How a Bangalore start-up simplified after-sales services for all white good companies
Jan 23 2013, 14:51 | By SME Mentor
Speaking of pain points, how's this one? While buying consumer electronics, gadgets and gizmos is fun, what happens when they don't work? Six weeks ago, it was your Samsung microwave; now the LG washing machine you recently bought from a major retail store is on the blink. It's simple - ask Jeeves.
Here's the amazing thing - the after-sales technician sent by the retail store is no LG guy; he's an employee of Jeeves Consumer Services, a Bangalore-based start-up that installs and services consumer appliances and electronics of all major brands sold through large-format retail chains across the country.
Jeeves is the brainwave of R N Balasubramanya and Alok Sen. With a seed capital of Rs 40 lakh, 8 employees and a small office in Bangalore , the company took off in August 2007. It had just one client back then - BPL - and 30 franchises. It has since grown to have 40 clients, 600 franchises and 400 of its own technicians across 222 cities in India .
At Your Service, Jeeves!
In the 1990s, when BPL was the market leader in consumer electronics, their biggest challenge was after-sales service. Balasubramanya and Sen worked with BPL then. "Initially, the company had an in-house service department. As sales grew, the number of people in the service department also grew. But the management finally realised that service was not their core business and it was becoming unviable and unmanageable. So they tried to outsource after-sales service to franchises and ended up appointing 15-20 franchises in each city. This brought its own set of challenges," remembers Balasubramanya.
That's when it struck Balasubramanya - the country needed a pan-India service provider, a one-stop shop for various consumer electronics companies. And thus began his entrepreneurial journey.
Right Ho, Jeeves!
But it wasn't easy. Jeeves is a manpower-intensive operation and consumers are notoriously fussy. How do you get a qualified technician to a client's home within 24 hours in so many cities, on time, every time?
Here's how the start-up overcame some of its biggest challenges.
Hiring Technicians: Technicians were a little sceptical about signing up with a private company no one had heard of back then. Jeeves soon figured out that most technicians were working with companies that did not offer any social welfare benefits. When the company started talking about ESI (Employee State Insurance) benefits, provident fund benefits and the pride of working for a private limited, organised player which would provide a uniform and identity tag, they were able to sell the idea to technicians.
Franchises: Servicing customers across geographies is a potential logistical nightmare. So Jeeves identified local franchises who could send their technicians to customers, promptly. The arrangement suited the franchises as it streamlined their own operations. Whereas they had earlier signed up with the service departments of many different companies, they now had just one client - Jeeves. It was a symbiotic partnership.
Training: Companies are constantly launching new products with diverse features, and new variants of existing models. Thus, technicians need to be trained and updated on all these products on a regular basis as untrained staff can cause irreparable damage. To make sure their customers receive quality service, Jeeves decided to train technicians of their franchises even in remote areas of the country. To achieve this, the start-up used a combination of technology and manual processes.
Spare Parts: Getting spare parts in every location in the shortest possible time was another huge challenge. Jeeves had to have adequate supply chain management in place to be able to service customers quickly and with authentic spare parts. So it set up its own warehouses in Bangalore , Mumbai and Delhi while also signing up with independent vendors. Jeeves now claims it can source spare parts to anywhere in the country within 40-72 hours.
Despite these challenges, Jeeves is an authorised service provider of 40 brands including Toshiba, Panasonic, Micromax, Tata Sky, HCL, among others. While 45 per cent of the business is handled by their own branches, 55 per cent is outsourced to franchises.
"We pay our franchises on a per-call basis. If the call load is good, they don't demand an extra fee. But if the call load is not good, and if the place is, say, in a hill station, we offer a fixed compensation. Ninety-five per cent of franchises work on a per-call basis. When there is a call, they get paid for it. The cost starts at Rs 75 and we have a profit margin of 15-20 per cent," says Balasubramanya, who adds that the company's turnover in the last financial year was Rs 9 crore.
Adding A B2C Model
After doing B2B for about five years, the founders realised that there was huge potential in directly servicing customers. "There are about 175 million households with more than 400 million products. Thus, we recently launched Directive Customer Product, which offers AMCs. We did a soft launch in Bangalore and we will launch in all the other metros soon," adds Balasubramanya. The company's annual servicing plans start at Rs 990. In addition, Jeeves launched AMCs for IT services, both hardware and software, in Bangalore in September 2012.
Very Good, Jeeves
Balasubramanya estimates that the electronic after-sales services market in India is worth Rs 2,500-3,000 crore. With first-mover advantage and no other company quite like it, the field is wide open.
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