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 we researched before deciding on 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 the day-to-day running 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 customers. I stuttered an answer while 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.

 

The importance of Knowing Your Customer – A Brief History of the Paper Pouch Industry

I am the founder & CEO of what has become one of India's largest paper lifafa (paper pouch) manufacturing companies, 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.

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 a maximum of 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.

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 will fleece them simply would not go away. 

After a while, we understood that they did not want to accept any change because the system suited them since they loved to cut bills and underpay, 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 would be 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 customers much better. We came up with a two-pronged approach - one to differentiate ourselves to demonstrate our fair practices and second, to use a highly effective internet marketing strategy without spending much so that when the market changes, people can find us. 

 

Strategies to Stand Out in the Marketplace 

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 primary 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 at 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. 

What we were sure about was that we understood our customers. Our typical customer was a 40-50-year-old man, a shopkeeper in the local intra-city wholesale markets (With a customer range of 15 kilometres). 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 payment 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  sell by the kilo model. 

This proved to be an equaliser across the board. No matter what packing was coming, or no matter what quality paper was 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, especially 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 on plastic bags in Delhi, a new breed of manufacturers was born. These new guys only learnt to sell in kg rates and enjoyed the market that we had opened up for them. 

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 defects 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 30 packets, their combined weight would be 31.200 Kg. This satisfied the need that some customers had to cutt payments as, in their mind, they were gaining 1.2 Kgs on every bag of 30 Packets.

So, like this, just by understanding our customers 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.

 

The points where understanding our customers was critical:

• Understanding that the customer did not want to accept that their quality and the short-counting problem were solved.
• 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.
• 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 wholesaler's customers didn't ask for bags in Kgs, they would not convert easily.
• Understanding the wholesalers’ need to feel that they have the upper hand and fulfilling it in a way that suitsd us.

 

This article was contributed by our expert Sushant Gaur

 

Frequently Asked Questions Answered by Sushant Gaur

Q1. Why is understanding your customer so important?

Understanding the customer is important to give a better solution to the problem. If we understand the customers and their problems in a better way, only then can an optimum solution be reached. 

Q2. How do you meet customers’ needs and expectations?

I will use an example to explain this: As a person in the packaging supply industry, our approach is to provide better products for lesser prices. However, since we understand our customers, we know that a bigger problem for them is optimising their products to reduce cost rather than simply lowering the prices and providing a robust supply chain. If we can supply products just in time, then the storage requirement for the product goes down for our customers, hence reducing warehousing costs, thereby reducing the total price of ownership for our customers.

 

Q3. What do customers value the most?

A supplier who gives them the ability to forget that the supplier exists, the highest value that any supplier can deliver to their customer is Mindspace. Only by giving perfect supply all the time can the customer derive value.  

 

Q4. What are the 4 main customer needs?

• Delivery as per the commitment
• Optimisation of the product to reduce cost
• Relevant new product development
• Easy communication