Dig­i­tal chan­nels in ru­ral mar­kets

Sameer Malhotra, CEO at Shri­ram Au­tomall and Ta­pan Singhel, MD & CEO at Ba­jaj Al­lianz Gen­eral In­sur­ance share emerg­ing trends in ru­ral mar­kets: Edited ex­cerpts

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Dr. Ravi Lal­wani: In the re­cent years, what per­cent­age of busi­ness growth has your com­pany re­ceived from the ru­ral mar­kets? From which ru­ral areas do you re­ceive a ma­jor­ity of the busi­ness?

Sameer Malhotra: Ma­jor­ity of our auto malls are lo­cated in ru­ral and semi ur­ban areas of the coun­try. We re­ceive 70% of our busi­ness from tier 2&3 cities, and 30% comes from tier 1 cities. Ma­jor­ity of our busi­ness comes from the ru­ral areas of Trichy, Madu­rai, Au­rangabad, Salem and Agra.

Ta­pan Singhel: In FY 16-17, 14% of our to­tal busi­ness came from the ru­ral mar­kets. We have seen a growth of over 40% in our busi­ness from ru­ral areas, mainly due to the boost given to crop in­sur­ance by gov­ern­ment through schemes, like Prad­han Mantri Fasal Bima Yo­jana. Hence, we had ma­jor­ity of our busi­ness from Ma­ha­rash­tra, Andhra Pradesh, Bi­har, Haryana, Te­lan­gana and Ch­hat­tis­garh since we were present in these areas for crop in­sur­ance.

What are the ma­jor changes your com­pany has wit­ness in the pur­chas­ing pat­tern of the ru­ral cus­tomers?

Sameer: Ru­ral cus­tomers are mainly in­flu­enced by ra­tio­nal­ity, per­sonal ex­pe­ri­ence, and the level of util­ity that is de­rived from the con­sump­tion. Ru­ral cus­tomers are sure about the prod­uct they want to pur­chase, be­fore vis­it­ing our auto mall.

Ta­pan: Ru­ral cus­tomers have al­ways had a good pur­chas­ing power; how­ever there has been an in­crease in pur­chase and con­sump­tion of con­sumer durables and smart phones. More­over, many easy fi­nance options and ac­cess to e-com­merce mar­ket plat­forms have made it sim­pler for con­sumers in these areas to ac­cess qual­ity/ branded prod­ucts. We need to re­mem­ber that for this mar­ket is not a mo­bile first mar­ket, it’s a mo­bile only mar­ket as far as ac­cess to in­ter­net is con­cerned. The de­mand of 2-wheel­ers, 4-wheel­ers and trac­tors is grow­ing rapidly in these areas. How­ever, in­sur­ance is very low on the pur­chase pri­or­ity of the ru­ral cus­tomers, and I feel lack of ef­fec­tive dis­tri­bu­tion and aware­ness are the pos­si­ble causes of this. This is some­thing that the in­sur­ance in­dus­try has to work to ad­dress more ef­fec­tively.

What are the main prod­ucts you are sell­ing to ru­ral cus­tomers?

Sameer: Trac­tors, 2-wheel­ers, pas­sen­ger ve­hi­cles and auto-fi­nance are the main re­quire­ments of the cus­tomers. Thou­sands of ru­ral cus­tomers visit our mall on daily ba­sis.

Ta­pan: Ru­ral cus­tomers usu­ally buy in­sur­ance through their bank, mainly for live­stock, farm­ing equip­ment like trac­tors, agri­cul­tural pump sets, 2-heel­ers and cars. Now there is a broader con­sump­tion of in­sur­ance through gov­ern­ment schemes and fi­nan­cial in­clu­sion, es­pe­cially for crop in­sur­ance, (PMFBY) and where opted, for per­sonal ac­ci­dent as well (PMSBY).

Which tech­nol­ogy chan­nels are you us­ing to reach ru­ral cus­tomers?

Sameer: The clever and gim­micky ad­ver­tise­ments do not work out with ru­ral con­sumers. There are over 120 mil­lion ac­tive in­ter­net users in ru­ral In­dia. Though so­cial me­dia chan­nels are get­ting ex­tremely pop­u­lar in the area, not only the youth but the el­der gen­er­a­tion as well is get­ting well versed with the so­cial me­dia plat­forms. We have spe­cific Face­book pages for all 70+ auto malls, which help cus­tomers to reach our pro­fes­sional team on area ba­sis. With the data we gather through our mar­ket­ing cam­paigns and events like canopy ac­tiv­i­ties and road shows, we keep reach­ing out to po­ten­tial cus­tomers through SMS and What­sapp. Num­ber of queries from tier 2&3 cities gen­er­ated through these plat­forms is reg­is­tered by us on a daily ba­sis. Gen­er­ally, these queries are for spe­cific prod­ucts and have high prob­a­bil­ity of con­ver­sion. These queries are usu­ally

for trac­tors, 2-wheel­ers and small cars, and also for the fi­nan­cial as­sis­tance from the com­pany.

