Cultivating customer relationships – Case study in Philip Kotler’s book on Marketing Management
For marketers who target a large customer base, as is the case with FMCG marketers, it is unviable for a single company to build one-to-one relationships with customers. One organization, rural relations, started the business of networking with villagers, developing direct contact with people in a large number of villages in 10 states in India. This organization provides an array of services on commercial terms, such as subscription-based information about rural markets, product sampling, franchisee identification, lead generation, customer profiling, direct mailing, recruiting and training of people from rural areas and media, public relations, and on-ground activities.
Many companies in FMCG sector utilize this specialized knowledge they want to communicate directly with some of the constituencies in villages. As an example of one such activity, rural relations wrote to a large number of people in villages that act as feeder markets to other rural markets about hygiene health, and oral care. When villagers sent their queries, it provided hand-written replies to each of them. The relationships built by rural relations in these villages are leveraged by FMCG majors when they introduce new products or they are re-launch existing brands.
While undertaking such campaigns, rural relations collects feedback and provides hand-written replies to any queries, which help in strengthening the relationship further.
Activity based “select” case studies
Oral Education Programate
Empowering rural youth
rural relations: A Socially-Driven Co
A case study in Economics Times by:
Prof. Madhavi Lokhande,
Welingkar Institute of Management,
It was late in the evening on Friday and Pradeep was looking out of his office window deep in thought. His mind went back in nostalgia to his maiden efforts in gathering information about villages, the farmers markets and the residents. What began as a simple initiative 25 years ago of sending a postcard to opinion leaders in the villages eliciting basic information about the village, had today grown into a huge business opportunity. In his vision, building a comprehensive and constantly refreshed base of information about rural India could be leveraged both for business and social development, a goal close to his heart. Running an organization sustainably with a positive social impact excited him and he had been successful thus far. The challenge for him was to monetize this business of ‘doing good’. What kind of a business and revenue model would work for the organization and also help rural relations to become a force to reckon with in rural development. Pradeep pondered “Can the model adopted for Maharashtra, be adopted in other provinces as well?” Pradeep had the vision to make rural relations happen two decades ago – but the effort was at a time when there were very few people who envisioned Rural India as a ‘market’. Today, every marketer has his focus on Rural India, which changed the rules of the game for Pradeep. “How do I scale up, and add more strategic units to my business, and yet not lose the flavor of what I had pioneered to do?”
Pradeep Lokhande – The Person
Born in Wai, a small province in the state of Maharashtra, Pradeep hailed from a family of modest means. He studied in Wai, and barely managed to finish his schooling. He managed to scrape through all his examinations, with bare minimum pass marks and was consistent in his academic performance till he graduated.
After graduation, Pradeep moved to Pune to stay with his uncle in a joint family. His uncle ran a cafeteria, where he first started working. After work he rearranged the furniture there, made himself some space and slept there on most nights. During the day, he would serve tea in the neighboring “Officers Club”. He was awed looking at the respect the officers commanded from the visitors who dropped in at the club. Watching the officers, he had his first big dream – becoming a “saheb” (a gentleman) himself one day. He was simply in admiration of their professionalism, work, stature and social respect that they commanded. He wanted to be addressed as “sahib”, count bundles of currency and own a car with bright red and yellow tail lamps! He wanted to be able to share a cup of tea with these officers one day.
Pradeep always knew that desire; dedication and effort were the three key ingredients to success, and the stint at officer’s club made him realize the importance of education as the fourth one. In pursuit of his dream, he enrolled himself in a distance education program specializing in marketing. To garner practical experience, he convinced a friend’s father who had a business selling paper tissues to allow him to market them. On completing his diploma, he was selected during the campus placement process by Johnson & Johnson Company to market their products in Madhya Pradesh. This being his first stint with corporate, Pradeep wanted to do his best. He knew he had a big dream, only the vision and the characters in his dream were hazy. He had to gain a lot of practical experience and a feel of the markets to be able to understand business. He travelled extensively in Madhya Pradesh and worked with J&J for
one and half years. This gave him his grounding in marketing to rural areas. Over the course of his stint with them, he managed to save INR 45,000.
With this accumulated capital, he decided to start his business. He took up the distribution of bakery items in Pune with a couple of friends. He would pick up the baked stuff from the distributors and would drive the tempo truck himself carrying and selling stock to the retailers. He toiled from eight in the morning till late in the night. All this hard work fetched him at the end of the month a net return of INR 10,000. His friends who were his partners in the business were not interested in such low returns and withdrew. His first attempt at starting a business on his own had failed.
