Who is my customer? Where is he?

A question every mortgage company ends up asking.

It is funny to hear to this question. Let us repeat once more to see whether it rings something to each one of us. The questions are who is my customer? Where is he? Isn’t it like an evolved person asking where is God? Where does he stay? Where & how do I find him? Fortunately, it is much simpler to answer the questions about the customer than the god but mind you, even he can be elusive like god if you don’t follow the process.

In an economy, where the demand is more than the supply no one would like to ask but at some point, of time this question is bound to come up and it needs an answer to be sustainable in the business. Now let us take the real-life scenario of India where the demand for housing as per the government statistics indicate that there is a need for 43.67 million units in rural areas and 18.78 million units in urban pockets. It has been noted that almost 90% of demand for housing in urban and rural area stated here are from Economically Weaker Section that is EWS and Low and Middle Income that is LMI segment. We also know that 69% of our population is in rural areas and 31% of the population is in urban pockets.

With these statistics on demand and supply side, is it any brainer to focus largely on urban areas or for that matter only on middle income and high-income segments? The key is that “have I understood where is the demand coming from”, “have I got my customer segment right”? Do I know the geography to understand where my customer is coming from? All these questions must be asked, as it is the starting point.

I am not advocating that urban markets should be emptied out. The number of players competing for the same pool of customers would be so intense that all the marketing activities will be leading to blood bath, which means you are going get squeezed on ROI, fee income and also possibly compromise on underwriting standards. Unfortunately, the developers in the urban markets are doing an act of hara karri leading to customer exiting the real estate market. This is because of price points at which the homes are being made available and the delay in completion of projects which again has many other reasons attached to it.

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Even if we take the small potential of the urban market, there seems to be chaos amongst the players leading to massacre of each other as everybody is focussed on formal segments having ability to provide documented income for assessment. Who is benefitting? According to me none. Even the customer is not benefitted as he gets shoddy service at the end. The issue is that can somebody focus on segments who do not have documented incomes but can show proof of business stability. Can someone move away from the central area to the outskirts of the city? What about EWS and LMI on the periphery of the metros?

The idea of addressing the customer needs in the EWS and LMI segment requires a shift in the thought process and restructuring DNA of professionals who have till now despised getting into the segment because of fear of unknown. What is this unknown? Probably it is about reading customer, his undocumented income, his expenses, his lifestyle, large family size with multiple incomes and absence of credit or repayment history if it is rural market understanding and reach to the rural pockets. 

The truth is the future of housing sector is in meeting the needs of the EWS and LMI segment. No doubt it is not going to be easy. But the start has to be made and learn from the experience as time progresses. Now the question about “who is my customer?” remains intact which needs to be answered. As a reconfirmation let me state that today there is unmet demand for housing in the EWS and LMI segment on the outskirts of metros and rural pockets. Having known the profile and

geographical base of the customer, it is now important to further segment in terms of customers with income documents and without income documents. Within each of the large segment of “with income documents” and “without income documents”, we need to further segment them. Let us take segment “without income documents”. Here, we should further segment on two dimensions. First in terms of trade like roaming fruit merchants, Coffee, and Tea vendors and other is geographical spread within the town like north, south, east, west or central.

I hope you got the clear vision of your customer segments and also how to reach him. Wish you good luck and to read more to such post subscribe to Virtuoskill by downloading the app from google play store.

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