Rohit Adya: We are taking Vodafone vans into rural
villages and educating the rural consumer on how mobility can
improve the economic way of life
Rohit Adya has spent four years with Vodafone Essar, the
company that used to be Hutchison Essar until Vodafone took
control at a cost of almost $19 billion in early 2007.
He's CEO of the company's operations in Uttar Pradesh,
India's largest state and the fifth largest territory in the
world by population.
The operation that Adya runs now has seven million subscribers
and annual revenues of around 20 billion rupees ($45
Can you start by talking about Vodafone Essar's
experience in moving from urban to rural markets, especially
the challenges of moving beyond the 'hygiene' factors of
coverage and quality in rural areas?
Adya: Beyond the early challenges of rolling-out
network across such a vast state, we recognised that the real
difficulties would relate to distribution and service
While the FMCG [fast moving consumer goods] industry had deep
experience in pushing into rural India, even the FMCG players
had struggled to develop an effective and profitable model to
reach the most isolated rural consumers.
We also understood that the consistency of brand and service
experience beyond the fundamentals of network coverage and
quality would be very important, but there were few examples of
industries that had been able to truly drive wide reach while
at the same time delivering brand consistency.
We saw reach of communication as a huge challenge, where you do
not even have penetration of cable or satellite to educate
consumers about your products and services. And, of course, you
cannot forget that many of the people living in the rural areas
of the state have very low incomes making affordability a real
We recognised that in the face of significant challenges, the
key would be to build a scalable approach at low-delivered
How did you go about building a distribution
approach for rural Uttar Pradesh?
Adya: We have developed effective rural distribution
that is based on exclusive distributors who manage a number of
base station sites. Under the distributors are associate
distributors who are also exclusive - typically the "son of the
soil" who is an established businessman with a good
These distributors and ADs serve the retailers in their areas
who are non exclusive - multi-brand retailers or MBOs.
Distributors and associate distributors are trained through a
series of modules on commercial operations and brand
This is a hub and spoke model that is immensely scalable. We
used intensive distribution of SIMs and paper recharge coupons
to ensure that these are available at the farthest point -
primarily to ensure the customer, being a first time user,
wants to physically purchase and use the service which the
retailer is required to assist.
Through our distribution model we have been able to deliver
products that are affordable and able to meet the small budgets
of rural consumers.
We call our rural recharge products "small" or "chhota", and
started with small denomination "chhota recharge" vouchers
before scaling-up the uptake of electronic recharge.
We also recognised that rural consumers could not always access
a retailer 24/7, so we introduced a recharge "credit" that
enabled customers to SMS to a number to get an electronic
credit of up to 11 rupees that they would pay upon next
Through these initiatives we demonstrated mobile
telecommunications was affordable and that we care for and
trust our customers.
In partnership with our distributors and associate distributors
we are also taking Vodafone vans into rural villages, and
educating the rural consumer on how mobility can improve the
economic way of life.
We have created several generations of short audio-visual
films, in which a villager becomes an entrepreneur within the
village and has created a small company through his access to
communication. These short films are shown at market days and
other gatherings of local communities and have helped build a
lot of awareness about our services and the benefits that they
bring to local villagers.
Delivering network coverage and quality has not become less of
a priority and it still remains an important differentiator.
But we have recognised that coverage and quality mean very
little if you cannot drive availability and awareness of your
products and services.
But of course availability and awareness will also become
increasingly common as other operators push into rural areas,
so we have recognised the need to move to the next level.
Beyond network coverage and distribution reach, what
are your priorities for rural areas? What will be the
differentiators for Vodafone in the future?
Adya: We believe that the service experience will be
just as important for rural consumers as it has proven to be
for urban consumers in both developed and developing
In alignment with this belief we have set up 700 Vodafone
mini-stores of approximately 100 square feet [nine square
metres] across Uttar Pradesh staffed by trained Vodafone
service executives to deal with common customer service
enquiries such as lost or damaged SIM card, questions about
tariff offers, or billing queries.
By mid 2008 we aim to be within 15 kilometres of any rural
village of 3,000-5,000 population, and the goal is to deliver
service centre reach within 10 kilometres, and then 5
kilometres by the end of 2009.
In many rural markets automation is not yet understood by the
customer, and hence the need to have the reassurance of
face-to-face service across the counter.
We must remember that for many of these consumers this is one
of the first service-oriented relationships that they have
entered into, so there is a high level of education taking
Our experience tells us that having a branded customer care
experience builds confidence in the Vodafone brand, and allows
the rural consumer to experience the brand beyond simply
talking on his or her mobile or sending SMS.
It also provides a very powerful tool for educating consumers
about new products and services that might be of value and
which are often poorly communicated through traditional
multi-brand retailer outlets - an experience that even
operators in developed markets have discovered.
