Servify CEO Interview

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Servify is a BEENEXT portfolio company and has raised Series C funding in latest round. Mumbai, India headquartered company was founded in 2015 by Sreevathsa Prabhakar (Sree).

FT partners recently interviewed Sree about Servify journey. I am reproducing that whole interview here for broader audience with key parts highlighted. I hope you will enjoy it.

Tell us about your background and what led you to start Servify?

I’m not a native of Mumbai but I have loved every experience I have had since I moved here to join a company called BPL, right after finishing my education. I come from this small town near Mangalore of barely 3,000 people where everyone knows everyone, so my first reaction when I reached Mumbai was of awe. Not just by the scale of people here but the number of enterprises sprawled across the length and breadth of this metropolis.

At the time, BPL was like the Apple of India. It had a huge presence across the country and people aspired to work there. My very first assignment was in 1998, in the slums of Dharavi, where an irate customer had purchased a 29 Inch TV (which was considered big then), which he had kept over a refrigerator in his 10 square meter home. There was hardly any place to move around but in that cramped environment, he placed that TV and was abusing the Company relentlessly as it wasn’t working within 5 days of purchase. I tried calming him down but he wanted only a replacement or his cash back (and I was certainly not authorised to do both as a Trainee Engineer). Fortunately, I figured out that the issue was merely that of a missing cable and I ‘fixed’ it within a matter of a few minutes. The same irate guy did a complete 180 – degree turn and now wanted me to have a beer with him as I solved his problem like a scientist.

That was my first learning, my first data point, if you will. Customers expect solutions, and many times the same could be as easy as what I did with that customer.

I moved a few jobs and everywhere my learning was almost the same. In a post – purchase world, you have to ‘demand’ for service instead of ‘deserving’ it.

It was in 2009, when I was with Nokia (which enjoyed >70% of the Indian mobile phone market share), that I lost my dad and wanted to be close to my family; which really was the trigger point for me to start a venture of my own. I moved back to Mumbai from Gurgaon and founded my first venture The Service Solutions (TSS). We started small as a completely bootstrapped venture and did some consulting work for a few customers. Around the same time, Apple was looking to make inroads in India and we approached them with our idea around customer experience.

That’s how TSS took off, with an idea of an exclusive AppleCare Center to elevate the after-sales service experience for Apple consumers, but through a technology platform to manage all the customer walk-ins. We ultimately made it available for the entire AppleCare ecosystem, which Apple Partners benefited greatly from as they didn’t need manual lookups to know the status of any service for an Apple product and did not need to follow up with customers to come and collect the device post repair completion since the platform provided an automated update. The expansion of the business continued with many other brands and caught global attention. That’s how TSS was later acquired by the German company B2x, in 2014.

While I stuck around for a year after the takeover, the idea of building a unified platform that would tie the entire after sales service ecosystem was germinating in my mind. And that’s how I later parted ways from B2X to start building Servify in 2015.

What are the primary device markets Servify serves and what problems are the Company trying to solve?

At Servify , we have built a platform that brings together all ecosystem partners to deliver a great after-sales service experience. Typically, brands spend almost equivalent to, or at least two thirds of what they would spend on marketing, towards after-sales service. And as the devices were becoming more personal, but also delicate, customers would spend money for the upkeep, such as protecting the phone from damages etc.

This is approximately a $4 billion opportunity in India and a $40 billion opportunity globally.

The spend by brands and customers was more towards performing/facilitating ‘transactions’ rather than delivering an ‘experience’ as most brands considered service an obligation rather than an opportunity to build life – long engagement. To that effect, our business model is quite unique.

We understood the customer’s pain point for the need of standardization, transparency, credibility, real time feedback and hence the need to get technology to play a major role in bringing all these ecosystem players under one roof as the right solution — these are not limited to smartphones or smart devices but encompasses all types of appliances and much more.

What are the demand drivers causing strong growth in the after-sales service market? Why have OEM brands historically ceded this market to third party providers?

Many brands have historically looked at after-sales service like an obligation and nothing more. Very few looked at it as an opportunity to drive consumer delight through superior service and even if they got it, they eventually ran into issues due to different CRMs not being in sync with each other when multiple channel partners got involved.

We understood these pain points early on and our tech platform is a unifying factor bridging the inefficiencies of multiple processes under one umbrella. Key drivers of demand in this market include: 

  • Ever increasing count of devices in households
  • Increasing prices of devices and therefore the need to protect them from damages and breakdowns
  • Increasing relevance of devices in our lives and therefore the need to keep them functional

Historically, OEM brands didn’t see much value in providing exemplary service once the product was sold. Cost saving was another big factor. The idea was to sell more products and not really provide great post-purchase experiences. With the increase in competitive intensity, the incumbents started to experience growth and margin pressures and therefore started looking for new adjacent business opportunities.

That is where we come in, as we work with brands to run white labelled device care programs thereby opening up new revenue streams for them while at the same time elevating the experience of their consumers in every stage of their product’s life cycle.

You’ve taken an end-to-end platform approach to after-sales services by integrating multiple partners across the value chain — how have you been able to get everyone in the ecosystem to buy into your approach to the market?

