Getting first customers

 

This is the first article in a series of articles talking about our experiences while building SimplyGuest. Watch out for more in-depth articles about marketing channels that we tried, dealing with customers, consumer behaviour, building software, getting media coverage, etc.

I didn't have any experience selling. All my life I had been a software engineer. I had some ideas how I could get my first customers but no practical experience. This is a long article, 3985 words; estimated reading time: 18 minutes.

SimplyGuest provides fully-furnished houses on monthly rent. First, I had to have a house to let it out to customers, I needed to find house owners. Me and Bhanu started going around nearby areas, look for 'To Let' boards in front of the houses, call them up and explain SimplyGuest. On weekends we'd go together. On weekdays she would go alone. When I come back home from work, we both would sit together, start calling up the house owners again. We had our first break through after talking to about 10 owners. Bhanu had found an empty house 300 meters from our own house. Some house-owners don't put a to-let board in front of their empty houses. Bhanu had found a way to get around this. She would walk up to the security guard, ask him if there are any houses to let in the apartment building. Most security guards would know and give her details about the empty house. In one such case, after 10 unsuccessful attempts, she had found an empty house; she had spoken to the house owner already and he was willing to let out to spinsters. I came back from work and I called him. He was residing in a different city. He was a hard negotiator - I sensed it - and he took advantage when he realized I was starting the business and inexperienced. He pushed me so hard for every little thing, I ended up going way over my budget. I desperately wanted this house; I agreed to pay a fixed monthly rent even though I knew I would find it hard to find tenants for it. If that weren't enough, he asked me to meet his cousin who was staying in the same society, and get his approval. This cousin didn't like the idea of renting it out to bachelors or spinsters - he was married and had a kid, he was part of the owners association. I came out from the meeting with a bad taste in my mouth, I had lost hope. After a couple of days the owner called up again and said he would like to rent it out. he would've rented out the house to me in any case, he had managed to increase the rent by 80% more than the market rate. I was going to curse my decision to agree for such a high rent. I later renegotiated the rent when I figured I couldn't afford it.

 

 

After about 10 days of negotiations he came down to Bangalore to sign the rental agreement. He asked me if he could see any of the existing properties managed by SimplyGuest. I had lied to him saying I already had 3 houses. He had looked at simplyguest.com and wanted to see a flat listed on it - I had listed my own house and another friend's house in it. I hurried called my friend and gave him a few instructions on how to handle this visitor, but luckily the owner's train was leaving in the afternoon, he didn't have enough time to visit the house.

Finding first customer

Bhanu and me would stand in front of the big corporates on Bannerghatta Road and distribute flyers with house details in it. It was awkwardly embarrassing at first, but we didn't know any other way; few people agreed to hear us out out of pity. We did this for about 4 days, standing at different places every day - some security guards yelled and chased us away. Only one girl that we spoke to appeared potential. She couldn't afford what I was offering but she had a friend who could afford. She had him call me later that day but we didn't have any houses for boys. Our only house was meant for girls. I couldn't help. We made a list of offices nearby, started visiting them one by one; we'd try to meet their admin or HR teams, but nobody seemed to care. Had I built something nobody wanted?

It's been 1.5 months, I was paying for an empty house. None of our marketing channels had worked. We had a few enquiries but nothing potential yet. I was loosing hope. Me and Ambarish were thinking we probably won't be able to find customers. I was anyway not able to sell it and had a lot of free time. I thought, why not find a house for the boy who had called earlier. I went looking around. I found one flat close by; it was turned into a PG. I was walking around the building checking the house, some guys staying in it mentioned they weren't happy staying there; the PG owner had promised them something and hadn't delivered; maintenance was bad and it didn't feel good staying there. I explained them what I was doing and they found it interesting and wanted to check out even though my only house was for girls. They visited the house and loved my concept. I asked them if they would rent it from me if I found them a good home, they said yes. I was excited. I called back the boy I was searching the house for and told him about this new PG I had found; he had already found a place.

