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India: The Engagement Conundrum

In India, engagement sits at the fulcrum of a peculiar paradox: digital growth is exploding while customer centricity is barely burgeoning. This phenomenon leads to the leapfrogging of a billion-person market from a recent past in which conventional businesses themselves were still coming to terms with the basic tenets of customer orientation, to the present, in which the most-promoted brands are in the e-commerce or telecom space.

Brand engagement has traditionally been neglected by Indian brands. Few understand the need to engage with the stakeholder at a deep level, over a sustained period of time. Fewer still know how to go about it.

A cursory look at the brand strength assessments of a cross section of Indian brands confirms this. Almost all of them—from the largest conglomerates and B2B brands to giants in the telecom, FMCG, automotive, banking and consumer durable spaces—have consistently low engagement scores. The Best Indian Brands, in fact, score an average of 4.5 out of 10. Compare this to the global average (represented by the Best Global Brands) of 6.5, and it’s clear that engagement is a neglected factor of brand strength amongst Indian brands.

Our research into Indian brands across industries—including conversations with leading CMOs—reveals the top reasons for a lack of engagement in India, which will serve as a foundation for finding solutions:

  1. Lack of appreciation for engagement ROI: Building strong and lasting brand engagement often requires large investments. The benefits of these investments are not immediate, but accrue over a period of time, and may manifest in the form of emotional measures like “a sense of belonging” to a brand. These benefits are not easily measurable and, in a world in which businesses are focused on the next quarter’s sales numbers, many corporations do not find the reasons for brand engagement compelling.
  2. Poor online engagement ecosystem: While India has made significant strides in building infrastructure, there is still a long way to go. The country has limited platforms for communication, low digital penetration, and even lower internet speeds. A recent report by Crisil, a leading rating agency in India, elucidates these points. According to Akamai’s State of the Internet study, broadband speeds in India average at 5.6 Mbps. This is amongst the slowest in markets with 4G services (the fastest, according to the report, was South Korea, with 26.1 Mbps). Insufficient digital infrastructure means that brands need to prioritize real-world engagement – which can become prohibitively expensive.
  3. Challenging heterogeneity: Assuming a brand overcomes cost and infrastructure hurdles, the question then becomes – who do you engage with? The fact is, there are multiple India’s within one. It is famously said that culture, language, customs, and even cuisines change every 100 km in this country. India’s high population, vast cultural diversity, multitudes of languages, and disparate urban-rural populations make it difficult to create compelling and relevant engagement, as the effort gets spread very thinly across nuanced cultures.
  4. Priority of salience in fast-changing markets: In developing markets such as India, which are constantly expanding and extremely competitive, building presence and salience often takes centre stage. Indian marketers are often too preoccupied with expanding into new territories and tackling rising retail challenges to worry about engaging with the consumer at a micro-level.
  5. “Anything you say about India, the opposite is also true”: Given the magnitude of people and the diversity of language, culture, and customs, the country often experiences trends and counter-trends simultaneously. For example, the fitness movement is getting bigger than ever, with an active lifestyle being propagated by a large percentage of food, apparel, and sportswear brands. In parallel, indulgence (for pleasure, not health benefit) is widely advocated by an equal number of food brands. These trends coexist and continue to grow, not necessarily at the cost of one another. Creating effective and impactful engagement in such a disparate market becomes a challenge for brands.
  6. Aspiration vs. actual price: There exists an interesting paradox in the Indian market: Customers yearn for aspirational products, but expect these products to be available to them at affordable prices, and without compromising quality. Hyundai’s success in the Indian market is largely due to its ability to constantly deliver fully loaded, feature-rich automobiles, a world class dealership experience, and an aspirational brand image that comes with a price that’s comparable to that of Maruti, the quintessential commoner’s car. Engaging customers can be an exceptional challenge in markets where customers’ desires are so divided.

The reason engagement scores are low amongst brands in India is perhaps as much due to inherent structural issues with the market as to a lack of appreciation. However, there are compelling reasons that India is becoming fertile ground for engagement:

The consumer capital and rising social saturation: India is currently the largest market in the world, and increasing spending per capita makes our economy more attractive for long-term growth prospects. Hence, in markets like this, the continuous building of brand loyalty and advocacy through some of the most populous social networks will play an increasingly important role. While digital infrastructure is still growing in India, the social presence is rising. Brands have a chance to get ahead of the curve by reaching vast audiences where they’ll be in the future

Evolving demographics in India: The Great Indian Middle Class is seeing increased discretionary spending, driven by the increased disposable income. Indians are no longer “Brahminical” in their approach to spending and are increasingly choosing to consume. This presents immense opportunities for brands to engage in deep, meaningful conversations with customers on an ongoing basis, which will keep them top-of-mind when those purchase decisions are made.

Growing affluent class demanding exclusive attention: The luxury market is projected to grow 2.5 times its current size in the next five years. The purchase of luxury cars in India has increased, despite the economic slowdown in 2017—with first quarter growth at its lowest since 2014. High purchasing power is also evident in the affluent class through significantly increased smartphone usage and spends on eating out.

As the rich get richer, they are also getting pickier about where they spend. Given the multitude of options available, presence alone might no longer be enough. Brands now need to work harder to engage more deeply with customers, stay relevant, and be the preferred choice.

Getting savvy consumers to stick with you: The middle class—which constitutes nearly 65% of the total consumer market—is highly value-conscious. Catering to this significant target group has led to widespread democratization and discounting—two of the biggest success-drivers in the market. Fostering engagement amongst this finicky group may be a strong way of restoring some lock-in and loyalty, which can be a stabilizing force for brands amidst the uncertainties of an evolving market.

The engagement opportunities: Despite the plethora of challenges, it’s important to pay attention to growth trends in India. There are certain “hero categories” in which engagement is the key growth driver, as brands are more critically expected to design their experiences around customers and deliver personalization. The best bets for engagement strategies lie in the sectors in which the customer segments are of higher value and thus there is a business case for investing in engagement. Luxury goods and services, HNI wealth management, high-end hospitality, and gems and jewelry are all sectors in which early adoption of an evolved engagement practice is crucial. However, all brands would be wise to stay ahead of the growth curve: The upward mobility of the consumer class and democratization of the market are rising forces that will push this practice into all sectors—making “connection” the source of growth for businesses and brands throughout India. Forging stronger connections in the world’s most populous nation will be a happy fillip to its celebrated heterogeneity and drive the evolution of society at large.

Contributors

Managing Director, India