Every once in a while, in those hot summer afternoons, a marketing fellow from either HLL or P&G would ring the door bell and announce schemes like: "For every women/girl in your house, we will give you a complimentary sachet of our new product. e.g.: Sunsilk shampoo"
I would soon start jotting down feminine names and not stop writing until either my mind ran out of names or the marketing guy ran out of stock :) [With dozens of sachets in my hand, I often felt like the smartest child on this planet :)]
Among other funny conversations, I specifically remember one incident when the marketing guy asked me if the house was actually a girls hostel :)
Wow, this was even better than negotiating and selling old newspapers and scrap to make for a little extra pocket money
(To be frank though, the money either got spent buying gifts for my sister or was saved in my Piggy Bank)
If I could collect Rs. 1/- each (beg, borrow, steal) from every Indian, I would have collected a billion rupees (~USD 22 million) and become a rich man.
Well, as I grew up I realized that there was actually nothing wrong about my plan, just that I could do this in a more intellectual way than actually reaching out to people directly asking for money.
On 15th March 2010, Reliance Communications announced that it has hit the "100 million customer" mark (i.e. 10 crore customers) and targets to have "200 million customers" (i.e. 20 crore customers) in next 1000 days (FY 2013)
Ignoring the current or previous numbers, capital investments, expenses, debt etc for now…
Let us try to understand what it means to have 100 million or 200 million customers (in less than 3 years)...
On the operational side, it means being able to manage as many customers (in terms of network scale out, managing customer records, outlets for recharge/bill payments, billing, logistics, customers support) among other things.
On the business/earnings side, it means having 200 million customers using the services and hence putting money is company's pocket either through monthly bills or recharges.
There are several approaches to maximizing/increasing revenue from customers from collecting fixed monthly charges to various value added services to text advertisements etc
After accounting for all forms of expenses from managing networks and call centers, employee cost, interest cost, depreciation etc, If the company just manages to make a net profit of Rs. 1/- per customer per day (come on, this ain't too much to ask for)
Well, seeing the ever increasing number of junk/bulk messages on my mobile, I for one believe that the company could earn Rs. 1/- a day per customer from text advertisements alone.
200 million customer * Rs. 1/- per day… translates into a net of Rs. 6 billion a month or Rs. 72 billion a year… i.e.: $1.6 billion in annual profits
I am sure the management, strategists, business planners or promoters at the company, even on bad days would target for more profits per user than a mere Rs. 1/- per day
If they can manage to extract Rs. 2/- per day from customers, it would translate into $3.2 billion in annual profits
(aha, I am loving it…)
Big numbers multiplied by numbers as small as 1, still yield big numbers… that's the beauty of a high volume business...On the other hand, the same big number game can have catastrophic results, when big numbers are multiplied with negative numbers, however small.
Economies of Scale...
No comments:
Post a Comment