Prateek's Musings

My Perception Of Sales

In my pessimistic view, sales is the process of fooling someone into spending money to buy something that just barely meets their requirements. This happens for a number of reasons. A salesperson might not possess enough knowledge about the product/service offerings they have been hired to sell, which results in them selling something which either falls short or seems overkill for the customer's requirements. Another salesperson might not have the ability, time or willingness to understand the customer's requirements. And then there's another person who wants to earn maximum incentive with minimum effort, and just focuses on selling those products/services that serve this purpose.

Are All Products Differentiable?

My retention of marketing concepts is zero, but I believe product-market fit is at the top of the agenda for marketing managers and product managers. Some industries have limited scope for customisation and by extension feature-based differentiation. My limited experience in banking has led me to believe that banking products targeted towards retail customers are pretty much the same. E.g. most banks will offer a normal savings account with similar interest rates and add-ons like debit cards, redeemable reward points and so on; alongside special variants for kids, females, senior citizens etc.; followed by multiple tiers of membership-based premium offerings with wider range of add-ons and privileges. The reasons for that could include financial viability and regulations among others.

The Conundrum Of Human Capital

Irrespective of the increased use of telesales, adoption of digital marketplaces and evolving abilities of virtual assistants, sales will remain a personal process involving actual salespeople in flesh and blood. In banking and financial services, there are outbound sales personnel who reach out to customers to identify prospects, generate leads and close them successfully; and inbound sales personnel who largely engage in lead generation by getting referrals for new customers from existing ones, or pitching more products/services to existing customers.

Revenue is the product of number of customers, product holding per customer and revenue per product. Companies have to expand the footprint of their salesforce and boost their average productivity to maximise both customer and product sales count. Hiring more salespeople costs money and time which could go into other revenue generating activities, hence it is largely handled by people in non-revenue generator roles, i.e. HR personnel. Salaries in India are obviously lower than those in developed countries, but from an informal survey of the salaries of frontline sales personnel across leading private sector banks in India, I observed that salaries are even lower than those offered by the WITCH companies. This also lowers their switching costs and makes it easy to jump from one job to another, driving up attrition, resulting in more hiring and more costs.

Productivity is also linked to hiring. HR personnel cannot possess the same level of functional understanding as the experienced hiring manager. To paraphrase the words of Prof. Sunil Maheshwari, the current Alumni and External Relations Chairperson at IIM Ahmedabad, hiring has become more about certificates over competence. Competence is extremely difficult to evaluate, and competence evaluation cannot be scaled up for large batch sizes. As a result, most folks who end up getting hired are misfits who don't possess the ability and drive to learn and grow. A smart salesperson would understand their incentive structure in and out, and identify ways to maximise their incentives; but these misfits won't even be able to do that. All this puts an invisible ceiling on the optimum productivity level which could only be reached or breached if the hard-working folks overachieve by huge margins, creating that pareto effect of 20% of the salesforce bringing in 80% of the revenue.

Processes Exist, But Are They Effective?

One component of the hiring cost is the cost of organisational onboarding and functional training. Organisational onboarding aims to introduce a new employee to the organisational hierarchy and structure and provide information about standardised processes followed across the organisation. Functional training enables the employee to become a productive salesperson by providing them knowledge about the product/service suite and directions for utilising various technical and non-technical systems for sales and performance tracking. Unfortunately, it is common for a lot of new employees to either completely miss these programmes, or have only a physical/digital presence with no attention. This is either because of the employee themselves taking things lightly, or their managers expecting them to start working from the first day instead of wasting time attending these programmes. Those mandatory quizzes with minimum passing percentages also get easily tackled with freely circulated answer keys.

The outcome of all this is that a salesperson starts working with incomplete knowledge, encounter more obstacles and end up getting solutions from senior colleagues who themselves got them from someone else rather than a standard operating procedure or a policy document, ending with a lose-lose situation for all parties involved. The customer feels cheated because they are provided incomplete and inaccurate information by the salesperson. The salesperson underperforms because they wasted time seeking help on a straight forward non-issue. The company loses revenue due to lower sales productivity, lower spread of the mis-sold product/service and potential future revenue due to loss of goodwill.

Non-adherence to standard operating procedure by some professionals like doctors and law enforcement professionals could be labelled anything from unethical and immoral to criminal, but the same gets an almost free pass and is even occasionally encouraged for salespeople. It might be foolish to except a salesperson to be as selfless as a soldier serving on the border, but the least that can be expected from them is upholding ethics. But if we want to ensure that a salesperson doesn't give the excuse of committing a mistake inadvertently, robust fail-safes need to be built into the processes themselves and the systems they utilise.

