CRM Case Analysis

Mahindra First Choice Services:

Creating a Value Proposition

Submitted by – Section 2, Group 12

Pranav Sharma – FT201053

Raghav Goel- FT201059

Sirigiri Sai Srinija - FT201067

Saswat Kumar Dey- FT201073

Akash Dutta- FT202010

Introduction

This case is about sales in marketing Mahindra First Choice Services Limited (MFCSL).MFCSL
established in 2008 has created a network 28 company-owned and company-operated
(COCO) workshops and had a turnover of 300 million in a market that is pegged₹120 billion
by 2014. MFSCL’s parent company, Mahindra and Mahindra (M&M), had high expectation
and these can be achieved only by creating a nationwide network of workshops.

MFSCL needs to create a unique customer value proposition to differentiate its brand in a
highly competitive landscape in India. The aftermarket services market comprises original
equipment manufacturers independent garages and few organized players. The marketing
head, Alok Kapoor, and his team need top position their company's brand to capture
customers that have previously relied on local garages and original equipment
manufacturers. The team needed to ensure a consistent brand positioning that will be
similar to M&M’s values and image. With this, MFCSL’s positioning needed to be flexible
enough to allow for local requirements.

As there are no existing models Alok could learn from, it was not clear what exactly
customers needed from a service workshop. Alok and his team do not have the luxury of
time s they only have few months to decide on their brand strategy and begin its execution.

Business Environment Analysis using PESTEL and SWOT

PESTEL
Political: None

Economic:
• India’s economy was on the rise which increasing propensity to spend for each
customer and hence boosted this industry.

Social:
• Growing economy increased per capita income of the country thus changing
lifestyle and hence increasing demand for used cars.

Technological:
• Although services business was fragmented but advances in vehicle technology
caused an industry trend towards consolidation
• Internet was used a supply (sales) channel for spare parts and accessories which
posed a threat for MFC type organizations

Environmental: None

Legal: None
SWOT
Strengths
 The geographic presence in different areas can act as one of the principal strengths
of the organization. It determines the business’s reach to the target market and
ensures the handy accessibility.
 The wide range of products will allow the company to increase its customer base and
offset losses from one product category with benefits from the other.
 Strong online presence on multiple social networking sites and effective
management of social media will improve the impact of positive e-WOM and
develop strong customer relationships
 Market Leader in Automobile industry
 Brand Image and trust from customers because of Mahindra brand

Weaknesses
 Lack of Competitive advantage over independent dealers
 Lack of strong supply chain
 Low level of control

Opportunities
 There is a growing market for used cars in India
 Since there India’s economy is growing, there are more numbers of cars sold in India
 Using unsold cars and connection with individual vendors

Threats
 Increasing internal threats from domestic players and independent garages
 Big foreign competition might enter this market
 Increase in usage of public transport

Competition Analysis using Porter’s Five Forces Framework:

Bargaining power of supplier: It was drastically reducing as there was large number of
vendors. LOW

Bargaining power of Buyers: Since there was stiff competition from other OEM and
unorganised sector, which made switching cost of customers less and hence their bargaining
power was high. HIGH

Threat to new entrants: Small players with no R&D were surfacing and thus posing a threat
to MFCSL. HIGH

Rivalry among the existing competition: There was a high degree of rivalry among the
existing players in the market which consisted of brands like Carnation, Car-Z, other OEMs
and unorganised sector. HIGH
Threat of substitute: The threat of substitute was high due to availability of counterfeit
spare parts. Moreover, there might in increase in usage of public transport which pose as a
threat to this industry. HIGH

Customer Analysis

For MFCSL, customer segmentation required a detailed understanding of the factors

affecting the consumer’s decision-making process for selecting a service workshop or
provider. Broadly speaking, the end consumers in the automotive aftermarket could be
divided into business owners, fleet owners and private owners. However, these divisions
were not the only criteria for segment selection. Other important factors were the life cycle
stage of the car, the car maker, the owner’s service needs and the owner’s personality type.

Segment 1. Ownership Category

First priority should be given to the ownership category constituting individual car owners,
corporate fleet, taxi fleet and insurance. Mostly those car owners were more likely to avail
services of MFCSL who were residing within a 5 to 7 km radius. Moreover, for car owners of
large cities distance is not a problem so that could be beneficial for MFCSL.
Again, for acquiring new customers the marketing expense was Rs.24 million and total
manpower cost of acquisition activities was approximately Rs. 25 million. This is much more
than the justifiable levels of less than Rs. 250 per acquisition i.e. (250* 40000 new
customers).

