climate of the country. The anecdotes of the author show how the company and the economy as a whole transformed, and gives us a view into times completely alien to our young existence.

I have read a number of books by the giants of the Auto industry – My Years with General Motors by Alfred Sloan, Lee Iacocca’s auto-biography, and I can actually identify with many of the things Bhargava describes as a result – the focus on quality, worker relations, dealer relations, focus on marketing and model development, emphasis on servicing – all of which were unknown to Indian industry at the time, and the way Bhargava describes how each of them were envisioned, and implemented, shows their foresight, strength of will and commitment.

Apart from that, Bhargava also describes some unique problems of being an Indian company – that too a PSU – where accountability and responsibility is a big issue. While we blame PSUs and the Government of demonstrating red tape and acting slow, the book also gives the lay reader an idea of why its so – most managers and civil servants will rather follow protocol and ensure that their decisions are always above board and measure up to the right standards of probity since the downside of being caught in a political storm is very high. Bhargava himself describes a number of CBI enquiries and charges of corruption being levied by him by political opponents who wanted to settle an old score. It’s only justified that in all of these cases, the individual manager would want decisions to be taken in such a manner that responsibility is shared and nobody can be “blamed” for any particular decision later. The fact that the Maruti management was able to cut through this red tape and still build a company of its stature is remarkable (of coursing, having Suzuki as a JV partner and blaming tough decisions on them is an important aspect of it).

Some key take aways for me were:

1. Having a lofty vision and very high ideals to begin with are very important to build a sense of purpose amongst the team
2. Having a shoulder from which to shoot from – and people who are above the circle of responsibility which enables justification of key decisions and pushing them through
3. Communicating the right ideals of all stakeholders, and leading by example (uniforms in Maruti are still followed; I had even heard one of my classmates from IIT complain about it!)
4. Managing bureaucracy, relationships, governments, partners can be extremely tricky and once again one has to be strong up front
5. No compromises on quality

One grudge I have against the authors is that there are so many anecdotes that some of them are not as well covered – perhaps the editor could have given some direction on pacing the book well. Similarly, the book seems to sag in places and its easy to lose interest.

For anybody who really wants to understand the evolution of Indian industry, this is a great resource.

An Evening with Latif

Seeking The Beloved

I attended an evening of Sufi Sindhi music organized by The Kabir Project – the evening was a wonderful experience to say the least.

My interest in Latif had been piqued due to the detailed mention he got in The Empires of the Indus, with his risalos being quite popular and a big celebration in Bhitai on the day of his urs. He is quite obviously one of the most famous icons of Sindhi culture. More about the Shah:

Shah Abdul Latif Bhitai (1689-1752) is one of the greatest Sufi poets along with Rumi (1207-1273) and Mir Dard (1721-1785), but relatively speaking lesser known. His poetry draws on the power and beauty of Vedanta and Islam melding the two philosophies into one poetic and spiritual vision. His major work is the “Shah Jo Risalo” and his poems thrive today as a vibrant oral tradition being widely sung, quoted and loved by both Hindu and Muslim communities in the Sindh region on both sides of the Indo-Pak border. He takes the popular love legends of the region and speaks through the voices of different woman protagonists. Sometimes he is Sasui, sometimes Moomal, sometimes Sohini and sometimes Marui… and through their journeys of seeking the Truth he expresses his own. His poetry creates a tantalizing dance of expressions between the sensual yearnings for the earthly Beloved and the deeply meditative yearnings for the transcendent Beloved.

What made the event outstanding was the organization – the music was completed by a sampling of Sindhi cuisine, including their samosas, tosha, daal and halwa. There had souvenirs available in the form of t-shirts and books. The artwork and the presentation playing in the background was absolutely fascinating. Shabnam Virmani, as the emcee weaved a number of stories and kep the audience enthralled. even the sign boards to the venue said, “Seeking the Beloved? … This way”.

Just putting down a few couplets that I really liked

all bear
some burden of sorrow
I carry a full load

I seek
sellers of sorrow
most have left
the marketplace

and

seeker
ordinary ears
do not decipher whispers

throw away
sell these
donkey ears

tune into the inner ear

The only comment would be that the second part (Waee music) was probably not very mellifluous and for popular consumption. While the authenticity of the experience is very important, the organizers should have kept public taste in mind.