I came back home and started searching for a house for the potential customers I had met earlier. Bhanu found a house close by; it was in the walking distance of their offices. Two of them worked at VMWare while the last one worked at Honeywell. They liked the flat and asked me how much it would cost. I hadn't worked out the details yet. I promised them to keep the prices low and get back to them. Only part of the problem was solved - I still had to meet the house owner and convince them about bachelors staying in the house. I met the owner and figured she didn't mind letting it to bachelors. I went back to the guys, told them about the rent, after we agreed upon the price I told them they will have to pay an advance as a token of confirmation. They were happy because they were getting a private room with an attached bathroom at a low price - almost for the price of a double-sharing room. They gave me a cheque for 5000 rupees. I had sold a house that I didn't have! I went back to the owner, paid her 1 lakh advance in full.

Trying different channels

My first house was still unsold. One of my colleagues had found a home using a Facebook group meant for finding flatmates, she asked me to try it. I posted photos and other details about the flat on it. To my surprise, I got a call the same day from a girl. Her budget was lower than my price. I had priced a single room at 20k and a double at 10k. I agreed to lower it if she liked the house. She said she would visit in the evening. I waited. She didn't turn up. Worried, I called her up to enquire if she was coming or not. She had found a different house. I was disappointed. I called her again to ask why she had decided against my house, it was one of the house-rule that she had issues with. Her parents were coming down for a month and our guest-hosting-policy didn't allow that. I told her I'll bend that rule for her - it turned out to be a bad idea, but things look clear only in hindsight - I was desperate to get a customer, I couldn't think too much ahead. She agreed to visit the next day.

Bhanu cleaned up the house once again, I sent Ambarish to get tea for the prospects to make them feel good - I had seen jewellery shops doing this - the potential customer turned up with 2 of her friends who were also looking for a flat! They loved the flat. They were happy that the rent included electricity, maintenance, 30mbps WiFi, DTH, maid servant; the kitchen was setup completely. They asked if I could arrange for another pressure cooker and a mixer grinder, I would have given them anything at that moment if they had asked, I readily agreed. Two of the girls said they like the flat and will move in in a week; the first girl was living with 5 other friends and it wasn't working out for her, and the second girl was living in Elita Promanade, a large apartment society nearby, and she was finding it hard to manage the house. They liked the fact that when other flatmates leave they wouldn't be affected in anyway. The second girl wanted the rent to be reduced, I agreed - in hindsight, that was a bad decision too - the third girl, Nidhi, didn't want to take this flat because the first 2 girls were non-vegetarians; but she liked the concept of living in a fully furnished, managed flat. She liked that she wouldn't have to worry about finding flatmates and paying their part of rent whenever they leave, I promised her I'll find her something soon.

Ambarish couldn't find a tea shop that could parcel the tea. I thought I had seen a chaipoint somewhere close by but he couldn't find it.

The same week someone called me after seeing one of the sun packs - a small 2 feet by 1 feet display ad - I had set up near the house. The caller was from Lucknow and was in Bangalore searching for a house for his younger sister - she was a post graduate student in a dental college near Meenakshi Mall - he had seen a few houses near the dental college but hadn't liked any of them as he wanted his sister to live in a gated apartment that had security guards. They visited the flat and liked it. The girl wanted to move in next day itself; they were staying in a hotel near-by. Later that evening, he visited my home and paid the security deposit in cash. His sister moved in to the house next day. That was our customer #1. (I still can't decide if she was my customer #1 or the person who paid 5000 in advance but moved in 3 days later. They were so happy with the house that when the third customer pulled out in the last minute they found a replacement themselves!)

In two days, the other 2 girls moved in too. I helped move their baggage and set them up at the flat.

