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
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