Power of I 2019

Happily ever after

Mumbai-based Servify seems unwavering in its quest to conquer the after-sales service market globally

Faisal Magray

Press 1 to continue in English.” This could be the beginning of a horror story in this age, when all of us have one electronic device on which the thread of our life hangs, and it breaks. What follows is a wait at a call centre, for an agonising length of time, when we are informed repeatedly that our “call is important” to this brand many cold miles away. It makes you want to tear your hair out and it is a common experience. According to a 2018 study, 43% of mobile and computer manufacturers have the worst after-sales service in the country. Thankfully, there’s one start-up that is trying to soothe our worry lines.

“If you ask me if I wanted to be in the after-sales service profile, I’ll say, not necessarily,” proclaims Sreevathsa Prabhakar, founder and CEO of Servify. A former student of engineering in electronics and an MBA in information technology, he says, “All my friends were in software. There was a common belief that only people who couldn’t get jobs there would work in service.” Prabhakar now heads India’s biggest after-sales service platform. The platform connects all the nodes — the buyer, the call centre, service centre, parts supplier, warehouse manager and logistics handler — and ensures that any complaint or request is handled smoothly. Each stakeholder has an app through which they interact with the platform, much like how a passenger and a driver have different apps to interact with Uber. Through this platform, Servify also offers additional services for products, such as extended warranties.

The company has done very well for itself, seeing its revenue grow by more than 2x each year and reporting sales of $10 million in FY19. The founder expects it to grow 3x this fiscal.

Humble origin

Informally called Sree or Vathsa by his co-workers, Prabhakar founded Servify in 2015 though the idea for it began taking shape in 2009, through his first venture called The Service Solutions (TSS). “In large format retail stores, customers get a standardised experience, but not in mom-and-pop stores. We wanted to solve that,” he says. 

Before becoming an entrepreneur, Prabhakar spent over a decade on the corporate side of after-sales service. “I moved to the City of Dreams from Mangaluru and joined BPL as a trainee with absolutely no knowledge of the local language and culture. But I liked Mumbai and somehow blended in,” recalls Prabhakar. After working with what was then India’s largest consumer electronics brand, he plied his trade with Samsung as a service manager, moving on to Tata and Nokia as a service leader.

“When I was with Nokia, there were 750-odd service centres managed by the same number of independent businesses, all contracted by Nokia. The sheer scale was the challenge. We had to manage a vast number of individual vendors, accounts and invoices every month. From a customer’s point of view, this translated to 750 different experiences,” he opines. Brands usually issue customer service standards and guidelines to vendors, but they rarely follow them diligently. This gap in service is what laid the foundation for TSS — one-brand solution across several stores — a franchise for electronics repair. TSS would ensure that the brand standards are followed by every store that bore their name.

TSS got its big break immediately in 2009, with Apple. “We approached them and proposed to set up exclusive service centres just like the Apple stores in the US,” says Prabhakar and they set up the first service-only outlet in India for the tech giant. Besides taking care of the operations, TSS built its own tech platform to deal with the customer directly. One of the biggest global players in this space, B2X Care Solutions, set its eye on TSS and bought it in 2014. According to reports, the deal was worth $45 million.

Service king 

While TSS was focused on bringing service centres in line, Prabhakar realised that there was an opportunity in setting the larger ecosystem right. Today, customers place high value on transparency and quick resolution of grievances, but have little faith in company call centres to give them either. “Therefore, they head to Twitter,” he says. With Servify, he brought all involved on board, including customers and warehouses, and began fixing every loose bolt. Currently, 45 product companies (such as OnePlus and Nokia) and 90,000 retailers (such as Croma) connect to 12,000 vendors through Servify. The platform has quarter of a million users (comprising service centres and logistics personnel) and connects to over 750 million customers.

It is a good investment for any brand. “Effective after-sales service can help drive customer satisfaction, customer retention and brand loyalty,” says Harsha Razdan, partner and head – consumer markets, internet business and life sciences, KPMG India. He adds, “Customers are willing to pay more for a product or service from a company with a good track record.”

Servify’s vision was clear — to create a robust ecosystem platform. “Integrated service offerings covering end-to-end life cycle management is what differentiates Servify from other players,” says Ankur Pahwa, partner and national leader - e-commerce and consumer internet, EY India. The platform also helps people trade in their old phones for new ones.

Its solid business model has attracted investors such as Iron Pillar, Blume Ventures and Beenext; in fact Iron Pillar led the $15-million funding round for the company, in 2018. Anand Prasanna, managing partner at the India-focused venture capital fund, says, “We look at the product market fit, revenue streams and a management team that can scale up before we invest in a company. We found all these in Servify, along with a lot of customer love from the brands they work with.” The start-up has raised $20 million in funding in total.

Client connect

Within four years, the company has seen tremendous growth. It boasts of brand partners such as Apple, Jio, Nokia, Amazon, OnePlus and Xiaomi. OnePlus hopped on board as Servify’s first customer and uses the start-up’s services for all its products globally — from phones to accessories. As OnePlus became the fastest growing smartphone brand in India and the top five globally, Servify rode that wave.

Ramakrishna Kongara, head of customer support, OnePlus India recalls their chance meeting. “In September 2017, we were searching for a new customer-relationship management (CRM) tool. Lincle Peng, the global customer support chief, and I liked Servify’s user interface (UI) and the customer experience on offer,” he says. The Chinese smartphone manufacturer claims to have seen tangible improvement in its customer service metrics since then. “The customer satisfaction score (CSAT) for OnePlus improved from 80% to 96% within a few months,” Kongara adds. More queries are being resolved in time — while earlier only 43% of the grievances were addressed within the stipulated two hours, now it has gone up to 80%.

