SKS goes for rebranding to tide over crises

The need for rebranding arises post a black swan event like the AP MFI crisis

The management at SKS Microfinance wants to revisit the positioning and brand propositions of the troubled micro finance institution (MFI).

Even though its operating model has remained more or less the same, SKS has been plunged into a crisis after the Andhra Pradesh government ushered in a legislation in 2010 regulating the sector's activities on receiving complaints that micro-lenders were adopting coercive recovery practices and charging exorbitant interest rates.

Within 16 years of its existence, SKS, the only listed MFI, has gone through various transitions - from 'non-profit' to 'profit' in terms of a business model and from a non-government organisation to a non-banking finance company in terms of a corporate structure.

"The need for re-branding/re-positioning arises post a black swan event like the AP MFI crisis," says the chief financial officer, S Dilli Raj.

He says SKS is on the threshold of steady growth and requires expert counsel in ending the ambiguities related to its branding and positioning.

Last month, it roped in one of the leading global marketing strategists, Jack Trout, to undertake its re-branding.

The image makeover initiative also comes at a time when SKS-founder Vikram Akula, who is trying to stage a comeback in the company, has levelled charges that the operations of SKS has deteriorated since he was made to quit the organisation in November, 2011.

But what kind of brand positioning is SKS looking at? "This is more about clarifying ambiguities and stating clearly what we are and what we stand for," managing director, MR Rao says.

While the approach document would be ready by this year-end, Raj indicates that the brand positioning would be customer-centric and not competitor-centric.

"As we follow a close-to-consumer model with a high number of touch points, wherein we meet our customers 50 times a year, the customer bonding is always strong. The other stakeholders include local communities, regulators, credit grantors and investors. At the end of the day, the brand cannot be different from what we are and what we do on the ground," Raj adds.

SKS says the intensity of competition in the industry has reduced significantly after the AP-MFI crisis.

The number of players is down to a handful and the market opportunity is huge. SKS is the only MFI with an AP portfolio (fully written-off now), which did not seek corporate debt restructuring.

"That meant that we had to repay Rs 5,800 crore to the banking community and the same was repaid without any delay or deferral or haircut. These measures go a long way in creating a strong bond for the brand," Raj points out.

SKS has fixed the core (Transformation A) and experimenting (Transformation B) with new engines of growth, According to Raj.

While Transformation A relates to the core business of micro-lending, transformation B comprises various new initiatives like giving loans for purchase of mobile phones and distribution of insurance products.

These apart, the MFI's customer protection practices like installation of toll-free helpline for members, a separate toll-free number for the ombudsman and capping of return on assets on core MFI-lending at 3 per cent would be taken into consideration while re-positioning the brand.

As far as Jack Trout, president of the US-based Trout and Partners, is concerned, it is "an interesting assignment as re-branding/re-positioning work in the social sector, particularly after a crisis that nearly annihilated a crucial sector, brings multitudes of challenges."

Raj says Trout might also oversee the implementation of the SKS brand repositioning, which means his association with the MFI would be for a longer period.