I had listed our first flat in Housing.com under PGs section. I hadn't hoped for any calls, but I liked their listings site. One of their executives visited the flat, took pictures, and listed it on their website. After about 10 days I got a call while on bike. It was some guy from Delhi, his name was Animesh; his wife had joined an MBA program at IIM Bangalore and was searching for a flat near-by. He had seen my listing on Housing.com and liked it, he just wanted to book the flat. I was surprised; in my experience so far, people wanted to see the house multiple times, show it to their family and friends before booking. But this guy wanted to book over phone. The only issue he had was he wanted a single room for his wife, I didn't have any. Both the single rooms were already taken. Only one bed was vacant on a twin-sharing basis. Reluctantly, he agreed as he didn't have other options. He transferred 10k the same day. For about a month and half I didn't have any customers and now the flat was full in a matter of one week.

Don't trust anyone until they pay

Nidhi continued to follow up. She wanted something near JP Nagar and she promised me she'd convince some of her friends to take up other rooms. I sent Ambarish to search for new flats as I had to go to office. After searching for 2 full days he could find 3 flats who were ready to give it to us. One house was too expensive; Nidhi didn't like the second one but liked the third one, she brought a colleague along. Ambarish had already spoken to the owner and explained her that spinsters would be taking up the flat, and he was helping them find the flat. The owner was a resident of Chennai and she was receptive to SimplyGuest idea. She agreed to give it to us but wanted to meet me. She was coming down to Bangalore the next week and we fixed up a meeting at Woody's on commercial street. To my surprise she came along with a friend who was an old college-mate of mine. I was seeing her after 16-17 years. It was a coincidence. Owner was happy that I wasn't a total stranger. I gave her a copy of the agreement and also gave her a token advance. House #3 was signed.

I called up Nidhi the next day and informed her that the house is booked and she can move in about 10 days time, I told her she could move sooner than that if needed while we furnish it. She backed out saying the flat would be too far for her - the same flat that she had liked and made us sign it. We had already signed up the house although we hadn't paid the full security deposit yet. I had a choice of keeping it or returning it to the owner, saying the tenants backed out. We decided to keep it and continue to look for other customers. Although we hadn't realized, that was going to be our first core lesson which would come back time and again; don't trust anyone until they pay. this turned out to be a good call. It made us work harder to find customers; we had learnt not everyone who likes a house are going to pay for it. They may say they like it because they don't want to offend the person selling it. We furnished the house and in the meantime started installing sun packs in and around the flat. I wasn't sure if they'd work - like everything else I had done until that point - in a couple days a girl called up, she had taken my number from one of the sun packs installed near her hotel - she, along with 4 of her friends, had taken up jobs at VMware and were staying at a hotel close by, about 400 meters from my home. I went to their hotel and took them around to show our newly-acquired, rejected-by-Nidhi house. They appeared to like the house - they had cuddled up and were seriously discussing.

Over the next 2 weeks I continued to show it to a few more people, including guys too, although it was decided for girls I didn't have a lot of houses so I used the same house to convince everyone. Most of these calls came from sun packs, a couple more came from housing and commonfloor too, but no conversion yet.

After a week this group of girls came back to me and said they'd take the flat if I reduce the price. It was a group of 5. I told them I'd reduce the price to 8500 if all of them confirmed and would reduce it further to 8000 if they brought one more person. It was in the middle of month, I had already paid 15 days of rent to the owner without any revenues. These new customers wanted to move in immediately but wanted me to start the rent from next month. It was a loss, but I agreed looking at their long term potential. They moved in to the flat next day. House #3 was full now; one bed was empty, but I didn't mind.this discount turned out to be a good decision. None of them left the house for 9 months. One girl left at the end of 9 months; she had got married. To my surprise the flatmates found a replacement from their work circles.

One person wanted to rent a room but she had a pet. We hadn't thought about pets! I checked with the existing flatmates, one person was allergic to dog hair. I turned down the lead, but got a new cartoon made for it.