He chanced to attend a lecture delivered by a Director of a foreign bank who opined that the future of business lay in rural India and that the potential was almost limitless. This set him thinking and a germ of an idea grew in his mind. What if he could run a business with rural India as its target market while at the same time contributes to its development. His initial thoughts were unclear on how to go about it. One thing he was sure of – he would help the rural youth of Maharashtra, who had stars in their eyes and yearned to be successful. He would try to inculcate good reading habits, expose them to computers and provide them with the opportunities and resources to make it a reality. He became a man possessed with that mission.
He embarked on a journey of discovery to find out what makes rural India tick. Though he hailed from a village, he knew deep down that there was more to life than what meets the eye or what he has lived through. He wanted to know the essence and core of village life – its customs, traditions, cultures and mindset of the villagers. He personally visited 4000 villages across the country in his journey. He strived to understand the rural administration methodologies, local markets or the bazaar-haat systems and the education infrastructure and process. During his visits, he established direct contact with opinion leaders and started recording obscure details of the local economy. His journey of discovery exhausted all the capital that he had. He had to sell things from home to survive. Family and friends thought he had lost his mind, investing time and money to collect data from rural areas. Friends tried to dissuade him that this did not make any business sense, and that there was no future in it.
rural relations – The Company
rural relations is India’s largest relationship based communication organization with a very simple philosophy: touch, feel, learn and reach out to rural India. It is an organization that prides itself not just on the detailed information it has on villages but the relationships established with the rural opinion leaders – hence the name rural relations. The organization has a formidable presence across 10 states:
Maharashtra, Madhya Pradesh, Chhattisgarh, Gujarat, Rajasthan, Uttar Pradesh, Uttaranchal, Andhra Pradesh, Karnataka and Tamil Nadu.
Information gathering methodology
Pradeep started with targeting villages with population between 2000 and 10000, where there were weekly ‘village fairs’ and ‘bazaars’. He started collecting information such as:
- Which day is the ‘bazaar’ held?
- How many people attend/visit the ‘bazaar’ or ‘village fair’?
- What shops does the village have?
- What products and brands are sold?
- Who is the head of the village?
- Who is the sarpanch?
- Does the village have a school? Who are the principal and the teachers?
Pradeep would send in questionnaire postcards for which he was lucky to get scanty responses. This did not discourage him. Soon he sent 9000 postcards to other villages (Exhibit 1, 2 and 3). His wife and father would help him write the postcards and also to collect and classify the information. He received 20 responses from 9000 postcards. He repeated this exercise two times. He then sent Diwali greetings to 10,000 villagers with a reply card. This got him 800 responses, thereby confirming his belief that people in rural India believed in building lasting relationships. The rural market had to be approached with the mindset of establishing relationships rather than working on it as a business model. This revelation also prompted him to finalize the name of his organization as ‘rural relations’. Encouraged by the responses, he set out on his journey to collect information about rural markets first hand. His wife would enter all the data on an old computer.
He realized that to be able to monetize the information repeatedly, it had to be kept constantly refreshed. Pradeep adopted a dual strategy of continuing to mail reply paid questionnaires (Exhibit 4), and of setting up teams on the ground called “the village developer”. The “village developer” teams were formed in the villages that Pradeep had identified for testing his entrepreneurial skills. The “village developer” builds the relationships, comprehends the mindset, traits, preferences and values of the inhabitants of the village. These village developers were rural youth drawn from the area they were to work in thus providing employment to rural youth but also leveraging their knowledge of local language, customs and people. rural relations had 32 village developers on the ground, and this would be increased by hiring on a temporary basis when specific projects demanded more coverage. This ensured that the villagers did not see it as a one way relationship.
Monetizing the Information
With this rich data and process in place, Pradeep started approaching companies which sold products in the rural areas and offered the market research data to help them make better marketing decisions. While companies wanted to buy the information, the price they offered was as low as INR.25, 000. Though disappointed at the low balling of the companies, he agreed to sell the data to start generating revenue. Pradeep knew the worth of the data he had collected, and he was sure that companies would see it eventually. The companies that were purchasing the data would need Pradeep’s expertise to analyze the data, and Pradeep was hoping that this would happen soon. As anticipated the change did happen and he started getting enquiries from the big companies, for data and on tapping the rural markets. And they paid a good price for it too. His hard work had started paying off. Now, Rural Relations had information on 2500 Talukas (Blocks), 49000 key feeder villages catering to over 3,55,000 villagers. Pradeep realized that this activity could be the revenue generator for ‘rural relations’, however, he needed to firm up this aspect and also ensure that he had updated information at all times to be able to provide that to the companies. Could this be the business model for rural realtions?