Moving On From Legacy Systems

A few years ago, I worked with a small software company which made web-based trading information exchange platforms for private banks (buy-side firms engaged in investing HNI money) and investment banks. These platforms were built on almost end-of-life versions of software building blocks, and hosted on oldest stable versions of server operating systems, and that really puzzled me. A conversation about this with a friend made me realise the principle behind this - Don't fix something if it ain't broken.

There is no point inconveniencing an end user for something that will change the current UX for the worse. But looking inwards, upgrading and modernising the backend systems will only make platforms more scalable and easy to maintain, and also eliminate the dependence on legacy stuff that could go beyond maintenance and debugging any minute. This doesn't mean that companies should adopt cutting edge beta tech either, but finding a middle ground between cutting edge and end-of-life software building blocks and infrastructure.

Conclusion

Passing the responsibility from people to standardised processes and scalable systems will free up the time of salespeople and boost their productivity. This productivity boost might lead to less employees feeling burnt out or misfit, enable them to earn more incentives and scale up business performance as a result. Organisations could become leaner and employees could expect better career progression. Standardised processes will improve customer experience and encourage referral, meaning more customers will buy and use more products from the company. Lower employee costs and predictable revenue streams will culminate into sustained long-term profitability both at the macro level and even in terms of unit economics.

My Connection With Films

As a fat kid with very few friends, watching TV was my only pastime. While I watched cartoons alone on most school afternoons, watching the World Television Premiere of some successful films on a Sunday evening with my parents is a core film-viewing memory. It was only after I stepped into adulthood that I started visiting theatres more often to watch a few films, and for the rest I relied on my hostel room's Wi-Fi connection and my experience of using torrents.

Sizing India's film business

With more than 10,000 theatres across the country, revenue from theatrical film exhibition in India are projected to reach INR 384 billion in 2024 and cross INR 512 billion in 2029 (Source). This number is miniscule compared to USA and China, but makes sense in the context of India's connectivity, technological penetration, disposable income and entertainment preferences.

Anecdotally, Indian film industries churn out scores of film every year, however their budgets and scales have been fairly modest. This trend has drastically changed in the last decade due to global critical acclaim and financial success attained by films like the Baahubali duology and Dangal. The stupendous success of the magnum opus RRR at the Oscars and Golden Globes have definitely put Indian films on the map of world cinema.

Business Model Of Films By Dummies

There are three key aspects of the business of filmmaking - production, distribution and exhibition. Production encompasses selection of the base story or concept of the film, hiring or selecting writers to expand it into a screenplay with dialogues, hiring or selecting the director and other technicians, casting actors, readying the inputs required for filming, shooting the content and then enhancing the content with dubbing, re-recording, background score, DI, VFX+CGI and other activities.

Distribution involves the sale of audio and movie streaming rights to respective platforms, television rights to a TV network and sometimes dubbing rights to a specialist company. Production companies aim to recover the production costs and earn some profits through these sales. As the production company sells various rights, they decide upon a date for the theatrical release of the film in consultation with the industry's producer and distributor governing bodies, and streaming release dates with their partner platform. The extent of preferential treatment given to a film in setting a release date is directly proportional to the value of its theatrical and streaming rights, which is linked to the film's budget.

Distributors prepare for theatrical exhibition of the film by signing agreements with theatre owners and multiplex chain management. These agreements outline the number of shows, ticket prices and revenue share between the distributors and theatre owners. Andhra Pradesh, Telangana and Tamil Nadu have a cap on ticket prices; although the former two states allow this cap to be raised for some films with prior permissions from the Government.

Sustainable Scaling Of Film Production

More and more films with bigger budgets are being produced every year, as production companies and directors look to bring together ensemble casts, utilise modern technology and creating multi-verses of characters, akin to the Marvel and DC Cinematic Universe from Hollywood. However, reports suggest that the lead actor's salary is the biggest cost incurred during the production of a star-led film. These salaries are market-driven, and both producers and distributors know that stars can single-handedly bring in massive footfalls and theatrical revenues in the release weekend itself, thereby ensuring that the distributors break-even on their investment at the earliest.

However, a film's financial success is hard to predict because it depends on the its reception and the performance of other films released during the same period. In situations where films severely underperform, actors have ended up part of their salary to compensate the producers and the distributors. Therefore, it makes more business sense for the sought after stars to adapt the profit-sharing model and divide their salary into a fixed component proportional to the number of days they allot for a film, along with a variable component linked to the theatrical revenue and the value of the streaming rights sales.

