How to Use Service to Charge Higher Prices and Grow Market Share in a Price Sensitive Market
By Ron Kaufman
Indian telecommunications is one of the most commoditized, competitive, and chaotic markets in the world. Hundreds of stores sell identical phones and tablets. Price competition is intense. Customers are spoiled for choice.
In this challenging market, one company consistently charges higher prices, but has also enjoyed sustained growth and profitability over decades. How can this be possible?
The key their success is continuous innovation to intentionally disrupt the industry’s standard practices of service. Sangeetha Mobiles began with one store in 1974 selling records and today boasts more than 300 stores selling mobile devices to over ten million customers. Sangeetha, which means “music” in the local language, has been serving the Indian nation “around the ears for 40 years”.
Managing Director Subhash Chandra explains the company’s strategy of disruptive service innovation: “Sangeetha was the first retailer in the country to sell mobile phones legally in 1997. Lower-cost grey market sales were the rule, so we had to innovate hard to succeed. How else could we charge higher prices and yet attract and keep customers?”
Four compelling innovations demonstrate Sangeetha’s commitment to challenging the norms, and leading the industry, with new service ideas. (Note: Sangeetha is not a client of UP! Your Service.)
1. Replacement Insurance
What is the worst thing that can happen to your mobile phone? You drop it, break it, or find it has been stolen. In the traditional service world, this means you need to buy a new phone.
Sangeetha turned this practice upside down by automatically enrolling every customer in an insurance program against theft, liquid and physical damage. When the company began this policy in 1997 they paid a 3.5% insurance premium, well beyond what lost-cost competitors were able to afford. Today, after 15 years of positive track record, increased sales, and more than 50,000 phones replaced per year, Sangeetha pays a much smaller premium of just .75%, for which other companies cannot qualify.
Sangeetha’s disruptive innovation was offering customers protection automatically by including it in the price, rather than requiring customers to choose the protection as an added-cost option.
What do your customers worry about? What can you protect them from? How can you provide that protection so your customer’s experience, and your reputation, are both automatically enhanced?
2. Service Wherever You Are
When customers have a problem with their phones, Sangeetha sends a courier to the customer to pick it up, brings the phone back to get it fixed, and then brings it back again to the customer. Customers can even have the phone picked up in one city and delivered to them back in another. And in the meantime, Sangeetha lend customers a phone to use at no extra charge.
This service, nicknamed “Delight”, has been running for 5 years and is currently offered in 7 major cities. The service was instrumental in Sangeetha winning the National Award for “Excellence in Customer Care in Retail” from the Indian Economic Times.
The usual telco industry practice is for customers to bring their phones to the service center, take a number, wait in line, and then leave their phones for repair until notified to come back again. Sangeetha disrupted this troublesome standard with a massive commitment to customer convenience.
What’s the most inconvenient thing your customers encounter when doing business with you? How can you turn that upside down and make it your competitive advantage? Can you disrupt your industry by eliminating the disruptions your customers endure?
3. Extended Warranty
Unlike the extended warranties offered by competitors, Sangeetha’s warranty service bypasses third party providers in favor of direct tie-ups with the authorized service centers of Apple, Samsung, Sony, Nokia, and other brands.
While the third party providers are cheaper, authorized service centers have faster access to parts and replacements, as well as the most up-to-date service information and technology for repairs.
Is there a “cheaper way to do business” in your industry? Does that lower cost carry a higher risk? How can you disrupt the impulse to compete on price by offering higher value?
4. From Slow to Speed – 1:47 Delivery
Sangeetha’s most recent innovation is the online shop at www.shopno47.com. This site launched with an offer deliver a new phone to your home or office within 1 hour 47 minutes. Today, in three of India’s busiest cities, the delivery promise is just 47 minutes! The company accepts payments on the spot in cash, by credit card, or direct bank debit.
Sangeetha took the traditional challenge of saving time and pushed it to new levels, and then pushed in once again. Today’s delivery promise of 47 minutes is record-breaking and standard-setting.
What can you do to dramatically accelerate your speed of service, and then make it even faster?
What Are Customers Saying?
Sangeetha’s service yields high levels of customer loyalty and satisfaction. One customer was so moved that he brought a large box of sweets into the store for all the sales people to enjoy. Another customer broke into tears when he learned that his broken phone would be replaced quickly, easily, and at no additional cost. A third delighted customer drove his Mercedes to the company’s head office and insisted, “I love your service so much, I want you to insure my car.”
Of course Sangeetha is not perfect and they do receive complaints. But these complaints are used to focus even more clearly on changes that must be made to continue serving to win.
What are the Results? What’s Lies Ahead?
Sangeetha has grown by 65% over 2013, and 60% over the previous year. The company is on track to open 700 new stores in the coming year, reaching every 1st, 2nd and 3rd tier city in the country. The company plans to go public with a stock offering in 2015-16. And when it happens, don’t be surprised if Sangeetha offers to deliver stock certificates to your doorstep.
Sangeetha’s culture of innovation continues to change and challenge the industry. Next in the queue for activation is a “15 Day Trial Period” where you can buy a phone and try it for up to 15 days, and then return it for Full Value if you don’t like the model and trade in or up for another model.
What industry-challenging service innovations have you seen in your industry?
What disruptions in “the way we always do it” can you imagine?
What would you suggest?
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