Focusing on educating customer, Muthoot Finance reinvents gold loans as a smart choice

New Delhi: When the Covid toll was at an all-time high and the world was hitting the “panic” button, Indians in the districts most affected by Covid put more of their savings in gold than those in other regions. In Covid-vulnerable districts with the highest number of cases, 6.9 per 1000, poor households increased their allocation of gold (International Review of Finance and Economics).

However, many households in India had to resort to shadow banking for gold loans, facing high interest rates and falling into debt, risking their precious assets.

Why?

The answer is simple: people in North India consider gold loans a measure of last resort.

To change this perception, Muthoot Finance recently launched two ad films featuring their brand ambassador Amitabh Bachchan to highlight how gold loans enable new beginnings for its customers. 

The campaign is called ‘Shubharambh’ and features the tagline ‘Har Shubharambh Mein Apno Jaisa Bharosa,’ highlighting the role of gold loans for all auspicious beginnings or Shubharambh.

Sharing his thoughts on how the campaign came to light, Abhinav Iyer, Senior General Manager—Marketing & Strategy of The Muthoot Group, said, “The campaign intends to bring awareness about how people can realise their dreams with easy and affordable gold loans by unlocking an idle-lying asset.

Gold, more often than not, is kept in your lockers and rarely gets used. By unlocking this emotional asset and putting it to productive use, you can help it work as hard for you as you are working for yourself.”

Accompanying the campaign, the brand also launched a gold loan mela and Milligram Rewards—a loyalty program that is the first of its kind in the gold loan industry. 

“Anytime a customer walks into a branch and does any transaction, whether it is taking a gold loan, making an interest payment, or buying any other product, they earn reward points.

These reward points, called Milligram Rewards, accumulate with every transaction, referral, gold loan purchase, or interest payment. Once the points add up to 500, the customer receives half a gram of gold coin, with no conditions applied,” Iyer noted.

Sharing the rationale behind the timing of the campaign, Iyer said, “Quarter four is a crucial period for us, contributing the most in terms of business volume. Quarter three sets the stage by building momentum, leading to quarter four's pinnacle. During this time, business customers primarily avail gold loans for working capital, business expansion, paying salaries, advance tax, rent, and purchasing raw materials.

We have launched campaigns to encourage business customers to see gold loans not as a last resort but as a smart lifestyle product that unlocks idle assets and aids in their path to progress.”

In India, gold has a varying cultural context. While people in South India use gold loans as frequently as UPI, people from North India hold great pride in their jewellery and think of gold loans as the “last resort.”.

This divide is visible to the naked eye, as South India alone accounts for “50% of the total gold loans handed out, while North, East, and West India combined account for the other half.”

So, we asked Iyer how Muthoot Finance is addressing this challenge, and he said, “Today, we have about 2,500 branches in North, East, and West India, contributing more than 50% of the book size. Despite this, the North is a different market where gold loans need hand-holding, education, and awareness. That's why we regularly introduce new communications, like educative series, almost every quarter or half-yearly. With 25,000 tonnes of gold in the country and not even 5% currently monetised through gold loans, there is immense potential.

This gold, lying idle in lockers, can be unlocked and monetised to help people progress. Our communications aim to change the perception of gold loans from a last resort to a smart, lifestyle product. Our last communication was the 'Kholiye Khushiyon Ki Tijori!' campaign, which was hugely successful, and people even took gold loans to pursue passions like buying a laptop or mobile phone.”

Mentioning other challenges that come in the way of marketing gold loans as a product, Iyer said, “There is a misconception that gold gets melted when pledged. Many people are ill-informed because the gold is given back in the same condition in which you pledge it. 

So, one of the films in our campaign focused on the fact that there are no pre-payment and part-payment penalties. Suppose you have taken a gold loan, and after 20 days, you feel that the purpose is served, and you want to make the full payment to take your gold back. There are no pre-payment charges or penalties.

Additionally, there is no part-payment charge. This means a part of your pledged gold can be released back to you. People don't want to keep gold for longer than needed so they can repay part of it. Gold is a portable asset, so it can be given out in parts. All our efforts were focused on de-stigmatising gold loans and myths surrounding them.”

Moving on, shadow banking systems in India act as “loan sharks” and offer loans to farmers and people working in the agriculture sector at high interest rates, making them fall prey to life-long debt due to the lack of awareness about formal loan instruments.

To reach out to farmers and educate them about formal gold loan instruments, “we came up with a campaign film carrying the tagline ‘Soch Badaliye Aur Life Mei Aage Badhiye.’ The film featured a farmer who wants a loan to buy a tractor. The wording of all these campaigns aims at addressing an attitudinal transformation, Iyer explained.

Moving on to the media mix employed by the brand to communicate its offerings and simultaneously educate the customers in North India, Iyer said, “Traditionally, we spend almost 50% on ATL (Above The Line) activities. Another 15% to 20% goes into BTL (Below The Line) activities. We used to spend about 10% on digital, but now we have increased it to about 15% to 20%. Additionally, another 10% is allocated to content development and the production of films and related materials.”

It is important to note that while Muthoot Finance spends heavily on ATL, it also spends “almost 20% to 50% of its budgets on BTL and ground-level activations.”

Highlighting how Muthoot Finance operates on a “phygital” model, Iyer said, “Whenever we do any BTL activation, we plan activities for every branch so that each branch and its catchment area receive relevant ground-level support and ATL (Above The Line) provides top-level support.

This ensures a human connection, with our staff members interacting with prospective customers in the market and catchment areas. We do a lot of activities to complement the efforts done at the ground level. It's not just about customers seeing ads on TV and radio; our branch staff and promoters reach out to them at the ground level.

ATL and BTL efforts complement each other, and this combined approach ensures that our marketing strategies are effective and reach our target audience through multiple channels.

Moreover, we also encourage our employees to follow all our social media pages and share our content through WhatsApp channels. To add, employee-generated content (EGC) is also picking up very well.”

When it comes to communicating with customers, Iyer appreciates the appeal of regional influencers and regional languages.

Elaborating on his stance, he said, “This is the first time we have onboarded regional influencers because people are able to relate to them better. No matter what, it is an underlying human emotion that anybody speaking the customer’s native language will connect better. We feel regional influencers have a role to play.

We have even made our brand films in ten languages. To add, all the regional television channels, we always air regional content as our branches are present throughout the country; thus, using vernacular languages is vital for us. Even our print ads are in regional languages as well.”

Deeper into the conversation, Iyer spoke about the new front for marketing—WhatsApp. 

Providing insights into how Muthoot Finance is using WhatsApp, Iyer said, “We are using WhatsApp largely for two purposes: to create awareness about new products and offers that need immediate action from customers and to facilitate user journeys that can be completed entirely online, such as top-ups. We have also created vertical communication with Amitabh Bachchan for new customer acquisition and for new loans to existing customers, which will go live soon. 

The key is not to spam your customers with repetitive questions and communication; the probability of them blocking you is higher. Therefore, based on customer segmentation, we apply segmentation logic and rule engines to send only relevant communications to relevant customer segments.

Our WhatsApp copy is always complemented with a nice video or film featuring Mr. Bachchan or another brand ambassador, as content with brand ambassador usage tends to have a higher uplift. The first few seconds of any communication are crucial. If the first 4-5 seconds are engaging and relevant, the customer is more likely to watch the entire content and take the necessary action.”