Segment 2: Car Life Cycle Stage

MFCSL should give this segment second priority because even post warranty, as per case,
car owners used the aftermarket service of MFCSL 3 to 4 times in two to two and a half year
before selling their vehicle. Though customer retention for MFCSL was 40%, but its gross
margin on an average is expected to be 35 per cent per sale and net margin to be 10% by
2018.Also, according to Exhibit 6, majority percentage of customers who availed the
aftermarket service were car owners whose cars were within warranty and who were
subsequent owners.
Segment 3: Car Make
Car Make is in segment 3. The primary focus for MFCSL was servicing cars which are made
by Maruti, Hyundai, Mahindra and Tata.

Segment 4: Service Needs

As per the study, in India, only 90000 searches were directed towards car servicing despite
the number of cars on roads being close to two million which is equivalent to merely 4.5%.
Though services include mechanical, repair, minor denting and painting etc. According to
Exhibit 7, painting is where there is need for services to be provided. Therefore, MFCSL
should focus on providing more of such services.

Segment 5: Owner Personality Type

Owner personality types could be divided as follows:
 Gearheads: They were knowledgeable about cars and wanted the best for their cars;
they were explorers. They were interested in minute details and gathered
information about cars, new offerings, new technology, etc. They demanded the
best value for their money.
 Flaunters: These were attention seekers or showstoppers. They were switchers,
influenced by new technologies and products and by their social circles; they were
prepared to spend a lot of money on their cars.
 Epicures: They had refined tastes and generally were affluent or earned high
salaries.
 Functionalists: They were value seekers; they typically spent less on their cars and
were not up to date on new developments

Issues and Solutions

Issues
 Customer’s needs from a service workshop were not clear due to lack of precedence
 In mature markets, OEM-authorized workshops controlled over 50% of the business
and the use of internet as a sales channel for buying spare parts and accessories
were the major threats faced by MFCL.
 Starting a workshop in to US and European markets is difficult as they required
specialized equipment to conduct repairs and the budget is also high.
 The sale of spare parts was a grey area, as there is no fixed pricing.
 Due to catchment orientation of the business and its low customer life cycle value, it
was a marketing challenge to acquire customers, while keeping the customer
acquisition cost at justifiable levels.
 Apart from that, car servicing is hardly an attractive or glamorous proposition.
 The major challenge was to convert a price- conscious individual into a brand and
service oriented customer.
Solutions
 Creating unique customer value propositions and encouraging the customers to
outgrow the habit of relying on independent local garages.
 Setting up more authorized service workshops (with a greater number of bays) in the
catchment area of population with a comparative greater number of cars.
 Providing additional services like pickup and drop for customers residing far, 24/7
assistance and monthly online offers can add value to the service.
 Understanding customer needs to figure out the optimal size and workshop location
in a city, attractiveness of various customer segments and business parameters.
 Focusing on category A and B cars, individual car owners and mechanical repairs.
 Investing in skill development
 Building outlets within a radius of 7-8 kms to increase its reach to the customers.
 Focusing on repairing cars rather than merely replacing parts
 It offered “Fast Assured Service in Time” (FAST) as a new position for its service
stations in terms of comprehension and suitability

Customer Value Proposition

MFCSL must focus on following points to create unique customer value proposition in order
to differentiate its brand from an extremely competitive Indian landscape:

 Should focus on the core value proposition of the brand that is “F.A.S.T” (Fast
Assured Service in Time) which builds the impression of fast and assured services of
repairs will be given and badging of “Top Gear Service Point”.
 Present brand as a “First Choice Services” over their competitors by their customers.
This will also make their customers more loyal towards the brand.
 Emphasize transparency of the services which will give an edge over the local garage
and other competitors as they are being faithful and dedicated towards their work.
 Use of the structured ecosystem of the service center which has all the equipment,
trained service people & technology necessary for quality services in less time.
 Depending on the industry analysis as per the case, keep the present cost of MFCSL
as 10-15% lower than that of OEM / OES sessions.
 Most of the MFCSL customers are Functionalists and Epicures. MFCSL needs to come
up with attractive packages to attract the Gearheads and Flaunters as they price
oriented customers.
 As per Exhibit 6, percentage of functionalist is highest in all the four cities. Moreover,
as per Exhibit 9, MFCSL’s top segment constitute functionalist. So MFCSL should
prioritize functionalist among these ownership Personality Type followed by epicures
who earn high salaries.
Designing CRM system covering 7 principles of CRM design

Nearly all successful companies that have repeat buyers implement some form of CRM. This
may be a complex sales team using cloud-based sales tracking system, automated email
lists, blogs, loyalty programs, and/or other techniques that capture customer loyalty. MFCSL
must also do the same to stay in competition. To do so it must use 7 principles of CRM
design to create a stable and effective CRM system.

1. Create a Customer Database:

The first step in implementing a CRM system is to create and effectively manage a customer
database. This will help the organization in storing its customer data to understand the
customer better.

