Sarda farms has piqued my interest ever since I was referred by a close friend. I shared in your bewilderment as to how this small time farm was able to afford offering its customers a 30 day free trial with a limit of 2 liters per day! I was so intrigued that I actually visited the farm and met with Mr.Sarda. His philosophy is very simple, offer a high quality product at a bit of a premium and grow organically. His passion is farming and is very content with a slower growth rate with less capital expenditure rather than a high expenditure high return policy. As you have pointed out there are quite a few examples of companies employing successful referral programs. Companies such as Netflix and Uber offered similar trial and referral programs respectively when they launched in India. This marketing strategy made sense given that they were already established, profitable entities and were merely implementing best practices for their launch in India. Uber is the closest comparison in terms of marketing spends and referral programs to Sarda farms. Uber follows a strict no mass media marketing policy and has instead opted to strike key strategic alliances which have paid high dividends for the brand. It seems like we are witnessing a paradigm shift in how companies market their products. It would be interesting to see how companies implement this strategy in differentiated products.

Thanks Ma’am for sharing this story. I am amazed at the risk which Sarda Farms proprietor has taken. This indeed is a complement of what has been prevalent style of referrals in the present world adopted by companies like Hike and Uber, where they offered discounts and cashbacks to retain customers. One point that left me pondering was how milkmen tackle low demands versus the steady supply they have, with a constant number of cows or buffalos over time. Being in the Indian society, where we celebrate so many festivals, the demands for milk and milk products vary across the year. For instance, demands for milk increases during Shivratri, while sweets made from milk show an all-time increase in demand during festivals like Diwali and Raksha Bandhan. All of this leads to increased demand versus a steady source of supply. This situation arises in every city of India, and is an exact contradiction of what Sarda Farms is doing, distributing free milk up to 60 litres to account for oversupply. The situation gives rise to an opportunity for milkmen to get involved in fraudulent activities like, increasing milk supply by production of synthetic milk be it mixing it with water or milk made from powder. Hence, the increased demand of milk and its products is offset by increasing the supply of synthetic milk resulting in not only losing the holy spirit of festivals but also putting lives of many in danger. As per one article by Maneka Gandhi, “A minister of Maharashtra, while a random inspection saw people in organised rows in the filthy hutments taking out milk from branded packets and putting in white water from buckets”. According to Delhi Health department, up to 100,000 litres of synthetic milk along with 30 tonnes of Khoya is being manufactured every day in the city. Amidst all this fraudulent activity, it is important that we appreciate Sarda Farms whose business model is an inspiration to all these milkmen. The business model sticks to one rule of business – Good Product constantly meet its purchasers, without forceful advertising. Although it is a tough model to sustain, Sarda farm relies upon its innovation in end to end delivery without compromising in anyway on the quality of milk. Concentrating on the referral program, I see it as a confidence of Sarda Farms on its product’s premium quality. The distribution of free milk although gives incentive for the acquisition of new customers, it may not be required to the scale that is being provided, 60 litres of free milk for 30 days might help Sarda Farms deal with its oversupply, but it seems to me like adding extra sugar into the sweet. Sarda can work on producing other products of milk, which are long lasting, and decreasing its production in times of increased demand due to festive seasons. In a nutshell, Sarda Farms could have worked equally well even with launching a mild referral program of distributing say ,20 litres of free milk per month. Once again, thanks for the article, it was though-provoking.

Thanks for sharing the math behind the referral program. I have a double-love for your experience. One, because I am a loyal Sarda Farms customer (yes the milk is amazing) and two because I work in a corporate and it is always enlightening to read some real-live cases. Thanks again.