The Hindu Business Line : Tyranny of numbers

YEARS ago when a car dealership sold you a motor car, it was customary for them to ring you and ask how it was doing, and be reminded when it was due for servicing, even after the obligatory free services were over. If there was a longish delay for repairs, you were given a spare car to drive in the meantime — all part of a service package that looked far ahead to retain customers for years. Some dealerships even today provide pick up and drop back for servicing the vehicle.

However, increasingly the reality of the vast market, the inadequate trained staff and stagnant margins are catching up with many service-centric businesses.

When a few thousand cars a year were sold all over India, perhaps it was possible to keep a personal track of at least selected customers. The rapid increase in the customer and vehicle populations in the last decade, on the other hand, poses a serious issue generic to marketing and management in India: the sheer tyranny of numbers.

The equivalent in banking would be the special services offered to some individual account-holders which include cash at your doorstep, pick up of cheques to be deposited, and concessions on minimum balance requirement and so on.

In the airline industry, you are offered many extra services including an arrival lounge complete with showers, changing rooms, and a business centre and free limousine rides from wherever you live, to international airports.

As the numbers of models, competitors and customers have increased several times over, every business will face this painful paradox.

As other elements such as product, price, and distribution reach have long ago reached parity, in order to retain customers, they will have to depend increasingly on exceptional service to tip the scales in their favour. And such individual service is becoming difficult to scale up, given the numbers needed to cover a national market. A growing economy has meant the spilling over of the market for vehicles, and other durable products and services, into the smaller cities, which number over a hundred. This itself presents a unique challenge of geography.

Marketers have had to rethink the hierarchies, the channel structure, the number of area and regional offices and managers, number of front line sales force and so on. Once upon a time you inherited a structure of four natural regions broken further into areas roughly equal in number to major states and that was all.

Today, the situation is very different: Not only an issue of cost but, increasingly one of keeping in touch with all markets regularly and responding fast enough to their unique needs and demands, while simultaneously fighting the pressure of rising costs per call, per contact and per customer serviced.

Perhaps not surprisingly, in rapid growth categories, regional disparities in tastes and preferences have also become more pronounced. One-size-fits-all policies will therefore not do any more. Companies will be forced to make tough choices — either live with variety and deal with it using sophisticated computerised systems and communication devices; or be content with a lopsided market presence, eventually becoming a regional player.

If however all businesses were as competitive as airlines are, any one who wants to make exceptional customer delight as basis of competition would have to leap-frog into much more innovative information and communication technologies to link and keep together a far flung national operation.

Innovation therefore will have to re-focus to take on an organisational and managerial flavour. This has great implications for delegation and jettisoning the command and control mindset that still prevails in much of top management. A quiet revolution is under way hereabouts which we shall see more of as the years go by.

S. Ramachander

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