The company's target customers are the three-million-odd SMBs that are expected to use new digital tools for customer and sales management
If you go to the website of any top real-estate company these days, chances are you will stumble upon a chatbot integrator that manages the sales. Once you show interest in buying the product the lead is generated to a manager, who will close the sale with you. But now, applications to create a completely automated sales engine is possible with current cloud-based platforms.
Back in 2014, Subrat Parida, 35 then, sold his IT services business to a mid-size corporate, and made enough money to take a break. His company was engaged in building a business intelligence tool for industry. Looking back, he realised that a lot of information could be automated for industry and consumers, obviating the need for people-oriented processes that took time and often delayed leads.
Around the same time, 26-year-old Navneet Gupta was working on the platform strategy of India's second largest IT firm. Navneet was a family acquaintance of Subrat and the two used to often engage in discussions on machine learning and artificial intelligence. That's when both of them decided to build a chatbot that could change the way businesses acquired customers. Racetrack.ai was born in October 2015 and with it the bot Marvin. Says Subrat,
"The reason we were able to pin down on the problem statement was because I had worked with over 200 business customers in my previous company. I realised that sales processes were cumbersome and confusing. This is what we intended to change and automate."
Today, Racetrack.in has seen investments of nearly Rs 4 crore and grown into a 22-member team, which includes five IITians.
Why are chatbots a big opportunity?
Gartner Inc. predicts that customer relationship management (CRM) spending would reach $36.5 billion by the end of 2017. Organisations the world over are seeing a shift towards increased CRM spends because of the dynamism of the data coming from the digital world. For the first time the spend on CRM is going to overtake the spends on ERP. Companies like FreshDesk, Helpshift, Zendesk and Salesforce.com offer chatbots for all types of industries. Unfortunately, their businesses are largely concentrated in the developed world because customers pay for their full suite of CRM services.
Now this is where Racetrack believes it can make a difference. It is going after the three-million-odd small and mid-size businesses (SMBs) that would love to use new digital tools for customer and sales management.
"We are building chatbot applications for the healthcare, education and real estate industry," says Navneet. In Racetrack's case, the bot becomes the consultant and answers all the finer details. For example, if it is a real estate company, the bot answers all the queries about a location -- the schools, the retail shops, and hospitals around it. It speaks about things like proximity to other districts as well as about the cost of the project. Only if the customer is interested will it process the information to a sales lead to close the deal.
The company is helping educational institutes communicate with current and prospective students. It is also piloting in a couple of healthcare centres. Says Subrat,
"The healthcare bot is a high-end engagement module that is dynamic and allows patients to access information about the hospital faster."
The business model
The company is currently working on several business options, like the number of queries bundled as a package or a pay-per-query model. Being a B2B company it has to acquire as many paying customers as it can soon. Its competitors are Nikki.ai and Yellow Messenger. Both have acquired several businesses. Yellow Messenger, for example, has clients in India and the US. It should be noted that none of the chatbot companies have made money so far and are unlikely to do that for the next couple of years.
"These businesses need to scale up and need to show value to the businesses that use them. It's a crowded space with very few winners," says Naganand Doraswamy, CEO of IdeaSpring Capital.
But India is such a nascent market that there is an opportunity for such a technology to be taken to at least three million SMBs and one million retailers. However, the value of converting these leads into business for Racetrack is going to be a hard task. Currently, it has 11 paying customers and is piloting with seven more. That said, if the company onboards more than 50 paying businesses by the end of the year then it has the potential to become a large business in the years ahead.
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- Yellow Messenger
- Subrat Parida
- Navneet Gupta
- CRM spending in India
- future of marketing