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Suresh L. Goklaney, executive vice chairman of consumer appliances company

Eureka Forbes Ltd. (EFL), was on vacation in The Hamptons in New York when his
son-in-law began discussing the onset of the digital era. It was the summer of 2010,
and, at the time, only the travel and ticketing industry had warmed up to e-
commerce in India. I found the dramatic increase in online commerce in the U.S.
absolutely amazing, even though the economy was on a downtrend, recalls
Goklaney.
He returned to Mumbai the next day and chanced upon a 2009 Ernst & Young study
that piqued his interest in the digital space even further: According to the report,
members of Indias top socio-economic class spent an average of 87 minutes each
day on the Internet (and growing dramatically). Compared to this, 96 minutes were
spent watching television. Goklaney immediately turned to Marzin Shroff, CEO of
direct sales and senior vice-president of marketing, and asked: What are we doing
about this?
That question, more of a directive, set Eureka Forbess digital initiative in motion,
compelling Shroffs team to consider two strategic initiatives. [First,] how do we stay
relevant to the consumer of tomorrow and, second, how do we expand our presence
in person-to-person selling? Shroff says. There was definite need to imbibe new
technology. Until then, all the consumer durables company had was a basic website.
Eureka Forbes focused solely on its direct sales model with its iconic Eurochamp,
the friendly man from Eureka Forbes, going door-to-door selling the firms primary
products water purifiers and vacuum cleaners, which respectively account for 75%
and 22% of the companys sales.
Eureka Forbes, a Shapoorji Pallonji Group company (the younger son has recently
been appointed heir to Tata Group chairman Rata Tata), was started in 1982 as a
joint venture between Electrolux of Sweden and the Forbes Group of India.
Goklaney, who has been with the company since 1987, spearheaded the then
floundering firms growth story from a single office in Mumbai with 20 sales
representatives to a US$250 million organization with a presence in 590 cities and
towns across India. Its 7,500-strong sales force, the largest direct-selling sales force
in Asia, knocks on over 60 million doors a year.
But EFLs traditional model needed a digital impetus. We needed to generate more
demo requests for our Eurochamps, reach out to the younger generation as they are
spending an increasing amount of time on the Internet and ride the e-commerce
wave coming into the country, says Siddhartha Singh, senior manager of marketing.
According to Sridhar Samu, assistant professor of marketing at the Hyderabad-based
Indian School of Business (ISB), the Internet is a perfect complement to EFLs
direct-selling model. The Internet makes it easier to provide tailored information to
time-sensitive consumers. The basic problem of finding leads still exists, whether it
is direct selling to consumers with or without the Internet. But the process improves
dramatically once the lead has been generated.
Indeed, the Internet can open up an entirely new touch point for EFLs sales team.
According to a report by the Internet and Mobile Association of India and the IMRB
(Indian Market Research Bureau), the number of Internet users in India crossed the
100 million mark in September 2011 and was expected to grow to 121 million by last
December (as compared to 245 million users in the U.S.) The same report estimates
that since more than 600 million Indians use mobile phones, about 50% of the
population is online, making India the largest national base of Internet users in the
world.
But as Kartik Hosanagar, professor of operations and information management at
Wharton, said in an interview with Indian business daily Mint, Its important to
understand what these 100 million users are doing on the Internet. The numbers in
India do not compare well with that of China and the U.S. either. Also, from a
commerce standpoint, how many users will be willing to engage in e-commerce?
Thats a very negligible figure, since the payment infrastructure and distribution
infrastructure are lacking.
E-commerce in India has indeed been struggling. According to a recent white paper
by First Data Corporation and ICICI Merchant Services, the Indian e-commerce
market was expected to reach only US$10 billion by December 2011, with the online
travel industry accounting for 80% of that amount. Those figures are small compared
to the U.S. e-commerce market of US$195 billion in 2011, as reported by digital
marketing research firm eMarketer.
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One reason for the poor showing in India is that customer service after a purchase
has been made has never been a strong point in the country. A lot of outlets dont
have a returns policy, for example. Firms such as online bookseller Flipkart.com and
brand promotion and gaming site Hungama.com have succeeded because of their
attention to this issue. Flipkart has an elaborate system in which customers can track
orders. Earlier e-retailers would just take the customers money and leave them
wondering sometimes for months when a purchase would be delivered. More
fragile items often arrive in a damaged condition. India doesnt have a significant
consumer rights movement and there are no easy remedies.
Embracing a Hybrid Model
EFL was convinced that it couldnt ignore the Internet. But the corporate strategy
had to be a hybrid. I see the Internet as a tremendous way forward, to be able to cut
costs and give the end customer the right product at the right price with good
servicing, says Goklaney. In places that we are already present, the Internet can
complement our sales force as a lead generation device. In places that we are not
present, the Internet will become our sales force.
The first step EFL took towards digitizing its model was to make the companys
website easier to navigate and to develop focused, brand-oriented microsites for
various product lines. With a maximum of one or two clicks you can find the
information you are looking for, Singh notes. We also have a feature where an
online Eurochamp helps the consumer choose the right product.