While searching for House #3 Ambarish had found another house right in front of IIMB via the trusted to-let in front of the house. The location was perfect although it was a 2BHK. Bhanu, Ambarish, and myself went to meet the owner. I carried all my documents: passport, PAN card, agreements of earlier houses in case the owner wanted to review anything. She was more worried about the rent and agreed to let out. We paid a token amount and finalized it and started furnishing it, House #4. Another call from a sun pack gave us a good lead. This person was working in Strides just behind the new house, 100 meters from it. When he called the house wasn't ready yet, we were still furnishing it. So I had showed him House #3; he liked the concept and was keen to take a single room when it was ready. Coincidentally, he was staying in the same hotel as the group of girls who had booked House #3. I asked him if he wants to make a booking by paying a token. He wasn't ready to do that, and said he will stand by his word. We took a week to furnish the house and I called this person back. He came down to see the place again, he paid me a cheque for the full advance and moved in on the same day! Later that week, another person working in JP Nagar called, he had called me after seeing a post on Facebook, his stay in the hotel was getting over and wanted a place from that night. But he didn't have any money to pay for the house. I agreed to let him move in without any payment; getting a customer was more important for me than the payment. House #4 was completely full.

Getting help from customers

Customer #7, the girl in house #1 - one studying at IIMB - wasn't happy living in the flat. She wanted a room for herself and was willing to pay for it; plus one of the other flatmate's parents were living with them, and that made her uncomfortable; the mistake I had made earlier had already started biting us. She would check with me every day if I had found anything for her, I showed her both House #3 and House #4, she hadn't liked either of those. We continued to search a house for her; Bhanu found a flat near House #1. Incidentally, we had already spoken to the owner even before signing up our first house and he had said no. We thought we'll give it another try as the house was very good and it was still available, we thought owner might have changed his mind after seeing nobody were willing to rent it. This time the owner agreed to let out. But before paying the advance, I showed it to Customer #7 and she loved it, but I was still reluctant to take it; it was a big investment and I wasn't confident of getting customers to fill the other rooms; Nidhi's experience was still fresh. I thought was lucky to fill earlier houses. Customer #7 said she will help me find customers. To my surprise she did find another girl to move in to the flat in a couple of days. They had met on a Facebook group.

Feeling confident, I paid advance to the owner and furnished the flat. I helped Customer #7 move from House #1 to House #5. The house was on a third floor and there was no lift. When you are happy you don't mind hard work, it appears easy. Two days later customer #8 also wanted to move. But she had accumulated a lot of baggage. She wanted some help with packers and movers. We decided we'll do all that stuff free of cost. Ambarish booked a tempo, hired a couple of helper boys, brought packaging material and moved all of the luggage himself. It was a lot of work, cost us money, took us a whole day, but customer #8 was very happy. I thought, if we can make customers happy they'd spread the word about SimplyGuest and get us more referrals.

With Customer #7 and customer #8 moving in only one room was empty at House #5. The next day, customer #8 brought another reference. This girl had moved in from Mumbai and was staying in a hotel near Forum mall. We spoke over phone, after we agreed upon the price; she visited the house later that day, liked it and agreed to move in after I lowered the security deposit to less than a month. It started raining heavily the next day, when she wanted to move; I arranged for a cab and followed them on my bike; coordinating with the cab driver when its raining - especially when you are on a bike, and if the customer is new to the city and a bit paranoid - is a nightmare. All of a sudden House #5 was full; this time we didn't pay rent for an empty house. It got filled on the first week itself, although it left one bed empty in House #1.

At the end of 5 houses, we had 16 customers; 7 customers from sun packs, 3 from referrals, 3 from direct sales, and 2 from Facebook. We started making profits. We had accumulated some losses, but we'd recover them in a few months at current occupancy rates.

The thing about hindsight: because you don't have to take a decision anymore, looking back and concluding is easy; you have a complete picture to see which was the correct decision. But when I had to look ahead, I made mistakes. Some I could correct, but some were plain bad decisions.

Read part 2 in this series: Getting second set of customers