Our B2B business model entails partnering with brands, which provides us access to their service and sales networks. The brands participate actively in onboarding their authorized networks on the Servify Platform. Further, Servify also engages with service partners that have networks of service centers to complement the service network of the brands – this is true mostly in markets where repair service is concentrated (with a few service providers). Prospect of higher repair volumes and therefore bigger scale is the prime motivator for our partners to integrate into the Servify Platform. Other elements of the ecosystem such as logistics partners, payment gateways, call center etc. also engage with Servify for the same reason.

Why should leading global brands outsource after-sales servicing to Servify? What is your key value proposition?

Top brands trust Servify. We are the only Company that manages Brand Authorized Programs of leading premium brands with a global presence. We provide white labelled fully digitized device care programs and act as an extension of the OEMs’ presence.

Our fully digital solution integrates the sales and service networks of brands under a unified platform, thereby creating the required reach for distributing device care programs to their consumers digitally and also creating a high quality service experience for them. Servify’s digital platform, which includes the end to end processes for managing device care programs right from plan activation till claims/repair fulfilment, packs immense capabilities that are well recognized by our brand partners and have helped us win their confidence.

No doubt, we feel privileged to be associated with some of the top brands of the world and are on the verge of launching device care programs with many more in different parts of the globe.

Our unified digital platform integrates with all relevant players in the after – sales ecosystem including repair service providers, parts suppliers, logistics providers, payment partners, call centers, retailers, online marketplaces and resellers to name a few. We believe in a holistic approach to delivering customer service experience; this integrated approach brings together common objectives and ownership across the value chain.

Can you describe your technology platform and how it is integrated with your partners?

The key idea of building an after-sales service platform was to integrate different players of the ecosystem. So right from the beginning, we knew we had an uphill challenge. Yet we have developed the world’s most comprehensive tech-enabled cloud based, multi-tenant Device Lifecycle Management (DLM) platform that is quickly becoming the Operating System for after-sales service.

The multi-tenant DLM platform is built using a home-grown microservices architecture built for scale and a framework for quick and highly secured API integrations with partner systems, and has ready support for multiple currencies, languages and locales. The Servify DLM platform is powered by a proprietary tech stack that helps reduce risk of fraud and enables faster, more efficient claim adjudication process, to provide white-label warranty solutions and services used across the Device Lifecycle.

What role do you play from an insurance perspective with regards to product warranties? Are there opportunities to expand your insurance-related revenues?

Servify runs Device Care Programs for brands — offerings typically include damage protection and extended warranty plans. Servify creates these programs in consultation with the brands and generally owns end-to-end responsibility of operating them. The major responsibilities include providing the technology platform white-labelled for the brand, integrating the relevant service providers in the ecosystem with the technology platform, plan configuration on the platform, engaging an insurer to underwrite the program, managing claims including adjudicating, providing contact center support (voice, email, bots etc.) and reporting on program performance.

Servify’s insurance -related business presents strong prospects for growth. The following are the growth levers for this business:

  • Organic growth: Devices are becoming more expensive and delicate. Consumers are increasingly preferring to subscribe to the care plans to protect their devices from damages and mechanical breakdowns. 
  • Unaddressed market: Servify’s deep technology stack has opened up opportunities not leveraged by the industry. 
  • New categories: Servify’s addressable market is poised to widen significantly with development of its digital platform for new product categories (outside smart devices). 
  • Geographic expansion: Growth of Servify’s business in newer markets like North America, Europe, the Middle East and others creates opportunities for new revenue streams and profits.

How do you measure success with your offerings?

Every program that Servify runs with brands is monitored for performance. The KPls that are tracked include, but are not limited to, the following: 

  • Sales and revenue against the plan
  • Attach rates on devices
  • Health and profitability of the program — there are multiple metrics that get monitored here

All KPls are monitored for each program at real time using Servify’s Analytics Tool.

How do you charge for your services / what is your revenue model? What are your key expense items and what is your long-term margin structure?

Servify recognizes revenue against every device care plan that is activated. The major expenses include the insurance cost (premium paid to the insurer), and royalty for brands and manpower cost (mostly product and technology). In the steady state, Servify is expected to return operating margin in double digits benefiting from the huge operating leverage that its business model entails.

How has COVID impacted Servify?

COVID – 19 has certainly impacted our business in many ways. While it has forced us to work from home, it has also made us unlearn many things and create new and innovative ways of working and engaging with our colleagues and business partners. All of which have helped us recover quickly from the impact of the pandemic. The business is back on track and scaling despite the adverse conditions on the ground.

What are the key metric you use to measure your business?

Servify uses the following metrics to measure its growth and scale:

  • Overall business growth
  • Operating leverage
  • Share of revenue from new products and categories
  • Share of revenue from new territories

What new markets and geographies do you expect to enter over the next few years?

While we already have a global presence with operations in North America, Europe, the Middle East, India and Turkey, we plan to expand into South East Asia, Australia and Latin America within the next two years.

Closing note: I believe this interview captures a lot of learnings for startup founders. Servify team is building a great business and we are proud partner in this journey. If there are specific parts of this interview that you liked, please share your views / comments.

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