Four years ago, a conversation between an insurance agent and a client in a tier 2 town went like this:
Client: I don’t need insurance.
Agent: Do you have a car?
Agent: Have you bought insurance for your car?
Agent: When your car has an insurance policy, why don’t you have one?
This story has become something of a legend at the offices of Netambit, the Noida-based seller of financial products to predominantly tier 2 markets, and it’s told with special pride because the agent usually succeeded in making a sale at the end of the conversation.
Netambit sells all sorts of products from practically all the names in the insurance business (LIC, HDFC Standard Life, ICICI Prudential, Tata AIA, Bharti AXA etc.); it also distributes the entire spectrum of financial products, ranging from mortgages to fixed deposits. But it’s the market for insurance that the company has mastered with particular diligence — of the 10,000 new Netambit customers every month, 60% ask for life insurance policies, 20% go for health and automobile insurance, and the remaining 20% encompass all the non-insurance products put together.
“Five years ago, the first question clients asked us was, ‘why do I need insurance?’” recalls Girish Batra, CEO, Netambit. “Now, the question we get asked is: ‘what’s the highest amount of insurance you can offer?’” Direct marketing, which has become the norm for selling financial services, was pioneered by Netambit. “In fact, the telemarketing model in the financial services space is called the Netambit model,” preens Batra.
This is not idle talk. Netambit’s revenue has grown seven times in the last five years, from 15-20 crore in FY08 to 120 crore in FY12. In the current fiscal, the company expects to touch 165 crore in revenue. “Tier 2 towns give us access to the wide Indian mid-market everyone talks about,” says Batra, who works out of a large cabin on the 7th floor of a tall tower, in Noida, its floor-to-ceiling window showcasing a splendid view of the Taj Expressway below.
Across the office, everyone appears to be busy with calls, quietly talking to prospective clients. Around 5 million consumers are dialled every month, about 600,000 actually talk (because not everyone takes calls), out of which only 8,000-10,000 buy products but, “we end up educating the rest about insurance,” points out Batra.
This how we do it
Awareness has certainly increased. When Netambit ran a 3-minute infomercial on endowment plans four months ago on NDTV, Doordarshan, Sahara and Zee, the response was staggering — not only did it net 4,500 enquiries in a month with a conversion rate of 6%, it turned out that 77% of the leads had come from tier 2 cities. Where there’s so much business, investors can’t be far behind. Till now, Netambit has bagged 120 crore in three rounds of funding from Bessemer and Helion Venture Partners.
Netambit has been around since 2003, when the insurance sector was first de-regulated, but, “We had to start from scratch,” recalls Batra. “People in tier 2 towns dealt in cash and insurance was an alien concept to them.” But having worked with Godrej’s consumer products division and the Escorts Group earlier, Batra had seen the potential of tier 2 towns and was sure of his geographical focus.
Netambit started operations with 11 employees and a call centre in Delhi with the view to expand into near-by smaller towns. The mandate to the team was to make cold calls to clients. “Once we started selling, we expanded our circle from Delhi to smaller towns around the city,” explains Batra, who now monitors 150 offices and 3,500 employees (2,000 man the call centres alone) with just a laptop and a phone on his desk.
“We are a mid-market company and we sell to the middle class in smaller towns,” says Batra, adding that his sales force only advises clients based on the type of policy they need and the product that suits them best. “This is an industry with too many products. So if two companies are offering similar products, we look for additional features that meet a person’s needs,” he says.
Even generally, the cover with the lowest premium may not always be the best, so Netambit gives the client the company’s claim settlement record and the average claim settlement time, all of which is available on IRDA’s website. “You might pay a higher premium but you also get a critical illness rider,” says Batra. Netambit’s commissions vary considerably — from 1% to 15% in long-term products.
Netambit’s experience shows that a lot depends on the interaction with the consumer — sometimes, a deal goes differently simply because a consumer is not comfortable with a particular brand perhaps because of personal experience. Nevertheless, “We ask the sales people to zero in on the three most suitable brands for each customer,” says Batra. “This makes it much easier for customers to make a choice.”
Each location has three or four are field agents. If the location is very small, they make do with just one field agent. The company’s hub-and-spoke model gives it a presence in bigger towns such as Moradabad and Indore, and it tries to work with clients within a 100-km radius of such towns.
Small is beautiful
The strategy is canny and earthy. About 65% of Netambit’s revenue comes from small towns and cities, so it helps that 80-85% of the company’s workforce is also from such geographies. Deepak Gupta, a Netambit field agent, lives in east Delhi and services the Noida, Ghaziabad and Modi Nagar areas. “Dealing with clients is mostly easy except that customers these days ask a lot of questions,” grins the 28-year-old. He adds that customers in smaller towns have less exposure to insurance policies and are excited to hear about what insurance can do for them.
Smaller cities also have a different ethos. “In smaller cities, you always get a welcome reaction,” Batra points out, adding that the response to Netambit has been very positive. “People listen to you, unlike metros where cold calls are treated with contempt.”
It is clients like 57-year-old Bhupinder Kumar Khullar, general manager, Escorts Hospital, Faridabad, who make it a worthwhile business proposition. Khullar first heard about Netambit a few years ago when an agent came to his office and, since then, he has bought at least four insurance policies for himself and his family from the company. “I like the fact that they give me a product based on my needs,” Khullar says earnestly.
“There are so many products in the market that it’s very confusing.” Netambit’s experience has been that business metrics for metros and tier 2 towns are more or less the same, but the conversion of calls to customers in metros is about 1.5 times higher than in tier 2 towns. “But if you look at the reach, you end up reaching more customers in tier 2 towns,” clarifies Batra. “We have more customers giving us appointments in tier 2 towns than in metros.”
In the current financial year, Netambit plans to expand to about 50, even smaller towns. Scalability is not an issue for now; just four employees are needed to expand into a new location. “I need three to make calls and one as a field agent,” simplifies Batra. The problem is finding a good field agent. The slew of new product launches requires agents to be re-trained every time, which is an expensive affair. “Also, agents want to move to bigger cities,” adds Batra. “So they ask for a transfer, which means we have to again find a local agent. That’s tough.”
Regardless, if imitation is the best form of flattery, Netambit has quite a fan club. In recent years, all financial services distributors have created a direct marketing infrastructure, and some of them, like Infoline and Blue Chip, have started focusing on tier 2 towns.
Netambit hasn’t reinvented the wheel — it has just spun it in a new direction. While FMCG and automobile companies had explored smaller cities when Netambit set out to do business in them, companies selling financial products had not yet ventured into the Indian hinterland. “We have only 12 metros, which is very limiting for distributing financial products,” Batra concludes. “So, if you really want to have a large presence, you need to sell in tier 2 towns.”