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March 20, 2007

The Real Ajoy

Sometimes, the best insights from the GIO don’t come from the collaborative discussions we have sitting around the table. Sometimes, they come out of the many casual conversations the GIO team has with deep dive participants during breaks, lunch, or the welcome dinner the night before. Sometimes these insights are so subtle, so fleeting, you catch them only out of the corner of your eye, and they don’t really make sense to you until the next day, or on the plane ride home. And sometimes, they hit you square between the eyes.

Today I want to share one of those moments that I had in Mumbai. During one of our fifteen minute coffee breaks (or tea breaks, as it were), I had the pleasure of talking with Ajoy Krishnamurti, the CEO of Sankalp Retail Value Stores. As CEO, Ajoy is in charge of Sankalp’s recently franchised My Dollarstore chain of stores, in which everything is priced at or below 99 rupees (or about two dollars). Sankalp franchises its 42 stores throughout India from California-based My Dollarstore Inc., and sells mostly American-made products, like Pop-Tarts and Hershey’s Chocolate Syrup. They also offer the full American retail experience: red, white, and blue decorations; wide aisles; posters of the Statue of Liberty.

The formula has been wildly successful. India’s My Dollarstore saw 4.5 million customers last year, after just opening up in 2004. And Sankalp has plans to open as many as 400 of the outlets over the next three years.

How did they do it? TV advertising? Direct mail? Special events? “We don’t do any advertising,” said Ajoy, a man whose honesty is apparent the first time you speak with him. “We can’t afford it.”

So the whole business has been built on word of mouth, or so called “viral marketing.” So far most of the words that have been passed along about Ajoy’s dollar stores have been good, obviously. But it’s not always good. And I asked him if that bothered him, and what he could do about it. “Let them say what they want,” he said, without hesitation.

When I asked whether he has ever had a problem with negative messages getting out into the market, he told me a story. He said it bothered him that customers would sometimes assume that because the goods in his stores were inexpensive, that they were also somehow defective. Because he knew that wasn’t the case, he thought about how to change that perception.

To address the problem, Ajoy is offering a full refund in his store for anything that is not of high quality. A money-back guarantee is not common in India. He is also staffing up the stores to answer customer questions about unfamiliar American products.

What Ajoy understands, and many do not, is that “messaging” and traditional marketing, are not always the most effective way of selling goods and services. Word of mouth is far more powerful. But he doesn’t try to seed the conversation. He just lets it happen. And he knows he can’t control it.

So when he had a problem with the message that was getting passed along about his product, he didn’t take out an ad in the newspaper, or launch an elaborate marketing campaign. He simply changed the service. He made the offering more compelling, and trusted the market to sort it out. He enhanced the product, not the message.

This may be nothing new to all you MBAs out there. But to me, coming from a message-saturated American market, it was a pretty powerful lesson. It spoke to the authenticity issue that the New York deep divers repeatedly brought up: consumers are too savvy these days for promises. They want something real and honest.

It will be interesting to see if Ajoy can keep the success of his My Dollarstores up when Wal-Mart, Tesco, and Carrefour come to India, as they are all planning to do. But my guess is that with his local knowledge of the Indian consumer and his authentic attitude, Ajoy’s going to do just fine.

March 20, 2007 in Media and Content | Permalink

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Comments

Very interesting feedback - word of mouth is so important - but why should we think this is a revelation ?

Posted by: Freddie Moran | Mar 20, 2007 5:17:26 PM

This is a very important point to remember when looking into the virtual worlds, a.k.a Second Life hype. Most business people rushing into there (including, sadly, lots of IBMers) just think "great, a new marketing channel". What they forget is that word of mouth is even quicker in SL than in the real world - if you are offensive, pushy, or just plain boring, the community will know, and avoid you. Already the first movers are leaving SL because of overt commercialization.

But doing as your Indian friend did - having something worth talking about, letting the community build - will make success in these new worlds...

Posted by: Christian Bieck | Mar 21, 2007 4:31:09 AM

Freddie, i think what's important to take away from this is the "authenticity" factor. Companies try to seed the market with "word-of-mouth" messages -- like the Adult Swim campaign in Boston that met with disastrous results -- risk backlash. Here's a link to that Adult Swim story in case you're unfamiliar -- http://www.boston.com/news/local/articles/2007/02/01/marketing_gambit_exposes_a_wide_generation_gap/

Posted by: Dan Briody | Mar 21, 2007 8:03:39 AM

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