May 2010 | Arundhuti Dasgupta
A collaborative partnership
‘We only do what’s right for you’ is more than a tagline at Tata Capital as it rolls out a business model with the customer at the core
Two years ago, the global financial crisis sounded the death knell for many companies. Tata Capital reworked its strategy and approach, and strengthened its resolve to become a customer-centric organisation. Says Praveen P Kadle, MD and CEO, Tata Capital, “Initially when we started out, Tata Capital was operating in vertical product silos and developing a customer base for each product independent of the other.” The financial crisis made it impractical to adopt such a model. For one, the cost of customer acquisition and retention was too high. And secondly, it was not in the best interest of the customer who would have to interact with different product groups within one company to meet his or her different financial needs. The market and the customer were both looking for a change.
- Contact: The company establishes the first contact with a customer through a variety of channels. Says Mr Daboo, “We do direct marketing and local lead generation activities, and approach customers through institutions and channel partners.”
- Connect: This is when the company does a first transaction with the customer. “We close the first sale and the customer enters the fold,” says Mr Daboo.
- Retain: At this stage Tata Capital starts building a relationship with the customer via extensive customer service and cross sell. Based on the customer’s profile, the nature of his / her past transactions and the potential to generate future business, the customer is offered a range of products and services to meet varied financial needs.
- Partner: Gradually the customer forms a deeprooted relationship with Tata Capital and by the time he reaches this stage he becomes a collaborative partner. A range of products and services are then developed for the customer — right from financial planning and advisory, to execution of every financial requirement for joint wealth creation, protection and enhancement.
The company has also developed a four-stage customer engagement model that offers several advantages:
- The customer has a single point of contact with the company.
- The company has a single and complete view of the customer and therefore the quality of the interaction is not unilateral or silo-based.
- It brings down the cost of acquisition of customers and if managed well, generates a word-of-mouth sales play that helps the company.
- It helps create innovative ways of reaching out to customers. For instance, the company has currently launched Unnati, a programme for relatives of Tata employees, under which Tata Capital trains select customers to also function as agents. The company thus gains customers as well as referral business.
Tata Capital has set itself an ambitious growth plan. Says Mr Daboo, “From a business perspective, we are in the full gamut of products. We have also launched our mortgage business where the stickiness factor is high. We are strengthening our asset-based business and are simultaneously developing our wealth management business as well as the equity brokerage offering.”
- Achieve total revenue of Rs60 billion.
- Enhance the asset base to create total advances of Rs500 billion.
- Ensure contribution in terms of profit after tax of Rs10 billion.
- Build highly engaged stakeholders.
From good to great
What would you consider to be the high and low points of the Tata Capital experience so far?
We have maintained a consistent profit track record and expanded our branch network — we are now present at 65 locations in India through a footprint of 100 branch offices. We have witnessed strong growth of the corporate finance business, ensured successful closure of the first fund from the Tata Capital umbrella and have been listed in Debt League Tables for an investment banking advised deal.
We have also established our international presence, and the institutional equities and distribution businesses have gained traction within the industry. In fact, we mobilised the largest fixed deposits for Tata Motors and Indian Hotels.
We have had our disappointments too. There were significant market shifts in our embryonic stages, and we were negatively impacted by the liquidity and credit crisis in the market in our first year of operations.
What was the impact of the credit crisis on the company?
No private sector company in India had introduced NCDs in the retail market in the last few years. We were confident that this instrument would be well accepted by investors, and could lead to the development of a strong corporate bond market. The Rs5 billion NCD issue was oversubscribed by six times, demonstrating the investors’ confidence in Tata Capital.
Is the cash crunch within the banking system a nightmare of the past?
What are your plans for the future?
We aim to become the leading financial services company in India with a global footprint. To achieve this, we have identified a set of four goals called Race 2015, which should help us realise our vision.