A Top 10 company in the EMERGE 50, Capillary Technologies Pvt Ltd, a fast growing player in the retail CRM space, has managed to make a mark for itself in the three years since it was set up. Read the story to find out how Capillary is doing things differently.
How an EMERGE 50 company is making big strides in the retail CRM space
Shoppers who love ‘deals’ and ‘offers’ but cannot be bothered to take time out to fill up customer loyalty card forms, retail units and chains that have little or no customer intelligence – these are the kind of retail CRM scenarios that Bangalore-based Capillary Technologies Pvt Ltd. wants to fix.
The company, which is an emerging player in the retail CRM space, has managed to make a mark for itself in the three years since it was set up. A winner at Techsparks 2011, one of India’s discovery platform for product technology start-ups , Capillary was also the India winner of the QPrize 2009, a global business plan contest conducted by Qualcomm Inc. Recently, the company made it to the Top 10 of the EMERGE 50, a list of leading start-ups companies complied by NASSCOM. It has also managed to attract funding from Qualcomm Ventures as well as from some high profile angel investors such as Google India head Rajan Anandan.
Behind all the buzz is a company with a clear cut product idea and well defined market niche. But it always wasn’t so. Incubated at IIT Kharagpur by three students – Aneesh Reddy, Krishna Mehra and Ajay Modani, Capillary originally set out to set up a comparison shopping service. “We wanted to do something on our own in the retail+mobile space. With our original idea, we met with a lot of retailers such as Peter England, Bata and some smaller stores. All of them came back saying – ‘forget about new customers, we want to find out what’s happened to our old customers.’ These companies had no idea why older customers weren’t returning to the store to shop,” recalls Aneesh.
From all this feedback, Aneesh and Krishna distilled one shining truth – customers weren’t interested in filling up loyalty programme forms at shops or carrying a bunch of loyalty cards for different stores. “So, we thought, why not replace this (cards) with a mobile?”
Getting customers to sign on
Capillary’s retail CRM solution works off the identity provided by the customer’s mobile number. So, when a customer is paying up at the cash counter, he or she is invited to be part of the loyalty programme by simply furnishing contact details and a mobile number. Without any further ado, a loyalty profile is created.
This is a key differentiator for the platform compared to other retail CRM systems. Instead of waiting for a weekly/daily sales data dump plus stacks of filled out forms, the loyalty programme is integrated with the cash till process so that sign up happens speedily through a single window approach. This has led to increase opt-ins for loyalty programmes. “Typically 75-80% of customers sign up and if even just 70-80% of them spend just 10% more at the store, this can deliver 6-7% retail volume increase for the shop, which is significant,” says Aneesh.
Up in the cloud
The Capillary platform is also cloud-based – and, as a result, data updates happen instantaneously. This has created some impressive sales impact. Aneesh points out, “ With a cloud based model, you can get real time analytics. For example, let’s look at a situation where a young female customer purchased a pair of skinny jeans. Once this purchase is entered into the system, based on real-time data crunching, our analytics engine is able to offer the cashier some actionable intelligence – for example, that customers with a similar profile who purchased skinny jeans also typically bought short T-shirts. Using this, the cashier is able to immediately present the customer with an offer of 10% off on T-shirts. Our data shows that typically 8% to 30% of customers proceed to make a second purchase when presented with such offers. As a result, for the store, the RoI starts coming in right away.” This compares well with traditional retail CRMs where the long enrollment cycle pushes back ROI windows to three months or more.
Piloting it through the cloud
The cloud-based model has delivered other advantages for Capillary. It is far easier to set up pilots and scale the same to multiple retail outlets within a chain. Even when retailers sign up with the company, the cloud model enables Capillary to charge a simple usage fee per store per month. “Retailers do not want to invest in new software and servers. With a Software as a Service (SaaS) model, there are no upfront costs,” says Aneesh.
Instead, what the retailer gets are rich customer insights. Since every purchase is tracked (as physical card do not need to be produced, every purchase can be tracked once a customer provides a mobile number), Capillary’s platform delivers the full benefit of a lifecycle management system. “While we do restrict our clients to one campaign per month, the data is rich enough to support highly targeted campaigns – such as for example, one targeted at family purchases,” points out Aneesh.
Privacy Issues
Does the company run into privacy issues, especially since it is running SMS based campaigns. Capillary maintains that since all customers have ‘opted-in’ for the loyalty programme, there have been no complaints against the company. Aneesh also points out that for customers who do not wish to receive text messages, emails were always an option. “If a customer doesn’t want this as well, then we simply print the offer on the bill,” he says.
The bottomline
Capillary today works with around 150 brands across 6000 retail points covering 14 milion customers in India, UK, Africa, Singapore and the Middle East. Across this wide swathe of clients, Capillary’s CRM platform has positively impacted sales volumes by 5-6%. “On average, the increase in gross margins is four to five times what they are paying us,” says Aneesh.
Given this track record, Capillary intends to stay focused on the retail CRM space. Expansions by way of a stripped down solution for single format stores and social media extensions for the platform are in place, says Aneesh. Clearly, this is one company that’s going to be closely watching its client’s wallet share of your shopping spend!
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