At a time when startups in the home services space are finding it difficult to get customers, Sulekha—one of the legacy players and an online and mobile platform that connects users with local service providers—is marching ahead with a broad customer base and is also profitable. In a chat with Techcircle.in, Sulekha's founder and CEO Satya Prabhakar talks about the firm's growth strategy and how the platform is using technology and analytics to seamlessly connect users with the right local service providers.
Sulekha has been there for more than a decade now. So what is new?
Sulekha is and has always been focused on needâ€“fulfilment of local services. What has changed is that the classified market segment has now opened up to multiple verticals and a lot of new services—such as car washing as well as home and bathroom cleaning—are offered. However, this space has largely been a two-player market comprising Just Dial and Sulekha. We believe that we are far more sophisticated technologically and are doing a lot more need-fulfilment than any other player in the market. We provide a range for services and keep technology at the forefront for ensuring seamless experience for customers and service providers.
Is there enough juice left in lead generation model?
If you want to fix a leaking roof or upgrade your bathroom, you are unlikely to go online and allow any random person to come for the repair or upgrade without knowing who the service provider is. The full-stack model (where the service provider is responsible for the complete customer experience and uses all channels to deliver the service) works only for 16% of over 200 categories of local services that are offered. For others, you would want to speak to multiple players first before shortlisting the service provider.
What is the future of the listing business?
Everything depends on the lifetime value of a user. You can't build a vertical business and offer just one service which is not frequently used. We have to provide horizontal services for multiple categories and many of these categories are high value in nature and are not used frequently (internal decoration, kitchen remodeling, etc). For such categories, a lot of discussions happen between the service provider and the user and a lot of customisation takes place.
Not all things can happen when people come and pay online. As far as the future of listing business is concerned, it will be mix of need-fulfillment and full-stack services where you will consult two-three players before finalising a service provider and at times also need a person without the hassle of calling multiple service providers.
You raised over $28 million in a Series C funding round last year. How have you used the funds so far? Are you looking to raise another round soon?
We have invested the money in expanding the team, enhancing the technology and building the brand. We have rebuilt the site on cloud and have invested in superior posting services, telecom technology and internal system and processes to handle over 20,000-25,000 requests that are posted by users on our platform every day.
What new initiatives are you taking?
We will continue to invest in technology even when the connection between the user and service happen more offline. We have installed technology to identify who is calling who and understand what they are talking, to make sure users' needs get fulfilled. We are using algorithm-based scoring of businesses to help save cost of time and resolve hassles between the user and the service partner.
How are you using technology to streamline the business?
One of the biggest problems that Sulekha faced was the lack of control of the offline conversations that happen between the user and the service partner over phone. This would cause customers a lot of problems—they may not get enough calls from service providers or get too many calls. Then service providers would complain about fake or passive customers who would never pick the call. Now we have installed a user virtual number (UVN) technology through which we assign dynamic virtual phone numbers for all user-service partner combinations. If a user's request is shared with five service partners, Sulekha now has control over the calls between those service partners and the user. The user's real phone number is masked from the service partner and we can inform the service provider via dashboard or SMS that the user's requirement is fulfilled and he doesn't want any more calls. Once the customer's requirement is fulfilled, we deactivate the virtual numbers; so even if the service provider tries to reach the user thereafter, he gets a 'regret' message.
The technology backbone for this is powered by Exotel which has offered similar solutions for cab-hailing apps (driver can't see user's number), e-commerce firms (delivery boy can't see customer's number), etc.
How much traction is elicited by the platform? How many transactions are you clocking in a month?
Last year, we completed around 150,000 transactions on the site. Last month alone, we did around 15,000 transactions. This year we are looking to grow about 30-40% compared with last year and expect the number of transactions to be around 250,000.
You have been profitable—in FY2014-15 you generated around Rs 98 crore in revenues. How have you grown in FY2015-16? What is the secret of your profitability?
You have to be efficient with every expense you incur. We have infused only $25-30 million into the company so far and we have been focused on offering value and will continue to do that. About 85% of the traction we get is organic (where Sulekha does not spend on customer acquisition). The cost of acquisition of a single user is around Rs 250. In FY2015-16, we crossed Rs 110 crore in revenues. Are you looking for acquisitions?
We keep looking for opportunities but so far we haven't found anything that will help us increase reach and revenues.
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