Sell Well - Grow Well, a joint initiative between SBI Fund Guru and Wealth Forum, is an effort aimed at encouraging and guiding distributors on a path towards right selling - which we firmly believe is the best way to grow well on a sustainable basis.

Pallav Bagaria, North East India's most successful advisor, has a new ace up his sleeve. Having made a mark for himself in the HNI and retail segments in Guwahati, he has now set his eyes on a segment that the industry rarely even looks at, and has created a successful new business proposition around it. He has come up with a focused CASA initiative (Current Accounts and Savings Accounts) with a dedicated CASA sales team, and is successfully approaching shopkeepers and small businessmen in Guwahati with a compellingly simple proposition. Read on as Pallav takes us through yet another of his winning ideas.

About 5 months ago, we started a new business initiative that targets CASA balances (Current Account - Savings Account) of small and medium sized businesses. We created a 3 member team that focuses exclusively on this proposition, and goes door-to-door, meeting up with small and medium sized businesses in Guwahati. Some are hardware shops, electrical shops and sundry such small sized businesses across the city. We look for businesses that have current accounts with banks, with no CC limits, no overdrafts. Many of them have no knowledge of mutual funds.

Simple and compelling proposition

Our proposition is very simple: we tell them that we will help them earn money on their idle current account balances. Return expectations are low, since the money is anyway earning nothing. We have identified two ultra-short term funds of two leading fund houses for this purpose. The moment we sign them up for an ultra short term fund, we take their One Time Mandate to set up additional purchase and redemption facilities through their mobile phone. Not all of them are tech savvy - in which case we go through the paper route for transaction execution.

A pre-condition in all cases is that we will compulsorily ask them to redeem their initial investment after the first weekend of investing. This helps them clearly understand the entire transaction flow and gives them the confidence on convenience and on returns from migrating idle current account balances to ultra short term funds. Once they get this confidence, they are willing to migrate bulk of their idle balances into this facility.

Not so small after all!

When we started, we thought that this business will involve small balances from a large number of such investors, to become a meaningful proposition for us. To our surprise, 5 months into this initiative, we find that we have signed up 65 such clients for our CASA proposition, and their collective AuM in ultra short term funds is now Rs. 5.5 crores. That gives an average of over Rs.800,000 per client! We've understood that while big businesses have leverage and all the problems associated with it, there are many small businesses which are liquid, profitable, with no debt, and which are completely untapped by the fund industry.

More than 50% of these clients have never invested in mutual funds before. I firmly believe that while all of us keep running behind the same set of investors, the real opportunity is in seeking out those who have never been approached by our industry so far.

Stage 2: profits into equity funds

We are now moving into the next phase of engagement with these clients. Since the returns from these ultra short term funds are purely jam (they never expected anything from their current accounts anyway), we are now convincing them to transfer the income into equity funds. It's a step by step process to get them comfortable with mutual funds and gradually get them to consider a wider product basket.

NSE MF platform will help build scale

For us, this initiative will become a whole lot more scalable when we move to the NSE MF platform. Transaction execution will become much simpler, which therefore enables us to build some scale into this initiative. We have made a beginning with this initiative, and initial experience is very positive. The key for us is to keep our focus on reaching out to more and more such small businesses across Guwahati and then across North-East, to bring them into the fund industry with a simple, safe and convenient proposition. Our head of mutual fund business spends one day every week in going out to meet only such prospects. His CASA sales day does not involve any HNI calls - its all about engaging with more shopkeepers, more small business owners, and get them started with our CASA initiative.

Look for new pastures

I am more convinced than ever before that we need to move beyond running behind the same investors and think differently on how we can identify market segments that have never been approached by our industry, and go to them with propositions that appeal to them. There are ample opportunities for those of us who seek out new pastures.

All articles in the Sell Well - Grow Well section are created by Wealth Forum. These are not to be construed as opinions given by SBI Mutual Fund.

Share this article