I am Aarihant Aaryan! Welcome to the Iron Sharpen Iron newsletter,
Every week I share my homework from my startup journey, learn about human behavior, and sometimes decode industries and business models for fun,
I can’t control my curiosity :)
When I started up I didn’t have an exact idea of “what Indians buy” / their core motivation and how it is 100% different from the West, thanks to a bunch of kind people in our ecosystem who share notes, as I was building my co I realized what Indians buy and their core motivation is so different, since then whenever and wherever I had the opportunity I kept talking about
I also ended up writing 2 or 3 articles around it
How do Indians spend?
We Indians don’t understand Indians
What do Indians pay for?
Today I want to double down on, How Indians buy. I have been thinking about this for a few months, talking to a bunch of founders and great operators about this unique Indian behavior
I at personal capacity have built businesses and products in SAAS, fintech, and ed-tech.
Apart from that consulted a bunch of companies, and invested in a few companies.
While I was retrospecting my journey and execution, I realized how Indians buy is different from the West, it’s unique but also very expensive for companies
95% of things Indians buy are assisted by a seller, counselor, account, or relationship manager
Think of this, right from buying stuff in the supermarket, getting a loan/insurance, or buying an educational course - consumers need someone to talk to
To onboard a merchant on payment apps, marketplaces, or e-commerce platforms - some executives have to reach out to onboard them
This is a very different behavior when you compare it with the West or any progressive country, most sales are self-assisted - only enterprise-level or high ticket-size transactions have humans involved.
Tech companies are supposed to be tech-led but in India, most big tech companies are partly operations-led there are many reasons which I will share in the post
What happens when a tech business needs sales executives or any human effort to acquire a user, margins shrink to a certain extent - conversions could improve a little but quality, miss-selling opportunities, and average response time increases
You are in a disaster business if you need human effort to acquire a user and make them perform their key activity again ( basically your activation cost becomes super expensive)
I think another big failure with this behavior is, that cross-selling and up-sell become so hard, ideally, cross-selling and upselling only exist where there is high engagement
At my stint in PW, 60%+ of our sales used to be counseling-led, and there were courses with a different proposition and price points but we had to use counseling efforts to sell courses worth 4000 INR.
When we were building credit profiling for businesses, we used to hear rants from SMB lending tech incumbents about how operational-heavy the entire process was.
Rahul from Insurancedekho, who prev built Verak an insurance company for SMB kept telling us how they have to drop an army of sales reps to get deeper penetration
When your sales become mostly operational there are more operations required to make sure they are efficient,
You will have to pay them good salaries and align incentives.
derive quality metrics and optimize those metrics ( average response time, average sales time, lead to sale %)
Build a knowledge base and update it consistently
Build an organizational structure of Senior managers, managers, assistant managers, team leads, and analysts
Do quality checks and assurance, have higher NPS
Importantly you are cracking numbers/sales
With this operation-led sales process what happens is that 50% of leads generated in a lead gen campaign are of no use, consumers don’t lift your call or say not interested in the first second
If you get 5% conversion in sales for consumer products that is a great number - % could vary for other industries/segments
we are a low-trust country - you need constant human touch to build reassurance ( You have to badly do this if your products fail to solve engagement)
In India there are only a few products that are very well built, most products don’t have great UX and don’t have answers for edge cases, which amplifies the low trust of the consumer
Consumers’ lack of understanding, we always think consumers are mature like us and have great exposure like us but it’s not true, actually there was a great instance I should share with you - once at PW we were collecting our NPS, we asked consumers to rate us 1 out of 10 when we saw results our NPS numbers were bad when we deep dive into it we understood many learners rated us 1 thinking number 1 is the highest rank :)
You can solve this by building great products, but also you can’t swim against the river, if you are in an industry that needs operations involved, then go for it but make sure you build a great automation system
If you have any thoughts or tips share them in the comments :)
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