How are the mini-stores managed?
Adya: The mini-store is manned by a Vodafone trained
service executive who has been through a 25-day training course
at our academy.
The service executive has a WAP-enabled handset that enables
instant service delivery in the field - SIM exchange, reversing
debits, giving a view of account usage and so on.
Every mini-store has a public phone connected directly to a
call agent, and the care agent can facilitate the enquiries and
offer recommendations on the best deals available.
This is an automated process generated from our CRM on the best
loyalty offers. This is all about building brand experience,
and increasing awareness of services and new services that
require demonstration and experience.
The focus of the mini-store is for the AD to build a stronger
service delivery of the brand, and to strengthen loyalty and
customer experience. We have also demonstrated that the AD can
increase revenues from value-added service, multimedia and
These mini-stores are building a database of 3,000-4,000
customers per month, which is a powerful opportunity for local
promotions and activities. The brand experience is also
important, leading to referrals and word-of-mouth.
Service has obviously been a priority, but can you
also talk about how Vodafone has worked to increase mobile
penetration in rural areas beyond shared-phone use towards
individual ownership and usage of mobile?
Adya: Despite the fact that we have been successful in
driving affordability of usage through low-denomination
vouchers and electronic recharge, handset affordability has
remained an issue for the rural customer.
Buying an entry level handset at 1,500-2,000 rupees a year
back, or 1,200-1,500 ($27-$34) today is still a significant
payment and this has resulted in many rural consumers only
being able to access telecommunications through a payphone or
shared mobile phone.
So while many rural consumers had SIM cards and a mobile
number, this did not necessarily equate with increased
SIM ownership in the absence of phone ownership also creates a
whole series of service challenges such as lost and damaged
SIMs - challenges with maintaining minimum recharge values and
To address the challenge of handset affordability in November
2007 we introduced the Vodafone Magic Box handset to focus on a
bottom-up rather than top-down approach.
We were able to bring the Magic Box branded handset to market
at 1,000 rupees together with a SIM connection, three-month
validity card and some special recharge offers on talk time and
VAS - there was no subsidy.
Importantly, the handset also came bundled with easy access to
Vodafone's VAS platform.
Our insights told us that the rural poor cared greatly about
handset brand, but we also came to understand that at the heart
of brand preference was an association with quality and
reliability. Hence we worked on those insights and brought to
our consumers a high quality device, and a device with our own
Vodafone brand with two years' free replacement warranty.
To back it up we set up a very robust replacement network
through the Vodafone mini-stores. The promise of the Vodafone
brand, replacement warranty and the service delivery through
the Vodafone mini-stores were strong factors that resulted in
record sales of the handset within months of launch. The
objective was to provide an affordable handset with a brand
commitment at the doorstep.
We understand that we have to co-exist with the big handset
vendors, but in this situation we believed that we could bring
a better value proposition to market at lower cost. We will
continue to work with handset vendors across segments, but we
believe that there is a huge opportunity to co-exist.
Following the success of the Magic Box we launched the Music
Box, a colour handset with radio, in January 2008, and we will
continue to introduce higher-level models so that people can
move up the curve with functionality.
VAS is still at an early stage, but we see a real promise and
an opportunity that will become the next thing to evolve in the
coming six to eight months. We are building the platform
through our mini-stores, and we will leverage this to continue
education and awareness.
Your mini-store concept obviously represented an
important service evolution for the industry, but the market
reality is that multi-brand retailers will continue to have a
very important role to play in rural distribution. How have you
gained the support of multi-brand retailers in an increasingly
Adya: The mini-store presence of 700 is a strong
statement, and our direct service executives engage with
customers in the area of operation to localize brand
promotions. The communication of our Magic Box and Music Box
communicates benefits, and creates a pull in the market. This
is complemented with our push, creating demand through retail.
The retailer must respond to this demand, even if he has an
incentive to push another brand.
We have initiatives in the market where we train and support
the retailers, and also have certain preferred retailers who
support and work with us on such initiatives. The objectives of
our retailer training activities are to maximize gross service
revenue through institutionalized professional sales management
to the last mile.
This approach delivers multiple benefits including reduction in
attrition at the front-line level, emotional connect with the
trade staff, superior service delivery and improved visibility
We are building a strong presence in the retail market, and the
retailer knows that there is a service promise and feels proud
in selling a brand like Vodafone.
Finally, what are your objectives for the coming
Adya: The most important objective for the year ahead
is to continue taking this opportunity to the market in a wider
way - penetrating it to the furthest reaches of the market and
ensuring the brand experience. We see that the service
experience will be the key differentiator.
Jamie Anderson is adjunct professor of strategy at the
TiasNimbas Business School, Tilburg University, the