Understanding the Customer: a Game Changer for Us

I was recently invited to participate in an event for SMEs and start-ups where I was asked a very insightful question. The event was on branding and the question was on what did we research about before deciding our marketing strategy. While sitting on the stage with 300 people staring at me, I thought about it for a minute, I'd never given research a thought in day to day runnings of the business. Then it hit me, as clear as day, it was customer research that was most pivotal in our journey. In fact our entire business revolved around understanding our customer. I stuttered an answer while just realising the importance of what i'd just realised. Why were we successful? It was all about understanding your customer. Let me share our story and explain what I mean. 

I am the founder & CEO of what has become one of India's largest paper lifafa (paper pouch) manufacturing company, Urja Packaging. When I started the company as a 25 year old I found the traditional business environment a very difficult place to be not just because of competition but because of the nature of the market.

Me, Sushant Gaur in the right sitting with Mr Sushil Aggarwal, Chairman of Avon Moldplast (middle) and Mr Dinesh Agarwal founder of Indiamart (Left) in the Brand of India event organised by YourStory

In 2012, the paper pouch (lifafa) market was divided among household enterprises making hand-pasted pouches and small manufacturers using 1 or 2 machines to cut and paste pouches. The reach of one manufacturer was maximum 20-25 Kms around their place of work since they were usually one-(wo)man shows, just one person who is operating the machines, packing the material, selling and supplying it.

Sample Image of a standard size paper lifafa by our company Urja Packaging

The customers were used to short-counted packets (i.e. 46 in a pack of 50 etc) and used it as an excuse to delay payments and randomly cut payments. The short-counting was such a prevalent problem that even the reams of paper started coming in packets of 460 or 480 instead of 500. 

We did not want to follow the market standards in this we wanted to create our brand to stand for the same values we have in our everyday life, which is 505 pieces in a packet of 500, a Zero defect policy by implementing systems for 100% quality checking for pasting & printing errors and payment terms of our choosing which is payment on delivery and no short-cutting our payment due to bullying by the customer.

What we did not foresee was that customers would simply not get convinced that our paper lifafas were not short-counted, were defect free and we delivered on time. No matter what we tried the 50 year old conception that all packaging suppliers are going to fleece them simply would not go away. After a while we understood that they did not want to accept and any change because the system suited them since they loved to cut bills and under-pay, so it was convenient for them to not accept or expect any change.

Whether they agreed or not we had solved the customer's problem but we had not predicted that the customer is more comfortable with the problem rather than without. The biggest problem for us was to make them accept that things have changed and get them to accept our payment terms. We had to think of something completely out of the box and disrupt the system, open their eyes and convert this traditionally push market to a pull market.

By now, around a year had passed by and we understood our customer much better, we came up with a two pronged approach, one to differentiate ourselves in a way that demonstrates our fair practices and second to use a highly effective internet marketing strategy without spending much, so that when the market changes, people are able to find us. 

Strategies: 

1. After briefly studying SEO we launched an internet campaign of free ads using seo-curated ad language We posted our text ad on more than 50 free sites with the main keyword as "Paper Lifafa". Since these sites already had a lot of traffic and were indexed with google, overnight our ads were turning up in top google results. Before studying it myself, we tried to get some cheap professional help unfortunately 2 of the people we contacted laughed on the term 'paper lifafa' and the third tried to convince us that the traffic for paper lifafa is so less that google analytics doesn't have enough data to analyse. However we knew we didn't need 1,000 hits, because there weren't 1,000 customers for this product on the internet in the area which we could feed, all we needed was 5-6 calls per day. 

A typical customer with his Son at Shahdara Wholesale Market

What we were sure about was that we understood our customer. Our typical customer was a 40-50 year old man, a shopkeeper in the local intra-city whole-sale markets (With a customer range of 15 kilometers) the customer himself, knew that he could find people using the internet but didn't exactly know how. He could speak in English but exclusively thought in Hindi, hence we knew he would search for paper lifafa and not any other keyword. Also, anyone searching for paper bags may or may not want paper lifafas but every single guy who searched for paper lifafa, wanted paper lifafas and is probably on google as a last option and is desperate for the product. Within a week we achieved what we wanted, 5-6 calls per day, this went on non-stop for around 2 years. Now with our searchability sorted, we needed to give them a reason to search for us. 

2. Problem number one always was the payment terms and we knew we needed to create such a differentiated model that we could convert the push market to a pull market and only when that happened could we dictate our payments terms. I'm personally very proud of what we did, we changed the units of sale, instead of getting stuck in the 46 or 48 or 50 in a pack trap, we moved to a selling by the kilo model. This proved to be an equalizer across the board. No matter what packing is coming, no matter what quality paper is being used, everything was weighed and compared to our rates, since our basic rates were always below the competition, we came out above. The competition that had sold this product for 50 years, found it impossible that someone would sell per kg and they refused to change. 

Even some of our own customers did not change initially specially the whole-sellers sitting in the national wholesale markets (Chawari Bazaar & Sadar Bazaar) but soon their customers (the end users) started asking for paper lifafas in kg rates and they were forced to buy on our terms because we were the only guys who sold in per kg rates. We enjoyed this self-made-niche opportunity for 2 years after which due to the ban of plastic bags in Delhi a new breed of manufacturers were born. These new guys only learnt to sell in kg rates and enjoyed the market that we had opened up for them. 

Scenes of Paper Market in Chawari Bazaar, Delhi

Luckily the market remembered that we were the ones who brought the change and did not forget us. We had never banked upon the changes to make our brand, our brand always was built on our relentless policy of zero defect and 100% quality checking for printing and pasting errors, additionally we would pack 1.040 kg instead of 1 Kg taking it as a customer delight expense, since our outer packing was of 30 packets, their combined weight would be 31.200 Kg, this satisfied the need that some customers had of cutting payments as in their mind they were gaining 1.2 Kgs on every bag of 30 Packets.

So like this, just by understanding our customer through research, through observation and empathy we devised a go to market strategy that helped us achieve all our aims and has since the get-go kept us in the lead in our industry.

Notes:

The points where understanding our customers was critical:

1. Understanding that the customer did not want to accept that their quality and short-counting problem was solved.
2. Understanding that the customer thinks in hindi and would search for Paper Lifafa, also understanding, no matter how small the traffic, any traffic coming through the keyword Paper Lifafa would be easily converted
3. Understanding that only a blatant method of sale by weight would force the customers to accept that a major change has happened in the industry, and also realising till the wholeseller's customers didn't ask for bags in Kgs, they would not convert easily.
4. Understanding the wholeseller's need to feel that they have the upper hand and fulfilling it in a way that suited us.