Episode 56
Disrupting the Norm: How Fleetguard Filters Redefined Auto Components Industry Standards
Category : Sales & Distribution
Join our Counterpoint Podcast as we discuss with Fleetguard Filters how they're redefining the auto components industry with unmatched ROI, loyalty initiatives, and a bold strategy that eliminates traditional sales tactics. Discover the innovation behind their success.
Transcript
| Shubham Agarwal : | Hello and a very warm welcome to the Counterpoint Podcast by Vector Consulting Group. I am Shubham Agarwal, and we have a very eminent personality with us today.
Mr. Niranjan Kirloskar Management Director of Fleetguard Filters Private Limited, one of the leading organizations in the auto component industry. He is here to speak about their pioneering initiatives in the aftermarket which went on to set new industry benchmarks. So, let’s welcome him and talk to him more about this. Hello, Niranjan sir. Welcome to the Counterpoint Podcast. It’s a pleasure to have you here. Let’s begin our discussion then. |
| Shubham Agarwal: | Can you please describe Fleetguard and its operations for us? |
| Mr. Niranjan Kirloskar : | We are basically automotive part manufacturers which is specifically its filters and the filtration systems that are required for the engine. And we have a distribution system. We have around 220 odd distributors around 40 to 50,000 retail outlets and our products are distributed all over India. |
| Shubham Agarwal: | Well, Fleetguard is known to have disrupted the aftermarket with some of its initiatives. Can you please describe these for us? |
| Mr. Niranjan Kirloskar : | Mechanical Loyalty Program, ROI for the distributors. According to me in India 36%-50% of ROI is good enough. We are giving something in excess of 150% and Retailer Loyalty Program. So, these are the three things which we did for the market, which no one has done. |
| Shubham Agarwal: | I think, most companies woo their channel partners with better margins. Why did you focus on ROI or Return on Investment? |
| Mr. Niranjan Kirloskar : | If you ask the distributor or the retailer, what do you want? You are not talking about profitability. The distribution system everywhere in the world works on the distributors are not bothered about return on sales. They are bothered about return on investment. They are bothered about the turnaround time of their money. So, if you ask a retailer, “Acha boss, why are you in business? I want profit.” Okay. If you are in profit, then why are you asking for a volume discount. Are you going to keep that discount which I give it to you or are you going to pass it to the market? So, the answer has been, you are going to pass it to the market. Then you are not talking about profit as your goal. You are talking about turning around of the money with least investment in that particular business. So why do you want volume discounts? I will give you a better turnaround time, better ROI on your investments. |
| Shubham Agarwal: | So how do you make sure that the distributors get a good ROI? |
| Mr. Niranjan Kirloskar : | We tell our distributors, do not invest in our products. Invest in our range. So, on your sales counter, just keep one, one, one, one filters. And rest you do not have to do anything. We will deliver it to you when you want it. Somewhere it is 2 hours, somewhere it is 24 hours, somewhere it is 48 hours depending on the demographic. The distributor in Pune based takes delivery from us four times a day from our warehouse. It does not have to keep any inventory. |
| Shubham Agarwal: | Great, but how did you convince the distributors and retailers? Why should they trust your offer to whole inventory for them? |
| Mr. Niranjan Kirloskar : | Initially, we had that problem. Obviously, they were still ordering what they wanted because reliability was a big factor for them. If I do not get the product, Fleetguard is saying all this, but what if I do not get it, then what do I do? So, there were slip ups. But now we have our full-fledged IT system in place where he does not have to– of course, again, it was a trust issue. I won’t say trust issue, but they are saying that I will get the filter on time when I want it, but how are they going to manage it? It went on for two, three years. But after that, once the systems were in place, now they are absolutely not bothered. |
| Shubham Agarwal: | Can you describe the mechanic loyalty program and the thought behind it? |
| Mr. Niranjan Kirloskar : | See, the thought was very simple. It came from the airline thing. What is it for the mechanic here? Because mechanic is just fitting the filter, and he’s paid by whoever the transporter is. Other than that, he’s not getting anything. So, we said we should do something for the mechanic. We thought of various things like insurance, school for his kids, education. On religious days, give them some gifts. I said, but at the end of the day, we thought, or we came to a conclusion that it doesn’t make any sense, because anybody can do this. Giving a gift or doing an insurance, he will get it. What? Insurance, God knows when he’ll get it. So, for me or for anybody, what is my short-term gain? Unfortunately, that is what people think of. But for a mechanic whose daily stuff is on whatever is happening or whatever is earning every day is what it depends on. So, we said, let us have something like an airline. We give him points on fitment. And our scheme is open-ended. So, he can spend his miles or retrieve his miles or redeem. Redeem is the right word. He can redeem the miles whenever he wants. So, there is no end to our MLP, number one. Like in blackout days or whatever in the airline they call, or they expire after a few days, we do not have anything of that. It’s open-ended. It will go on for lifelong till free regard is in existence. So, that is what we did with MLP. |
| Shubham Agarwal: | What about the usual discounts and schemes that most companies tend to offer? |
| Mr. Niranjan Kirloskar : | No discounts. No schemes, no discounts, nothing, nothing, nothing, nothing. No Diwali bonus, no Christmas bonus, no whatever religious functions that we have in India, no schemes, nothing. Everything is gone. |