2. Database Analysis:
The customer data stored in the database has to be updated and analyzed to understand
and serve customers’ needs. Additionally, this can help in segmenting different groups of
customers based on CLV.

3. Customer Selection:
Using the customer information stored in the database, MFCSL can focus on high value
customers as well as loyal customers.

4. Targeting Tools:
MFCSL brought in 1000 new customers through online promotional campaigns. 39,000 new
customers were acquired through on-the-ground activities such as free check-up camps,
data sourcing and newspaper inserts.

5. Relationship Marketing:
MFCSL offered customer value passes to potential customers. MFCSL had several annual
loyalty programs in place.

6. Privacy Issues:
It is important that the customers’ privacy is respected by MFCSL while offering and
promoting their services. It should be ensured that the customer information is obtained
only with his/her consent.

7. CRM Metrics:
Using the CRM system, MFCSL can figure out different metrics such as acquisition cost and
conversion rate to understand the target segment of customers as well as design their
promotional campaigns.
Customer Acquisition Funnel for MFCSL

LEAD GENERATION: Getting Traffic and Raw Leads

 Deploy a CRM system which has all the data of the company’s customers. The
system would identify the customers who would be nearing the servicing date. Also,
we could launch campaigns to create awareness on the internet leveraging the
Mahindra’s brand name. Customer could be made aware of the importance of
company performed servicing and maintenance.
 Tele Marketing and on field promotion can be used extensively used to generate
leads and awareness. Cold calls to new set of customers’ ad warm calls to existing
customers of the company.
 Digital marketing campaigns can be run to create more awareness.
 Free car checkup camps can be arranged to gain more traction as it can act like
promotion activity.

LEAD ACQUISITION: Convert suspects into prospects and get Sales

 Explaining the customers who show interest, about the value proposition of the
company.
 Setting up of the customer care center to briefly answer all the queries of the
customers. There should be a lucid flow of information to the customer explaining
the reason they should go with the MFCSL.
 They should be able to see the proof of concept. Loads of testimonials in form of
videos and pictures should be available on demand and on company website too.
 Dashboards should be created displaying the differences in cost and benefits of
going with a renowned and trustworthy brand like Mahindra

LEAD CONVERSION: Convert the prospect into customer

 Finally, the customer will decide to make a purchase from the MFCSL. They will be
convinced that the services they are being offered are the best suited for their needs
and requirement.
 The company shall provide targeted services and customized services and not one
size fit all to customers to make them come back to the service center. Through this
process they will be able to convert them into loyal customers.
Metrics to estimate effectiveness of customer acquisition
strategy

Acquisition involves marketing and advertising activities that find new customers.
Let’s take a look at the figure of customer acquisition funnel for MFCSL.

The customer acquisition funnel gives us 5 measures. The Number of Impressions, Visits,
Prospects, Offers and Outcomes. The first 4 metrics (calculations from measures) are related
to the conversions from one level of the funnel to the next. Each of the conversions is
explained below.

Visit Rate
This is the number of visitors that come to a location, website or social media property from
one of the marketing channels. The calculation is the ratio of Visits to Impressions.

Prospect Rate/Lead Rate

The Prospect (or Lead) Rate is the number of Prospects that are developed as a result of the
Visits to the website (or event or physical location).

Offer Rate
If we divide the number of Offers by the number of Prospects we have the Offer Rate.

Take Rate/ Conversion Rate

Take Rate is the number of Sales as a ratio of the number of Offers. This is often called “The
Conversion Rate”
The next series of metrics are the average cost for each level of the Customer Acquisition
Funnel. But in order to calculate these metrics we need to add a sixth measure: the cost of
marketing, or Marketing Investment. This is specifically the investment made in marketing
over the time period. Although marketing and advertising show up on an income statement
as an "expense", marketing and advertising can be considered an "investment" because
managers expect that there will be a "return" as a result of the expenditure. If we know the
cost (i.e. the Investment) related to marketing, then we can calculate the average cost for
each level of the Funnel.

For each of these metrics the calculation is to divide the cost by the number of Impressions,
Visits, Prospect, Offer or Outcome
Cost per Impression
Cost per Visit
Cost per Prospect
Cost per Offer
Cost per Outcome

Return On Marketing Investment (ROMI). In order to calculate ROMI we need one final
measure, Revenue. ROMI = (Revenue - Marketing Investment) / Marketing Investment

In total there are 7 measures and 10 metrics for a total of 17 essential marketing measures
and metrics for customer acquisition. We can illustrate these as a table

Customer Acquisition Cost (CAC)

CAC is the total amount spent on marketing over a period of time divided by the number of
customers gained during that period. CAC = Marketing Cost /Customers Acquired.