Over the years, EFL has also mapped the quality of water across the country. The
website now has an application that can recommend the right technology once a user
inputs his or her pin code. This application helps to determine the best product for
the customer, Shroff states. It encourages e-commerce because when you are sure
of what you want to buy, you will be more open to doing the transaction right away.
EFL is also among the few consumer goods companies that offers a Hindi version of
its website.
But the key component of EFLs digital transition has been its Call Connect System.
When a consumer fills out and submits a lead form online, an automated process
identifies his or her location based on the pin code supplied. The system then
identifies the nearest sales team, makes an outbound call to a salesperson and one to
the customer. The system then connects the two calls all with an expected hold
time of less than 30 seconds. There is often a lag between a customer filling out a
lead form and the team getting back to him. This system cuts down the lag time
drastically. It also works on SMS and telephone, Shroff says.
Other than customer lead generation, EFL has also tried to digitize the back-end, or
after-sales, service, which is among the most important determinants of sales in
high-involvement product categories. The firm has established a five-step service
request application. If the customer is not satisfied with the response he or she gets,
the system keeps moving the request up the ranks of the firms service staff. At each
level, the entire history of the customers problem is updated until the issue is finally
resolved.
According to ISBs Samu,the trick is for direct sales companies to make the
consumer want to search for you instead of the other way [around]. The company is
trying to make its brand ubiquitous online through search engine optimization
programs. Other than lead generation, EFL also focuses on building brand equity. It
has an online reputation management cell that responds to consumer complaints on
sites such as mouthshut.com.
When EFL first started taking its digital initiative seriously, the company had 22,000
likes on its Facebook page. Today, the firm is at over 150,000 and also has two
additional pages Euroair and Eurovigil for air purifiers and security solutions.
Weve gone from just putting up press releases and information about the company
to more engaging content such as health tips and contests, Singh notes. To bring in
the New Year, EFL had a Blast From The Past Contest, for which consumers were
asked to share pictures of cherished moments from the year gone by; the best
entrants won gifts. The Facebook page is also linked to the companys service request
application. But Shroff admits that the actual number of leads generated from
Facebook is low. Our intention with social media is to build affinity, Shroff adds.
Todays digital consumer is the last guy you want to push things to. So let him like
you.
With a customer base of close to 9 million homes, EFL deals with a lot of annoyed
customers each day. If your water purifier is not working, you want it working in the
next half hour, Shroff notes. With every passing half hour that it is not serviced, the
customer gets increasingly annoyed. We have a lot of irate customers visiting our
Facebook pages. If we show them that we are also a nice company, they might calm
down a bit. So this is a relationship building program, a long-term lead generation
process.
Building a Deeper Connection
Samu suggests that that this increased affinity with customers will be key to EFL
transforming its sales model. As the level of consumer interaction increases, EFL
must build deeper relationships with them. This can eventually develop as the main
selling model, as it will include home visits for demo purposes, replacing the current
direct selling methods, he says.
But how useful have EFLs digital initiatives been in actual conversion to sales? As
of now, online sales actually using a credit card online to make the purchase are
less than 1% of sales, Singh notes. Whats working is a Cash on Delivery model.
EFLs online sales have grown from US$10,000 to US$50,000 a month. Thats not
bad considering its only a year-and-a-half old initiative, Singh adds.
EFL currently gets only four to five leads from Facebook every month. But it
manages 35,000 leads a month through organic traffic and an additional 40,000
leads a month from its brand display campaigns. The conversion of leads from hits
on EFLs own website are high 40% to 45% of total leads. While Shroff is reluctant
to disclose the actual cost of each lead, he does admit that, Its brilliantly cost
effective. The cost of each lead is the lowest as compared to advertising or door
knocks.
Shroff and Singh are upbeat about the digital initiative but Goklaney is candid about
the course corrections he would have liked to make in hindsight. First, we should
have started earlier, he says. Second, as a company we have not yet learned to be e-
commerce friendly. I want to be able to engage my current customers and to get their
inputs on how we can make our products better. Weve tried, but we havent done it
successfully.
But its not just the Indian consumer that Goklaney wishes to engage. While their
offline direct selling model exists in other countries, he expects the Internet to be a
primary driver of sales in the international market. I should be able to supply my
products to a customer in Switzerland or any country in the world from India. I am
unable to do that today.
EFLs share of the water purifier market has dropped to 60% from a high of 75% in
2004. Weve had 68 quarters of continuous profits. When you have a market that
you have dominated for 29 years, and then competitors enter, your sales continue to
grow, but your share drops. Its a process of market expansion. We still sell as many
water purifiers as the rest of the industry put together and more, Shroff notes.
More competition is coming; this time, in the direct-selling space. The Indian arm of
direct-selling major Amway is considering an entry. Others are looking at the
Internet as an easy entry point. Thats where they will stumble, Shroff says. In 10
years, we will have moved up the value chain and created new products that Indians
dont think they need. You can never replace human interaction with the Internet.
Ultimately, we are in the P2P, person-to-person business.