| Shubham Agarwal: | But were the channel partners okay with this? Was it difficult for them to accept it? |
| Mr. Niranjan Kirloskar : | It took us at least three to four years. Obviously it is difficult because it was a completely new thing for them, revolutionary thing. The company is not going to give you volume discounts, the company is not going to give you schemes, the company is not going to have distributor conferences. It was completely unheard of. Now they are used to it. Now they are so much used to it that they try to tell other companies why don’t you start working like this. |
| Shubham Agarwal: | So, did the competition respond to your initiatives in the market in any way? |
| Mr. Niranjan Kirloskar : | Competition did and even today they are trying to copy our MLP. As I earlier said, people only see what they see and they think, they thought or anybody would think he is doing it, I will also do MLP. But they do not understand that there is a lot of back-end things that you need to do. Number one, people will start some schemes, will try to give something but when the mechanic actually goes to the retailer, the product is not available. He goes second time, product is not available. He loses interest. So, first we ensured that our product is available on the counter, at the retail counter, whenever a mechanic goes to buy it. That was the key. Your product availability is the key for any scheme. Otherwise, you are dead. Number two, you need to change your policies that inventory is not a cost, inventory is an asset. Transportation of one filter is not a cost, it is an investment because if I deliver one filter, I still am selling it. Yes, my transportation has gone up, definitely it has gone up. If I was making delta 10 because of just one filter dispatch, I am doing delta 8 but still I am earning money. Now if I take a decision, nothing doing my minimum order quantities full load a container, then you have a problem. You have put that inventory on somebody else. He cannot sell it because there is no demand for it and he stuck with the inventory. After a few months, he will come back to you and say, I cannot sell it, I need volume discount and then you are stuck and this cycle goes on and on and on. So, for any company to decide or make a policy that inventory is not a cost or transportation is not a cost, it is very difficult, very difficult. So, just by copying MLP, you are not going to go there. Just by copying our product, you are not going to get there. I know there is nothing in the product, if I can manufacture it, anybody can manufacture it. It is not that only I can do it. No, everybody can do the product. But this particular thing of taking a decision to send even one filter doesn’t matter, not to lose the sale has been the thing. |
| Shubham Agarwal: | Well, I think you are a rare company that has removed primary sales targets. Why did you do that? |
| Mr. Niranjan Kirloskar : | Let me talk about the win for the salespeople first. They are my warriors in the field. If they are under pressure or if they start feeling pressure of this target and he is going to do anything. I don’t want that person to be under any pressure because if you have no pressure, you will perform better. Yes, there are a few people who perform very well under pressure. They want pressure. But that is a very small percentage. If you have to give a person to think creatively, be creative, you should have to ensure that there is no pressure on that person for anything. Now when I say that there is no pressure means there are no deadlines, of course there are deadlines. But those deadlines are driven by processes. So, if I have been given a certain activity, I will follow up on what is the progress on that activity daily. When you are working on one thing, don’t work on something else unless you finish this. That is the process. So, it is very easy for him or her, whoever, to follow or focus on just one thing, then it is faster. Obviously win for lead guard was the results in the aftermarket. So, it is a complete win-win. |
| Shubham Agarwal: | I believe your entire system right from mechanic loyalty program to operations is seamlessly integrated to run almost an autopilot with end-to-end digitization. Would you please give us some examples of how are you leveraging this? |
| Mr. Niranjan Kirloskar : | This is online information that we have at 12 o’clock or at 1 o’clock we are getting online information which is live information as to what exactly is happening in the market. Suddenly we can also realize that some mechanic is not fitting the filter at all. Why is that mechanic not doing it? Now how do we get that obviously because of the MLP scanning and all that stuff. So, we know exactly what is happening in the market. We exactly know which distributor has sold what to whom. We exactly know which product has been sold to which mechanic and in which area. Of course, now where was that filter fitted, we don’t know. Today we don’t know. But we are working on it. If a particular distributor orders more than it will give a signal. Order will that dispatch will stop and automatically from the war room that we have for the aftermarket you’ll pick up a phone and say why do you want more filters. |
| Shubham Agarwal: | So what has been the outcome of this amazing journey that you have had? |
| Mr. Niranjan Kirloskar : | Nobody has asked me a question in the last 10 years about the financials or where the company is heading because they can see it. It’s very very clear. I will always say my balance sheet my profit and loss will speak for myself. I don’t have to go out and say how good I am or how bad I am. |
| Shubham Agarwal: | Thank you so much for the discussion today, sir. But we’re not done yet. We’ll come back with another episode in the same series.
And for all the listeners we’ll keep coming back with more such episodes. Bye Bye. |
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Vector Management Consulting Pvt. Ltd.
10th floor, Thane One, DIL Complex,
Ghodbunder Road, Majiwada,
Thane (West), Maharashtra - 400610, India.