Coffee with the CEO – In conversation with Gaurav Aggarwal, Founder & CEO, Savaari Car Rentals
How and when did you feel the need to start Savaari? Was it based on a personal experience or did you simply see it as an existing gap in the market?
It was in 2006 when I was traveling from Mumbai to Delhi and had to go to Roorkee. But after reaching Delhi, I found no reliable option to book a car. This is when I realized the need of a reliable car rental that is available 24×7 where the customer is assured of a clean, fully functioning car and an informed courteous driver. I decided to analyze the scope of the future of car rental in India and soon found out that there were no national players offering a standard and quality service in this sector. There were franchises of some western companies but they were serving only to a niche segment. This is how Savaari was founded in 2006 with an initial investment of around Rs.55, 000.
I have a Masters in Computer Science from Georgia Tech and have worked for 10 years in a networking company in the Bay area. I was involved in router development. The experience of working in such a complex environment helped me design a completely customized and scalable back-end for Savaari from scratch. I have been managing technology, marketing and business development in Savaari. The family background of two generations of transport experience helped in evolving the business and the service model.
How big is the car rentals market in India and how much of the market has Savaari captured? Please share some numbers, if possible.
India has seen a sea change in this sector in recent years with the entry of car rental services which has made this segment organized, gradually increasing transportation options and business opportunities.
With burgeoning potential, 97% of the sector is still unorganized. Sadly organized players constitute only 3% with a turnover of 550-600 crore and about 6,000 cars in their portfolio in this 30,000 crore industry. However, the industry has been seeing a buoyant growth of about 35-50% in the last two years and the entry of international players is likely to bring in more action.
Majority of Indian car rental industry operates on Aggregator model which means that these companies do not own a car directly but have an association with vendors who are actually the car owners. This helps the company to reduce their capital expenditure drastically. These companies mostly rely on the fleet of the existing operators and bring them on board with proper training so as to deliver a consistent service experience. They charge service premium from the high end customers who do not mind paying for a flawless service and in turn empower a majority of small car owners or rather entrepreneurs.
While the corporate and tourism segments remain the fastest growing, the luxury rental segment is also expected to grow significantly. With each passing day, as the travel space will continue to radically evolve, the customer will look for a comfortable, secure and reliable service.
What is the best marketing move that you’ve initiated which sets you apart from your competitors?
We have been in business for almost a decade now and we understand the market very well. We are present in 60 cities across India with presence in almost all major tier 2 and tier 3 cities.
“The best marketing move which sets us apart from competitors is the focus we have always had on the Customer and everything around it”. Our website has a simple cab booking process and our Android app lets us control the delivery schedules. This approach has paid off as we have seen triple digit growth in both our corporate and retail businesses.
Which city is the biggest user base for you? What about plans to expand to other Tier 2 cities?
The biggest user base for us has been Delhi, Mumbai, Bangalore, Chennai and Kolkata. We are already present in 60 cities and have been seeing traction from Ahmedabad, Hyderabad, Lucknow and Chandigarh among Tier 2 cities.
As of now, we have no plans of expanding our business any further. However, we do plan to penetrate deeper in to the cities we already have a presence in. We are continuing to focus on quality and on expanding our reach through more local transporters within existing cities and plan to be India’s largest car rental company in the next 5 years.
What has been your single biggest challenge in sourcing and retaining talent?
We have always believed that there are talented people in smaller cities. This is why our operations and customer support are based in Moradabad and Dehradun respectively. Attrition is zero and operational costs are attractively low. Also, building the right culture to manage the expectations of employees is an important aspect of retaining talent. The expectations one has from employees when the company is five-people strong are very different as compared to when it is a 100-people strong company. When you are just five people, everyone is expected to do everything. As you grow, you need experts focusing on specific areas. It becomes very important to build the right culture so that people can adapt to fast changing requirements and this has worked for us.
How do you handle consumer complaints and bad word of mouth?
Yes, from day one we have been very aggressive in taking customer feedback. I can personally promise a lot of things. The drivers and vendors can claim a great experience too but all of this will mean nothing if the customer does not feel it. We always measure our services according to the perception of the customer. Fifteen per cent of our customers provide us feedback and our services usually aggregate around high nineties.
Consumer complaints are handled with utmost care and priority and we make sure the top management gets involved until and unless the customer complaint is resolved.
What would be your piece of advice for new players entering the car rentals space in India?
Most important learning’s which I would like to share with people who venture into industries without any prior experience of the sector would be:
- Lowest price doesn’t equal customer loyalty:It is convenient to price your services the cheapest in the market. But it will not get you loyal customers. In the unorganized car rentals segment, which lacks standardized services and pricing, the challenge is in offering the customer best value for money.
- Fund raising is stressful but, keep the faith: It is stressful to raise capital and often takes longer than anticipated. You have to meet more VCs than you would want to and there will be at least a couple that you wish you hadn’t met. But believe in what you are doing and you will certainly meet the right investor who will appreciate what you are trying to do.
- Establish a capital efficient model early: We have a capital efficient culture and operation right from day one. Even when we were proving our business and service model we were cash flow positive. This is an amazing thing to have because you will realize that even when you are funded, the goals that you have to achieve are far bigger than your resources.
- Entrepreneurship is pervasive: While running a startup, one has to interact with a lot of people, be it for legal or financial advice or to get your office up and running. In fact, even more exciting was to see the entrepreneurial spirit of our vendors. One proof of that, apart from starting, building and growing their business, was their openness and ability to appreciate a new idea like ours and to stick with us and help us grow.
- The team is and will always be your best resource: Internally, we have seen that a dedicated guy is four times more productive than the average guy. Investing in building the right team pays the highest dividends.
- Running a start-up is a roller-coaster ride: As an entrepreneur, for no tangible reasons, you can feel extreme highs and extreme lows, and sometimes one extreme within moments of the other. It seems strange but it is pretty common.
- Technology is your most efficient tool: Technology is essential and helps immensely in scaling the company. It also helps in building features that delight customers.
- Lots and lots of hard work: Being in a start-up means tons of hard work and long hours. But, it is also lots of fun.
Tell us more about your personal journey. How was your life prior to founding Savaari? Did you always want to be an entrepreneur?
Mine was a typical middle class upbringing with lot of emphasis on studies. Since my father was in ONGC, every few years he used to get transferred and as a result I have stayed in the east, north and west of India. This is an amazing experience to have and the exposure to such varied cultures and geographies helps in making a person adapt quickly to new scenarios.
In fact when in 2011, I moved back to India after staying in the US for over 12 years, the exposure that I got early on helped me adapt to Bangalore, a city that I had never lived in before. This also completes my staying in all four corners of India. The other thing that I distinctly remember is my fascination with automobiles; specially cars. At a sub-conscious level this is one of the reasons for starting Savaari Car Rentals.
While studying, just like everyone else I wanted to do well in studies and pursue engineering. Going to US and pursuing my Masters was definitely a great opportunity. I always wanted to do something different and new though becoming an entrepreneur never crossed my mind in the early days.