Written by: Rajib Chowdhury
About the author: Business Head – Consumer Durable Service & Revenue
If you ask a salesperson associated with Appliance trade, almost everyone will say it is the toughest and competitive market. Well, they are not completely wrong also. The CAGR of the overall appliance market vis a vis number of brands that are crowding the market every year are definitely not in sync. Our huge population and low penetration rate of appliances look lucrative and attract brands all over the world. But the potential is actually not converting into sales at the rate they are expected to.
For example, the Air-Conditioner retail market is stagnant at around 4 million units a year for the last 5-6 years. But you will find more than 15 AC brands struggling to get a major pie of the limited market. Moreover, every year beginning February or March, you will find a full-page newspaper advertisement of some new AC brands announcing their entry into the market.
When the market is not growing at the same or higher rate than the rate of increase in competition, the salespeople have to face the heat. In any territory, the dealer network option is limited. Today if you change the network, tomorrow you may have to fall back on the same dealer guy again. This is the market reality. So if you are not innovative, if you have not explored alternative/ non-conventional channels, the market will always look difficult to you.
Today I will be discussing one such non-conventional sales channel, which some companies have used successfully. This is the “service network” of a company.
The service network of a decent brand touches around 3 million customers a year, for a good brand, the number can go as high as 10 to 15 million a year. So you have an opportunity to capture a demand that is about to be generated or even create fresh demand. For both cases, you can fulfil the demand even before the customers hit the market. Thus blocking the option for your competition to eat into your customer base. Only thing is that you have to have a mechanism in place to capture the demand and also fulfil them. This channel is an added advantage for all old/existing brands over the new entrants.
But to create such a mechanism is not easy. To develop sales acumen in frontline service person is a continuous and sustained effort. This requires a structured and robust training infrastructure. This is not a one-time activity but requires constant monitoring, motivation and up-gradation of the training module. If you can have the same in place, this channel will give you return year after year and in the most cost-effective way.
Not only the additional sale, but this mechanism has many indirect financial benefits also
- This ensures an additional source of revenue for your service franchisee. Hence you can always bargain for the service cost against it.
- As a company, you will have more hooking points with your service franchisee. This will ensure a stable service network, which is the key to better service delivery.
- You need a strong infrastructure to run this channel. If the competition wants to copy you, it cannot be done overnight. Hence you will always have an edge over the competition.
Before I end, I would like to mention two examples from my past organizations, just to give you an idea
how strong this channel can be.
- I was part of a project that used to sell extended warranty and other service products thru “door to door” approach. Just to add more revenue, we decided to experiment with the sale of appliances thru that channel in a particular city. To our surprise, the first month itself we sold 43 appliances only thru a catalogue. This prompted the organization to nurture this channel further. Today there is a separate sales vertical handling this channel.
- One such leading Consumer Durable and Electronics Company used to sell “television kit” thru their service channel. The “kit” was assembled by the local dealers and used to be sold as their own local brand CRT TV in the respective market. In tier II and tier III market, the penetration of these “kit” became so huge, it started impacting the sale of the TV for the brand in those markets. Ultimately the sale of “kit” had to be restricted to create space for branded TV sale. Imagine, as an alternative option, if these service channels could be converted to sell TV sets of the brand, the brand would have been the undisputed leader in those markets.
I have discussed one, but there can be hundreds of such “hidden treasures” available in the market. Bottom line is, if you are in sales, you have to be innovative and have to have the willingness to take the risk. Every day morning, if you have not thought of something different, something non-conventional, something unrealistic, you are actually not growing then as a sales professional.