I was part of the session: Navigating the Slowdown - Increasing Consumption. Here’s a glimpse from the summit and a summary of my session
Session Summary:
GDP growth over last 4 quarters has slowed down to touch 4.4% in Q1 FY 14, the slowest pace in past 5 years. Several sectors such as manufacturing (-1%), utilities (4%) and pharmaceuticals (4%) also reflect this trend. Most economists continue to be circumspect about the timing of the recovery and uncertainty can continue to linger on for couple of years. Yet in the past, successful companies in Europe, Latin America and India have grown by upto 10 percentage points faster than the competition in such times.
Sales & Marketing is typically the biggest lever that will enable a company successfully navigate a slowdown. Careful alignment of strategy with the fast growing segments, solid key account management, and increasing sales productivity are key to success in a B2B setup. Similarly several opportunities to grow in a B2B2C setup exist by changes in go-to-market strategy.
Panel Discussion Points:
What are the key changes in customer decision journey/consumer behaviour during slowdown
There's a fairly large similarity in how consumers react during slowdown across the world. These changes are:
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People do tighten the belt and ponder every purchase with extra care.
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They worry more and tread more cautiously, even if they are actually quite well off.
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Postponement of big ticket purchases -People do put off buying that new car
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And reduce discretionary expenses - may think twice before dining out.
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Most often do not want it to show that they are struggling - this is important to their self image.
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People make purchase decisions as per budget. There is a Deal-seeking tendency.
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Down-trading
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More painstaking search with a lot more product/service comparison - be it online, through friends or checking physical stores.
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Looking for value-adds besides base product - to 'justify' the purchase to oneself
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People are more cautious about the future. So, they adopt the saving strategies in all circumstances to make better future. A country like India, known to be a country of savers (second highest household savings rate in the world after China), tend to reduce consumption in their effort to maintain savings rate.
-However, even in financial decisions, risk taking ability reduces significantly and there is greater preference for guaranteed return or low risk financial instruments
What are the key marketing and sales practices and capabilities that are most relevant to focus on to address these changes?
-Going deep instead of wide - Spending a lot more time and resources on current customers, rather than hunting for new buyers should be marketers’ choice. A strong relationship with existing customers makes it easier to get more business from them rather than spending time converting a fresh prospect.
-While quality and excellence is a way of life at Max Life Insurance, we have specifically begun to reward those employees who do commendable work in relationship-strengthening and customer retention. For instance, those who manage to persuade customers to stay, when they've come to surrender, those who manage to convert an irate customer into a positive propagator of the company, those who go out of their way to help customers get their claims sorted, in times of grief - all these people make it to our exclusive Annual Book of Service Excellence. There is also a special emphasis on long-term customer retention through Annual Client Review, persistency as a major vector for R&R etc.
-Getting more bang for buck in media spends - deploying money more efficiently; curtailing traditional media spends but staying the course or investing more in digital media.
-Borrowing other category practices - For instance, this year saw mobile phone brands apply the strategy used commonly by automobiles and durables ..that of EMI. To increase sales, Apple offered their latest iPhone on EMI. Similarly attractive exchange offers to switch to the latest tablet or phone were also visible this year.
- Tanishq – spoke about affordable jewellery in their communication
How do marketers create/stimulate market demand in the current environment?
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Bundling freebies - Real Estate, one of the quickest sectors to get hit in tough times, has begun offering several add-ons to clear unsold inventory. For instance, buying property comes with free gold coins, free foreign trips, free parking, cash back of monthly rental, payment of stamp duty and registration charges or offering fancy interiors as part of the package.
Bundling complementary products with some discount on bundle as compared to buying products individually encourages people to increase consumption.
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Price-offs - Commonly deployed by FMCG companies, we have already witnessed large brands in categories such detergent, soaps, tea, biscuits, giving discounts on MRP.
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Smaller pack to retain / reduce price point – Brands such as Maggie has come up with smaller pack to retain existing customers and to bring in new customers in. With the intent of cost effectiveness they have also launched bigger pack which can serve the whole family with greater value for money.
How do you balance immediate focus with long term opportunities during a downturn?
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In our business, it actually makes sense to think long-term and apply that thinking to short-term. When the insurance industry faced its worst downturn during 2010, the company's strategy was to take a hard look at the portoflio mix. Rather than trying to salvage the negative sentiment on ULIPs, the focus was shifted to traditional insurance products.
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We also realised that consumer choices change significantly and quickly and thus it is important to understand those through consumer research. Max Life was the first company to identify risk aversion and preference for safety while ready to compromise on returns. This was another reason for us to refurbish our traditional products portfolio and retrain our distributors to explain traditional products to the consumers.
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This paid not only in the immediate term but also continues to pay over the years, since long-term savings and protection solutions are a genuinely good proposition for customers.
What innovations are possible from a marketing and sales standpoint to mitigate a slowdown?
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Creating excitement with new concepts - While discounts and sales have existed for years, Indiatimes has brought the international concept of night sale into India. 'Indiatimes Midnight Sale' offering deep discounts on a varied assortment of products, attracts the consumer who would otherwise not have looked at opening her digital wallet.
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Unconventional door-openers - Life Insurance requires a long term financial commitment from consumers which they would not be interested in making in uncertain times. Hence rather than start a conversation with why you need insurance, we get advisors to use innovative tools to get a foot in the door. For instance, pitching a scholarship program for their child (through our igenius program).
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Experimenting with smarter ways to attract people - In our industry, advisors are core to sales. But they are also the most slippery lot, given the drop in seller commissions in the recent years. For the past 2 years, we have been experimenting with a TV show strategy to attract and hire new advisors instead of the traditional but expensive print recruitment model. This has been quite successful for us.