The Inevitable Intervention Of Streaming Platforms

When the COVID-19 pandemic brought the world to a standstill, people sat up and took notice of streaming platforms. The massive influx of viewership emboldened them to sign exclusive deals with production companies to release films directly on their platform instead of theatres, giving them a lifeline and a way out of the accumulating interest.

While initial deals were pretty much always a win for the production companies, platforms have grown enough to enforce their terms and even revise the terms depending on a film's theatrical success and initial viewership garnered on their platform. I am not aware of the depth of their analysis of a film before signing or revising a deal, but it is a lesson that production companies could imbibe to choose whether to produce a film and decide the resource allotment and the scale of the publicity campaign and theatrical release.

The Not-so-Slow Death Of Cinema Theatres

If you are at least a 90s kid, you might remember the theatre where you watched a film for the first time. For most people, it is a single screen theatre that might have become defunct or even destroyed and replaced by a multiplex or a commercial complex. Apart from selected areas in some South Indian states, single screen theatres have fallen out of grace. Sudarshan 70 MM, a notable single screen theatre in the RTC X Roads area in Hyderabad and a big contributor to the financial success of some landmark Telugu films, was demolished in 2010 due to being unviable.

PVR INOX - the biggest multiplex chain in India has grown multifold in the last few years, both organically and through acquisitions, but their latest financial report clearly signal a top-line and bottom-line downturn along with poor unit economics. They have also managed to restrict footfalls from South Indian films by choosing not to screen films with a theatrical window of less than 8 weeks, and have resorted to signing exclusive deals for re-releases of older films which did not garner enough theatrical revenue during their original runs. Things are probably worse for some of the smaller chains.

Consolidation is the natural course in an asset-heavy industry like this, but distributors and theatre owners need to come together and find a way to make theatrical releases profitable for both parties without distributors having to press for higher revenue shares and theatres having to push food and beverage spends for top-line growth.

What's The Way Forward?

Streamlined processes, robust contracts, focus on the fundamental revenue stream needs to support creativity and innovation to make films a sustainable and more lucrative business to attract investors and audiences.

During a farewell event organised for me by a team I worked with, one of my team members stayed that they appreciated that I asked a lot of questions. I guess the questions started during my first job, when problem solving became essential for earning bread. At IIMA, questions were a device for driving class discussion in the academic sphere. During placement preparation, we were told about the importance of asking clarifying questions to define the scope of problems.

Every decision we make is an outcome of a problem solving exercise, and each problem is essentially a question. An optimised question could unlock the potential for a much better outcome, therefore I believe it is imperative to work on asking better questions.

Use The Internet

The internet is the biggest source of information and knowledge available to us today. The incentive of ad revenue has driven the creation of websites with relevant (looking?) information in concise form accessible to everyone with a smartphone and working internet connection. Traditional information and knowledge sources have also realised the potential of this medium, so our dictionaries and encyclopedia have also moved to the cloud. An individual cannot compete with the capacity, speed and accuracy of the algorithm of a global search engine. So why not check if the answer is directly available on the internet?

Too Big or Too Small?

If I had to look at the entire lifecycle of a question I asked someone, it would start with me formulating the question in my mind, followed by expressing it in some form, then by the other person receiving the question, processing it, formulating their response and expressing it, and ending with me receiving and processing the response. I might have a lot of time to formulate the question or process the response, but the time available for the intermediate activities is certainly limited. You also have no control over the time that the responder could take! Hence, it is essential that we work on optimising our part of this lifecycle.

Is It Clear?

Communication is both implicit and explicit, and the implicit part can add a lot of processing overload because it is usually open to interpretation. Therefore, unless you are posing a rhetorical question or being sarcastic, an important consideration is making the question as clear as possible. A clear question could lead to a quicker and more valuable response contributing to a more effective decision with a better outcome.

Ask The Right Person

Similarities in experiences reduce as the underlying factors change. E.g. my experience in the classroom during a PGP1 course at IIMA would match a lot closely with someone from my section, a little less with someone from another section, lesser when compared with an immediate senior or junior and a lot less when compared with someone five years senior or junior. Asking someone with an ongoing or recent experience of a setting could lead to getting more valuable information, and thereby ultimately improve the outcomes of your decisions.

Final Thoughts

Most of us remember all our teachers asking if we have doubts, pushing us to ask questions. That's because we are rarely able to acknowledge that we have a lot of unanswered questions in our mind. If we are able to identify the existence of such questions, refine them, pose them to the right people and process the answers in the intended form, our decisions stand to improve vastly. Hope all of us are able to use our questions well!

On 30th August 2022, Shantanu Deshpande, the founder and CEO of Bombay Shaving Company, wrote this in a LinkedIn post -

When you are 22 and new in your job, throw yourself into it. Eat well and stay fit, but put in the 18 hour days for at least 4-5 years.

