Originally published on Medium, November 2021.
My best friend in India got mobbed today. She dared venture out to buy a gold coin on Dhanteras - a festival where buying precious metals is considered auspicious. I advised her to consider Digital Gold - similarly auspicious (according to me), and one doesn’t have to risk contracting Covid.
Truth be told, apart from concern for my friend, my love of Digital Gold has two more reasons:
a) I love India, and opine that Indian consumers need to become more rational about buying gold jewellery and coins, if not buying them for immediate needs (such as for marriage). At roughly 900 metric tonnes per year, India is the 2nd largest consumer of gold globally, and imports most of it. The largest global consumer is China, which imports around two-thirds. Gold imports are one of the top contributors to India’s current account deficit - that ideally should be brought to a surplus. Concerned citizen here.
b) Four years back, I moved from NYC to India - to build a consumer product in the gold industry. Over the next year I gained immense learnings from creating this category as a first mover. We sold record amounts of gold on Dhanteras - and I still can’t believe how in a value-conscious country, people still have this irrational love of gold. Whether gold is a great investment or not is a debate I will save for later.
Because I invested my sweat and tears in this unparalleled professional experience, I am sharing my learnings - applicable to more B2C and B2B2C products, especially if you are the first mover in the market.
1. Educate your customer
Being the first mover has advantages, but also unavoidable category creation costs. We were the first Digital Gold product in the market. To test the market without spending a bomb on customer acquisition costs, we decided to partner with a leading payment platform. The customer was acquired by the payment platform - and we sold purest 99.99 quality Digital Gold to them. Or so we thought, till we realized the amount of skepticism amongst existing gold customers. Months in, we still faced questions such as:
- Why is the real-time sell price lower than the buy price? (It’s normal to have a spread.)
- How can we trust that you are actually allocating gold to me upon purchase? (To solve this we appointed an independent custodian and established stringent handover processes so that we couldn’t commit fraud, even if we wanted to.)
- How is this different from paper gold or sovereign bonds? (Our product was backed by real gold, allocated to the customer’s account with each purchase.)
These questions sound simple to explain - but making the end customer understand them and establish trust took months of effort. We made UI/UX changes and invested in creating a lot of educational content and FAQs. On the real-time buy-sell spread, we eventually gave up on explaining and separated the offer price displays to two separate pages - when you buy, you see the buy price; when you sell, you see the sell price.
Our biggest learning: educating one’s customer is not a chore one must do reluctantly. It is to be done proactively, with investments planned for it. And for each happy customer, social referral incentives need to be built into the product - because happy customers will do further market education for you.
2. Know your customer
After many months of operations, when we profiled our customer base, we discovered that we had sold gold to “traders”, not “savers”. Our vision was to enable fractional buying for accessibility, affordability, and to promote saving for long-term consumption or liquidity needs. Despite our touching ads targeted at lower-middle-class consumers, we discovered that our typical buyer was a 34-year-old, UP-based male who was trading for the smallest margin advantage.
We hadn’t reached our target base, which valued fractional buying as a saving option for long-term needs. Our learning was to partner with different kinds of partners for reaching different segments of customers - by geography, income level, gender, age, and purchase motivation. This also fueled our partnership with jewellers for providing more redemption options in our catalogue, so that our customers had attractive goals to save towards.
3. Own your customers’ experience
One of the biggest debate topics while working through partners was: who owns the customer? Who is accountable when deliveries go late, or when the wrong SKU was dispatched? Who will customers call in case of a grievance? Contractually, delivery is the delivery partner’s job; customer care is the front-end partner’s job - and each party had indemnified itself.
But how does playing musical chairs with customer experience accountability help the brand that owns the consumer product?
Angry customers would inevitably find our corporate office’s phone number, get my or my team’s line, and share stories of how their child’s - or worse, their wife’s - gift got delayed. Lesson learned: partnering on core aspects of your customer journey is good for testing, not necessarily for scaling. And if one still chooses to work through partners, one must make sure that service quality is great and incentives are aligned for the partners to take as much care of the customer as you would do yourself. Customer delight is key to winning trust and retaining customers for enhanced lifetime value.
Today there are many Digital Gold products in the Indian market, and some have extended their product to gold-backed financial services as well. Even though my glittery experience is in the past, I firmly believe Digital Gold and the ecosystem of related fintech products to monetise it is the future.
Now going back to admiring my own Dhanteras purchase in Singapore. Did you know that gold is cheaper in Singapore than in India?