Part 22 of My Career Story - Ravikumar Pillai
There is much to learn in the Art of Selling
My search for a potential business domain aligned with my perceived self-competence and passion took several months of surveys, visits, and discussions with possible business partners, funding agencies, banks, and a range of opinion-makers and professional seniors before I bit the bullet in 1995.
I then strongly believed in the scope and future of training and development as a business domain. India was in the early phase of opening the economy and the ballooning young job-seekers with lakhs of new entrants every year provided the base for career-preparedness as an opportunity waiting to blossom into innovative business models and institutions.
The benchmarks out there were the national IT training franchises with NIIT and Aptech being the lead players. NIIT was set up by two young IIT Delhi graduates, Rajendra Pawar and Vijay Thadani in 1981. After establishing their first few direct Centres in metro cities like Chennai, Bangalore, Mumbai and Delhi, they ventured into the franchising business model to expand rapidly into a pan-India brand. The novelty of their business proposition and the flutter of national visibility attracted much investor interest. Soon the local learning centres of the IT Training majors mushroomed into a few hundred. They attracted hordes of graduates and undergraduates who signed up for the short, medium and long-term programs.
Those were still early days of computerisation in India. However, the immense potential for computer skills training in the Indian corporate sector and the overseas job market was visible to the discerning observers. Higher education in India was the government's monopoly, mostly the states. The universities were caught in lethargy and bureaucracy; they were slow to wake up to the massive unsatiated demand pipeline for training and certification of computer professionals.
NIIT, Aptech and a clutch of large, organized players opened the sector and new players mushroomed all around, even in mofussil towns. The smaller players, mostly from the unorganized sector, ill-equipped, understaffed and incompetent offered lower fees and naturally had sub-par faculty and infrastructure. Computer training became a free-for-all, low entry-barrier domain. In a market where mediocrity reigned, the established larger players became runaway success stories. It took a few more years for universities and Higher Learning institutes to plug into the space and provide credible options to job-seekers.
Franchising as a serious and viable business model in the Indian education and talent development sector was developed by the pioneering steps taken by the lead players in the IT sector. It took years for the model to gain ground in a host of other areas as well. Today, franchising has traversed much ground and matured as a business model that is much more equitable and fairer both to franchisees and franchisors. But that was not the case in the 1980s and 1990s.
As a novice, a middle-class business aspirant, with hardly any commercial legacy in my genes, I took the ride of fantasy into the world of franchising. In retrospect, I must admit candidly that exuberance and irrational expectations that drove my hurried stepping into the entrepreneurial shoes.
NIIT after tasting success in the computer education business, extended its reach to another apparently lucrative area of talent development. Sales function as a career option was set to grow and would need many frontline professionals. Unlike marketing, in which most MBA programs, from the prestigious Business schools to the mediocre and mundane ones, offered specializations, there was no proper platform for providing sales competence training and certification to fresh job seekers.
Most corporations had to take raw graduates and undergraduates and put them through tailor-made programs to make them market-ready. NIIT sensed a massive business opportunity in offering sales training and certification courses. It made immense sense because every year thousands of trainees and interns were inducted into the sales force across the country.
NIIT established a separate organization and an exclusive brand identity, the National Institute of Sales, NIS for short, to take this business idea forward. They already had experience in running standardized instructional packages and in preparing curated trainers and mentors in the IT field. They needed to tweak the model and customize it to the new domain of sales training. They also tapped a global sales training organization and adapted their framework and modules to roll out the program. The SALES PROCESS architecture that the NIS curriculum was based on was called SPIN, a comprehensive model developed by Neil Rackham.
"The best of selling isn't at all about your products and what you can offer. It's very much about the customers and their needs." - Neil Rackham
I don’t entirely agree with this statement by the Sales Guru. I am convinced that a great product and services portfolio, a robust, responsive sales process or platform and competent employees at customer interface points are critical for sales success. All these are equally important. No genius in sales can push a poor product to customers consistently over a long time!!
SPIN methodology of the sales process is anchored on the behavioural aspects of selling.
Specifically, it involves SITUATION-based probing, seeking to understand the context in which the customer or prospective customer is and the emotional narrative of how the customer formulates and states his perceived need or identified problem in the given situation.
The second element of the SPIN methodology of the sales process is identifying, articulating, clarifying and sharpening the focus on the PROBLEM that the customer encounters. The skill of the sales professional in identifying the customer's need and expressing it unambiguously is critical for sales to be effective.
Once the situation and the problem are identified, analyzed and understood comprehensively, the salesperson needs to proceed to the next stage of the sales process – analyzing and interpreting the IMPLICATIONS of the needs. These must be understood from both the customer and the sales organization perspectives.
The final angle of probing the sales is to craft the solution that aligns with the NEED pay-off that the customer seeks. The result of this phase of the pursuit of a sales solution is to ensure the satisfaction and fulfilment that the customer would experience from the proposed solution.
The Sales Training dynamics appealed to me as a holistic behavioural process. I was in touch with my acquaintances at NIIT for a few months before I decided to quit my corporate career and opt for being an entrepreneur.
NIS was already in operation in the metro cities. I pitched for taking the brand into Kerala. Based out of Kochi, I felt that the institute could churn out sales professionals to meet national needs. After all, Keralites were very mobile as a workforce, even to the extent of being corporate nomads. Across India, we could see many Kerala-bred sales professionals in both consumer and business sales. I thought with formal certification training and the backing of a NIIT-supported pan-India career education brand, young job seekers could get drawn to national and even the Middle Eastern job markets.
After a few rounds of discussions and refinement of the overall franchising bundle to align with the market potential and economics of operations, I signed up as the first NIS franchisee in Kerala.
I had a couple of months to be launch-ready. There were many tasks to be completed in a hurry. Identifying and furnishing the institute premises at a commercially important location in Kochi, recruiting the core staff including the faculty and counsellors as well as putting in place the brand promotion hoardings, commercial advertisements and launch seminars were all quite challenging. My being a raw hand, having spent my entire career of nearly two decades in corporate employment, shifting gears to be an entrepreneur was indeed much different from what I was used to.
The most important challenge was to find the financing for the capital expenses and to arrange for working capital at cost-effective rates.
In the 1990s, the cost of capital was quite high in India. Since the interest rates were high and inflation was at an elevated level, bank rates were not supportive of first-time entrepreneurs. The risk-aligned lending rates for a fresh small business were two to three percentage points above the RBI-mandated loan rate. To invest by borrowing at 12-14% interest took a toll on the business viability from the start. Considering the working capital provisions such as bank overdrafts or personal borrowings, the effective cost of capital is unrealistically elevated and could scare the new business entrant. Even to get a breakeven return, one had to hope for an overall ROI of 17-18%, which was a tall order.
I learned many tough and uncomfortable lessons in entrepreneurship and personal finance even as the clock started ticking once the franchise agreement went into operational mode.
I tell my friends, audiences, trainees and clients that I have had the tremendous advantage of a twin Master’s in Management – one that I earned academically and the second, even more valuable one than the formal PG degree, that I gathered through my years of experience as a small business entrepreneur.
I shall discuss in subsequent chapters how I maneuvered the bruising experiences of franchise management.
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