I see a LOT of youngsters who watch random content all over and convince themselves that 'work life balance, spending time with family, rejuvenation bla bla' is important.

It is, but not this early.

That early, worship your work. Whatever it is. The flex you build in the first 5 years of your career carries you for the rest of it.

Don't do random rona-dhona. Take it on the chin and be relentless. You will be way better for it.

As expected, the post went viral on social media pretty soon for the wrong reasons. The backlash started coming in thick and fast, and pretty quickly became about the person and the work culture at his company. Two days later, he made another post stating that it will be his last LinkedIn post and talking about the abuse his parents received from people. And that's when I thought that I need to jump on the bandwagon and give my worthless opinion.

Work 18 hours a day

I'll start by telling something related to IIMA, where I got my MBA. Term 1 at IIMA is very hectic due to the triple whammy of academics, co-curricular and extra-curricular activities and preparation for summer placements. That's why aspirants get to hear things like people not getting more than four hours of sleep a day. As someone who has been there and done that, I can assure you that this is not true. A better way to say this would be that there are a few occasions when some people don't get enough sleep due to all these commitments. The same could happen at work. There could be occasions when you are just about to finish up your work at the end of the day, when you get called into some firefighting situation by someone three levels above you and you end up working for as many hours until things get handled. You definitely can say no, but you cannot predict the response and have to be prepared to work anyway. And after you finish your work, you have to be ready to start working as per your regular work hours on the next day. If you start your own venture, these situations will arise pretty often, especially in the early days. And to add to your woes, you will have very little help!

No system is without a bottleneck, and with bottlenecks come inefficiencies which compound and create these firefighting situations. They can be predicted to some extent with some success, but they cannot be avoided. If one has built the resilience to deal with such situations, the physical and mental impact wouldn't be as severe. Does that mean you should work for 18 hours every day? Not at all! I'd rather suggest enhancing your own productivity by identifying what workflow works best for you in case of both individual and collective tasks. That way, you might not be the bottleneck.

Random content all over

The rise of advertising as the force behind all media forms has motivated everybody to become an "influencer". These influencers with their clickbait thumbnails and tag lines could fool you into buying any worthless crap for steep prices (read ad revenues). Many concepts cannot have a standard definition, and are pretty contextual. You cannot just leave Gurgaon on Friday evening, spend a couple of days in Manali and come back to Gurgaon in the wee hours of Monday every other weekend because an influencer who does the same got a million views on his Shimla Insta reel. Learn to filter information, investigate, try things and then decide whether they really fit in your definition of work-life balance. If you don't enjoy spending every weekend with your family, say it to them upfront! Identify what helps you to rejuvenate, not what someone else tells you.

Worship your work

Most of us don't find our work to be rewarding emotionally or materially. That might be because discovering one's true calling doesn't happen overnight. It takes a really long time and a lot of experience before one finally realises their true passion, and even when that happens they might not end up pursuing it if affects their earning potential. Employees will always feel that they don't get paid in line with the money they make for their employers, and the imperfect nature of performance measurement systems deepens this disillusionment. If you are a founder, you would probably be heavily drawn to the idea, the process of scaling it and the monetary and pseudo-monetary returns. That could definitely drive you to work for long hours.

So how can you worship your work? The closest you could get to worship is by displaying integrity and honesty. All of us are salespeople in some way, and all salespeople are scammers, i.e. they reveal incomplete information about the product or service they intend to sell. If this mentality could be curbed and information asymmetry could be reduced to some extent, which is quite difficult in the capitalist world, things might improve. Keep the lines of communication open, get a clear understanding about expectations associated with each task and share genuine information about your progress, the quick wins and the challenges encountered along the way.

Take it on the chin

There is no person who has never experienced failure of any magnitude at any stage of their lives. Things almost never go to plan, and when they don't the outcomes usually tend to be sub-par. If one loses their drive to succeed because they encountered failure, they might never be able to achieve the success they set out for. As a frequent overthinker who enjoys feeling miserable about my smallest failures, I know the physical and emotional toll it takes on a person. In this competitive world, mental health has become very fragile. If we could objectively analyse, discuss and work on what went wrong whenever we failed, it will definitely make us strong enough to empower the people around us.

Final thoughts

Our culture relies a lot on implicit communication. But we get to interact with people from cultures with primarily explicit communication, and that could cloud our judgement with respect to identifying and segregating what is stated and what is implied. In my opinion, Shantanu faltered with his choice of words, but I tried to make sense of what was implied in parts of his statement. I strongly detest the personal attacks on him and his parents. But to quote his words, I hope he takes it on the chin and stays relentless!