Over the years now, rural relations has become the information resource and market activation partner of companies such as Reliance Money, Unilever, Tata Automobiles, Procter & Gamble, Tata Tea, Reuters, HP, Marico, Blow Plast and Asian Paints to name a few. From concept to implementation, from strategy to developing communication that works in the rural settings, rural relations continues to help these companies to achieve their marketing objective. Companies can either buy targeted information on a one time use basis or subscribe to their continually updated research called Rural Barometer. The Rural Barometer is a live, dynamic and regular information source on rural India, by region and state to help marketers understand the villager like never before, gain valuable insights, learn about competition, distribution and empower them to forecast trends.
Leveraging the knowledge for social development
While the “village developer” teams played a dual role of both refreshing information and being a resource for villagers, an initiative which by itself contributed to the social development of the village, Pradeep wanted to do more and launched many initiatives leveraging the information he had about the villages. These included providing computers to the villages, setting up libraries in the schools (Gyan-key Exhibit 5), helping individuals outside the villages get in touch with their roots ( Non Resident Villager – NRV, Exhibit 6) , and raising awareness of the changes in villages through audio visual recordings.
Gyan-key is the flagship program to motivate students to develop good reading habits. Its aim is to open a library in the secondary school in key villages in every state – a library for the students, managed by the students. The organization invites individuals and corporate to make donations directly to the publisher and rural relations coordinates the delivery of the books and setting up of the library. The library kit consists of 170 carefully chosen books and costs INR5000. They have installed libraries in 480 schools in Maharashtra over nearly as many days and are targeting to cover 1000 villages by August, 2012. Pradeep spends about 15 to 20% of his time on getting donors to support Gyan-key and installing the libraries in the schools. His village developers spend about 2 weeks in installing the library and supporting the school in its operation. Over the past two years (400 school days), rural relations has received over 42000 letters a clear indicator of the success of the program. 49 schools have not been sending letters and rural relations is following up with them to see what’s wrong. 10% of his annual
revenue goes towards social initiatives like Gyan-key.
There have been many initiatives to take Information Technology to the rural masses. But Pradeep felt that there concrete ways to do more. The intention was not to make the villagers computer literates, but at least get them to touch, feel and try computers. He began to install used computers in villages, especially in secondary schools, where the interest and inquisitive levels were high. When he personally could not find the means and finance to progress, he appealed to individuals, organizations and corporate to contribute used machines. rural relations has succeeded in installing 3600 computers in village secondary schools.
The Non-Resident Villager MovementTM (NRV) is an effort to bring an individual back to his/her roots. Pradeep believes that every Indian yearns to reach out and make a difference to his country, his village and rural relations facilitates that through their network of ‘village developers’. The company organizes an exclusive tour of an individual’s native village where he gets a chance to visit the village, see the ancestral home, meet long forgotten family and friends and more. This opportunity to connect with one’s roots comes for a nominal fee of $100. The individual can also contribute to getting special projects done in areas like Power, Health, Roads, Communication, Water and Sanitation or donate a computer by writing out a cheque directly to the manufacturer/distributor with rural relations coordinating the logistics of installation and use.
rural relations believes that they are different because not only have they delivered time and again to leading corporate, but at the same time been a socially-driven organization. They aim at revolutionizing rural India and bring sustainable development to the villagers. What they pride themselves about today is their ability to mesh both business and community profitably, managing both bottom lines sincerely and professionally. The challenge now lay in how to scale in terms of both reach and impact. That was what lay heavily in Pradeep Lokhande’s mind. Would this continue to be a good business model? Would the years to come witness the scaling of business? In order to scale up should Pradeep aim at greater geographical reach or include more initiatives that strengthened the organizations position as a ‘Socially driven organization’. How could he measure in monetary terms the social impact of his initiatives? Is the calculation of a Social Return on Investment possible? Has his vision become the DNA of the organization percolating to the village developer? What were the other ways that he could use the
information he had on the villages both for commercial and social purposes? Does rural relations have the organizational depth in terms of process and leadership to charge forward?