New Customers or Existing? That's The Question!

I met my friend Deepak Chopra for coffee, couple of days back. A soft spoken Chartered Account, he often makes interesting observations. While discussing about a venture I was planning to be part of, he quipped, "Indian customers seek value for money. We don't buy products or service because they are low cost, we seek value. No wonder, that a Rs. 10 lac Renault Duster is selling like hot-cakes whereas Tata Nano, the world's cheapest car, has failed miserably."

Recently, I decided to upgrade our SD DTH connection to HD. Tata Sky is also running a seemingly good scheme for existing customers. At Rs. 1800, an existing customer could upgrade to HD. But I decided to upgrade to Tata Sky + HD, instead.

There was an online offers page on the Tata Sky website. Upon checking I found that there were interesting offers for a new customer. In fact, I realized to my disappointment that the offer for existing customer was not "as sweet as" the one for new customers.

Here are the details.

For existing customer

Cost: Rs. 4990/-
Value: Upgrade to Tata Sky + HD

For new customer

Cost: Rs. 6440
Value: Tata Sky + HD connection, 2 months of Grand Sports package free, 2 months HD fee waived, 2 Showcase movies plus Rs. 1000 Myntra gift voucher and 15% on purchases on another online ecommerce site.

How does this pan out?

Tata Sky + HD connection = Rs. 4990 (based on what is offered to existing customers)
2 months Grand Sports package: Rs. 820
2 months HD fee waiver: Rs. 200
2 showcase movies: Rs. 100
Gift voucher: Rs. 1000

Let's discount the 15% discount coupon for now.

The total value that a new customer gets from Tata Sky is Rs. 7110. Which would mean that a new customer gets an additional "value" of Rs. approximately Rs. 670.

I reached out to the customer support but as I had guessed the customer service support is not empowered to cross the line. Most of the time, they are dignified parrots, not only at Tata Sky but also other organizations. That will be another blog.

Anyway after some failed attempts, I felt a bit cheap to have done so much of calculations and trying to haggle for a paltry sum of Rs. 670.

It was then that I remembered an interview of CK Ranganathan of Cavin Kare making an interesting observation on the success of his Chik shampoo that catapulted a small shampoo company into one of the top FMCG companies in India, today.

He pointed out that customers in India are very diligent. He said customers didn't buy his sachets because they were affordable. He said that customers would calculate the cost of sachet shampoo and compare it with the cost of bottled shampoo before buying. Meaning, just because sachet was affordable at that point, customers would not buy it if the bottled shampoo was "cheaper" (read value for the money), overall.

But that is how we as customers are, I suppose.

Coming back to my DTH connection, I reached out to a top official at Tata Sky. After a small exchange, I realized that he also failed to understand the issue. Considering that my shift to Airtel would have to wait for six months and being impatient, I upgraded to Tata Sky + HD at a "not-so-sweet-deal" given to existing customers.

When I was doing MBA, I remember reading an interview of a Marketing Guru who urged companies to keep their existing customers happier than put all efforts to acquire new ones.

But I guess it is two in the bush is better than one in hand for many brands. 

Can Walmart Kill Nadar Kadai?

We moved into the house where we stay now in 2007. An avenue, the street is like a private colony despite not being one. Though located in a good upmarket location, we did not have any shops around. No Nadar Kadai (or as North Indians might understand - Baniye ki dukaan), no vegetables shops. Closest Nilgiris is about a kilometer away, Vitan store at a similar distance.

The only convenience we had was the short bearded man in his late forties selling vegetables on his push cart in our street and a couple adjacent to ours. Clad in lungi and a dirty shirt for most part of the year except in January when he would adorn black dhoti and shirt as he went on his annual pilgrimage to Sabari Malai, he would start work each day around 7 am setting the vegetables on the cart. By 8, he is on the street yelling on the top of his voice to get attention of buyers. A funny and fun loving man, he would joke around with security guards and maids working in various houses.

He would stock only regular fair. Onions, tomatoes, brinjals, drumstick...nothing exotic. If one wants broccoli or courgettes, he was not the man. But his stock was enough for any household planning a regular south Indian meal - Sambhar, Rasam, Kootu, Poriyal.

After spending about two to three hours in our street, he would move to another street.

Very recently Kovai Pazhamudir Nilayam (KPN), a retail chain that sells vegetables, opened its outlet at the end of our street. While we were worried about the traffic, we were also happy that we will have a proper shop which will not only be easily accessible but also convenient to shop in. KPNs are air conditioned shops which stocks not only regular vegetables but "exotic" ones. Further, they also stock all kinds of fruits, breads, pickle and even rice. They also have a juice shop near the entrance. With a self service model, they have computerized billing facility and accept cash and plastic. They also have a Facebook page!

While KPN brought good tidings for us, business was no more good for the push cart vendor. I neither find him nor the push cart in our street, anymore.

Can Walmarts kill Nadar kadai (baniye ki dukaan)? Can large MNC retailers do what KPN did to the vegetable vendor of our street?