Tata’s consumer electronics brand, Croma, also vouches for Servify as a partner. Ranjit Satyanath, CIO, Infiniti Retail (Croma), says, “We share the same ethos as Servify when it comes to customer experience, which is why we have partnered with them.”

Numbers game

Servify handles close to three million unique transactions a month and its revenue model with every partner differs. “Our business models differ from client to client. We may get paid per transaction, per warranty or just for the enabling software,” Prabhakar says. While some may choose to only offer warranty plans through Servify’s platform, some may want more add-on services such as insurance or plans to buyback old models. OnePlus Protect (which includes convenient repair service and insurance claims processing) and motocare (which includes trouble-free repair service and extended warranty) are a few examples of Servify-powered apps.

Prabhakar shares that warranty plans are a big play for the company and make up about 80% of its total revenue. “Typically, the customer pays about 6-7% of the product price as one-year additional warranty,” he says. However, Servify white-labels all its products. This means, a customer buys a Nokia Insurance or OnePlus Protect, not a Servify Care. The idea is that the average customer trusts the product brand more than the service vendor, so they let the brand take the driver’s seat.

Not just India, the company has tapped into global markets including the US, Europe and the Middle East. “We are in high-consumption markets to earn while we learn in India. Markets such as Turkey and ours are tough to permeate but have a huge opportunity to grow. These are highly unorganised and inefficient markets,” he says. In India, unorganised vendors cater to over 80% of the electronic repairs and 90% of the trade-in/buyback market. On the organised side, B2X Care Solutions, the German company that bought TSS, is in the fulfilment business, but Servify’s USP lies in being “only in the enablement business.” While markets such as US, Europe and Middle East offer a huge opportunity for any player, a newly-launched company would find it way too tough to break in. 

Prabhakar realises the value of being based in a different market. “From an investor perspective, it’s better for businesses to move to the US or Singapore, where the ease of doing business is much better. Plus, a start-up like ours would typically be 2x the size in the US, because of its larger market size and a more aggressive paying capacity,” he says. But, he believes their primary market will pay off in a few years. “If we become worth $1 billion in revenue after five years, the valuation difference between here and the US will only be 10-15%,” he explains.

Iron Pillar’s Prasanna believes that Servify has a formidable USP in the global market. “In a world where customers keep changing their gadgets frequently, hardware is getting increasingly commoditised. Therefore, the only way to differentiate yourself from other brands would be through after-sales service and Servify is the only tech company in the world that is offering a complete one-stop solution for these hardware brands,” he says.

Promising prospects 

While the picture may look rosy for the tech start-up, many brands still view standardised service as an added cost. Most remain reluctant to invest a significant amount in it. Even with these barriers, Prabhakar believes that the global service market is growing. “As a rule, the cost of after-sales service is directly proportional to the product price,” he adds. According to reports, the market has been growing at 25% annually. That keeps Prabhakar optimistic and as smartphones evolve, Servify sees another opportunity to bank on. “Phones are becoming more advanced and delicate. Software issues are going to rise at a faster pace than hardware. These can only be handled by professional and authentic service companies,” he shares. 

His clients agree that the company’s capability is unparalleled for now. “Their expertise in digital transformation of after-sales service helped us expand our network of service centre partners significantly within six months of implementation,” says Croma’s Satyanath.

Meanwhile, as young consumers turn towards premium second-hand products in the electronics category, Pahwa is betting on better growth in the trade-in and refurbished phones segment. He says, “Price sensitive markets such as India will continue to challenge original equipment manufacturers (OEMs) on new sales; this will certainly help the growth of companies that establish a standardised grading system for refurbished products.”

The total addressable market of the global after-sales service industry is worth $50 billion, but the highly unorganised trade-in or buyback business is worth another $50 billion. “With a platform like ours, where we know the end-to-end life cycle of the product, we can even provide warranty on a second-hand electronic appliance, simply because we can do the correct health assessment of that device,” says a confident Prabhakar. 

Servify is currently working on a hardware chip for its partners that can conduct quick and efficient device-health assessments in one tap, when integrated. The company wants to power every partner’s device with internet of things (IoT) enabled technology that could predict when consumers need assistance with any and every issue. It has successfully done this for the smartphone after-sales market, and has kicked off a measured expansion into the household appliances space. “With a television or a refrigerator, we will need to send a service agent for a simple check, which is currently automated with smartphones where you don’t need a person to do the preliminary diagnosis,” says Prabhakar. They have already signed up with two major OEMs for this.

Prabhakar believes that they have the first-mover advantage in the after-sales ecosystem play, which has only three to four companies worldwide. He also believes that each competitor is a potential partner in a continuously evolving industry. “The biggest risk lies in us not being able to scale significantly. We should maintain the momentum we have built for ourselves,” he says.

Servify’s story is that of a great offering led by a true-blue entrepreneur, as he uses every bit of his 13-year toil in the industry to realise a dream. Working with the world’s largest consumer brands is a huge responsibility. “With the volume of partner and customer data we manage, we can’t afford to be complacent at all. There is no room for error anymore,” he says. Prabhakar is not intimidated by the task at hand; in fact he has a healthy appetite for more.