Ta­pan: Dig­i­tized dis­tri­bu­tion mod­els are help­ing us reach out to ru­ral cus­tomers at their door step. In the last cou­ple of years, dig­i­ti­za­tion has es­sen­tially trans­formed the in­sur­ance busi­ness model and has pro­vided immense op­por­tu­ni­ties to reach out to this un­der­served and un­der­in­sured mar­ket. We at Ba­jaj Al­lianz have been able to reach out to over 200 new mar­kets last year due to our key ini­tia­tive is called Vir­tual Of­fice. It is an en­tire of­fice in­te­grated into a tablet that helps us reach out to re­motest cor­ners of the coun­try to im­prove dis­tri­bu­tion. It is a cost-ef­fec­tive dis­tri­bu­tion model since it doesn’t need brick and mor­tar of­fices to func­tion. We have also equipped our chan­nel part­ners and sales force with mo­bile apps like Eezee Tabs to take in­sur­ance to cus­tomers door step. They can sell re­tail prod­ucts through this and also pro­vide them with end to end so­lu­tions like pol­icy is­suance, pre-in­spec­tion and even set­tle mi­nor claims through this app. Apart from that, com­pany’s self-ser­vice mo­bile app - In­sur­ance Wal­let - en­ables all our cus­tomers to con­duct and store all their in­sur­ance re­lated trans­ac­tions and in­for­ma­tion seam­lessly on a real-time ba­sis. It pro­vides easy ac­cess to any prod­uct re­lated in­for­ma­tion and is an in­ter­face that al­lows them to reach out to us in­stantly. We also con­duct var­i­ous cus­tomer aware­ness pro­grams to ed­u­cate our cus­tomers about in­sur­ance, be it cam­paigns in schools, tier 2&3 cities with chan­nel part­ners.

Which chan­nels you are us­ing to col­lect the cus­tomer in­sights to tar­get the ru­ral cus­tomers?

Sameer: We use mul­ti­ple chan­nels to learn about cus­tomer in­sights like or­ga­niz­ing mar­ket­ing cam­paigns in lo­cal areas in­clud­ing pop­u­lar mar­kets, trans­port na­gars and rail­way sta­tions. While an­tic­i­pat­ing the needs of our cus­tomers, we also ini­ti­ate schol­ar­ship cam­paigns ev­ery month and driv­ing schools which fo­cuses on en­hanc­ing ru­ral cus­tomer knowl­edge about ad­vance­ments in the au­to­mo­tive sec­tor and how they can ben­e­fit from it. We also pro­vide free am­bu­lance ser­vices in var­i­ous areas for emer­gency pur­poses which helps cus­tomer to trust the com­pany and value the re­la­tion with us. It is as­sumed that the ru­ral psy­che is dif­fer­ent from the ur­ban one.

Ta­pan: We use in­dus­try data and data pro­vided by the gov­ern­ment to tar­get ru­ral areas. Apart from that, we also take in­sights from our chan­nel part­ners, ex­perts and con­sul­tants of the re­spec­tive field and an­a­lyse our own ex­pe­ri­ence in that re­spec­tive area.

Which are the pre­ferred pay­ment chan­nels among the ru­ral cus­tomers?

Sameer: Cash is the pre­ferred mode of pay­ment among the ru­ral cus­tomers. We have also wit­ness cus­tomers pre­fer­ring to pay through debit and credit cards. We also as­sist our cus­tomers with ad­vance pay­ment modes like in­ter­net bank­ing, RTGS and NEFT.

Ta­pan: In the past, cus­tomers in ru­ral areas pre­ferred pay­ment by cash or cheques for small trans­ac­tions, how­ever now pay­ment through on­line and dig­i­tal plat­forms is also gain­ing wider ac­cep­tance. Com­mon Ser­vice Cen­tres (CSCS) and banks are cre­at­ing the nec­es­sary aware­ness and in­fra­struc­ture for dig­i­tal trans­ac­tions and pay­ments in ru­ral areas, pri­mar­ily as fa­cil­i­ta­tors and in the long run as trans­form­ers.

From which ru­ral re­gions you fore­see growth in the com­ing months?

Sameer: We are wit­ness­ing ro­bust growth be­tween 15-20% years on year since its in­cep­tion in 2011. We fore­see ma­jor growth specif­i­cally from Ban­ga­lore, Ahmed­abad, Tiru­pati, Hubli, Chandi­garh, Vi­jayawada, Pune, Cali­cut, Raipur, and Kanchipu­ram re­gions.

Ta­pan: There is a lack of con­sumer aware­ness about the need for risk pro­tec­tion and un­avail­abil­ity of the re­quired in­fra­struc­ture in the ru­ral areas of In­dia. Gov­ern­ment and in­sur­ers are work­ing to­wards im­prov­ing this sit­u­a­tion, and the cur­rent sce­nario will change in the com­ing days.

Sameer Malhotra re­veals that ru­ral cus­tomers are mainly in­flu­enced by ra­tio­nal­ity, per­sonal ex­pe­ri­ence & util­ity

Ta­pan Singhel pro­motes dig­i­tized dis­tri­bu­tion mod­els to reach out ru­ral cus­tomers at their door step

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