Category: customers

The organization is the brand

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Japan Airlines was established as the national flag carrier of Japan in 1953. The government was the largest shareholder and for over 30 years, JAL was the only Japanese domestic airline with the rights to fly international routes. In other words, as a government entity it had a monopoly on those prized international sectors.

Rather than employing professionals in the industry, the government tried to run the airline, creating bureaucratic inefficiencies that had little inclination to deliver the value customers are looking for.

Hope came in the late 1980s when the government sold it’s stock in the company and the airline was privatized. In 2002 Japan Airlines System was incorporated to manage JAL and by 2006 the airline’s daily operations had reached 192 international routes and 387 daily flights.

A new brand identity and aircraft livery themed around ‘the arc of the sun’ was created and it was hoped that ‘the identity would help JAL build a stronger global brand and position a JAL flight as a means to acclimatizing to Japanese culture, attempting to attract more international business people flying to Japan to choose JAL over other international carriers’.

In 2010, JAL is fighting off claims of imminent bankruptcy by multiple media organizations. According to etravelblackboardasia.com, JAL has experienced financial difficulties for quite some time and currently owes more than US$5.8 billion.

JAL shares plunged to a record low in Tokyo trading last week, however the airline is still positive that it will experience a turnaround with the support of the Japanese government. The site also quotes a JAL spokesperson as saying that reports that JAL was planning to cut all of its international routes to cut costs are 100% false.

Well, only time will tell but it is crystal clear that the airline is in big trouble and is surviving on bail outs from the ETIC (Enterprise Turnaround Initiative Corporation of Japan).

What lessons can other legacy carriers learn from this?

Using creativity to build a brand.
When Japan Airlines and Japan Air Systems merged, the idea was to provide the foundations for a more efficient organisation to compete both domestically and internationally. Nothing wrong so far.

Next came the development of the brand image. This was to clearly communicate the fact that the merger had created a new and improved organization. According to Landor, the JAL agency, “the JAL brandmark needed to express a new business philosophy and strategy and at the same time be flexible enough to apply at every touchpoint where travelers, airline employees, and travel advisors have exposure to the brand.”

Landor also says on it’s website, “The JAL mark reaches dynamically to the sky. It is derived from the motif of a rising sun, one of the best-known icons of Japan. The mark is drawn in a modern way and is reflected in the red sun on the tail of the aircraft. In 2002, the integrated holding company was established and the JAL mark was introduced. It is now visible in advertising, ticketing, airport environments, and the combined fleet of aircraft. Implementation of the design will be gradually executed through prioritized applications.”

Sounds good, but the problem is that consumers aren’t buying that stuff anymore. Positioning products belongs in a mass economy that no longers exists. There are too many airlines essentially positioning themselves in the same way. This is because positioning and the 4 ‘Ps’ are imprinted on the DNA of an entire generation of marketers. But the market conditions have changed and it is time to bury the concept otherwise we’ll see more companies in the same position as JAL.

JAL should have focussed it’s brand building efforts, not on reaching for the sky with a motive derived directly from the sun but on providing value to customers based on bespoke relationships with existing customers, access, relevant content to relevant segments, userbility, technology and more. Sure a slick identity is important but it will not build the brand on its own.

Strategic relationships
JAL was late joining an airline alliance which meant it couldn’t offer the interconnectivity of competitors. This has had a profound impact on the airline. ANA, JAL’s competitor joined Star Alliance in 1999, eight years before JAL joined ONEWORLD.

Operations
Although once the airline was privatised, it did reduce costs by cutting staff levels and employing cheaper foreign staff, it still operated at high unit costs which had a negative impact on operating effectiveness.

The right technology
It is critical to invest in technology that is user friendly. JAL’s flight planning software is awkward and confusing.

Flexibility
Like many airlines, JAL focussed on attracting customers to the high yield spots at the front of the plane. There is a general theory (I don’t know how true it is) that if you fill business class on a 747, the flight is paid for and the rest is gravy. This is a common strategy but in the recent economic meltdown it’s not a very effective one.

Despite no longer being a government company, JAL was slow to adapt to the economic situation and suffered as a result. It is imperative therefore that airlines become more nimble and whilst a strategic plan is important, it has to be versatile enough to adapt quickly to challenging market situations. At the same time, it has to be adaptable to take advantage of opportunities.

I doubt very much that the Japanese government will let JAL fail. But what about other Asian legacy carrier established by governments to fly the flag globally? Many of them are already sucking funds out of already empty coffers. Will they be alowed to fail?

Tips for building a retail brand

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In terms of service, Christmas shopping this year has been a roller coaster ride from the highs of the interactions in the luxury stores of Pavillion to the lows of the interactions in the wannabe Malaysian fashion store in Mid Valley.

And even though approximately 85% of the interactions have left me frustrated, I want to be positive during the festive season and so am offering free advice to those retailers in Malaysia who want to build a profitable brand.

1) Teach your staff to smile when a customer walks into your shop. It costs nothing and instantly makes the customer feel welcome.

2) If you are a clothes store, get your staff to wear your clothes. If you are not a clothes store, develop a company policy on dress and stick to it. It may also help if you are responsible for laundry, that way the clothes will get washed.

3) Make it a company policy that all customer facing staff must have a shower and brush their teeth EVERY day, before coming to work. This is especially important in restaurants.

4) Teach your staff to approach the customer and say ‘good morning/afternoon’ etc with a smile on their face.

5) Teach your staff to understand how to respond if another customer interrupts a transaction. Essentially, teach them how to say no.

6) If you are a luxury or high end store, make it a company policy not to allow staff to drink from plastic bags when customers are in the store. Actually, make it a company policy not to allow staff to drink from plastic anything, ever.

7) The same goes with food. I walked into one store as a member of the staff was eating at the counter. He was on his own so came to serve me. I walked out 9 seconds later with half his samosa on my lapel.

8) The opening line, “Can I help you?” Begs a negative response. Teach your staff to try something open ended, such as “Are you looking for shirts or trousers?”

9) Sales staff are not order takers. If a customer, despite all the attempts by your staff to prevent him from making a purchase, insists on buying something, teach your staff to show something that goes well with the purchase. You never know, you might actually sell something else.

10) Listen carefully, the statement, “NO STOCK LAH!” is being used by many staff to get the prospect out of the store so the staff member can go back to sending sms messages to his friends. Teach your staff to apologise profusely for the fact that they just sold the last piece 15 minutes ago. Teach them to then explain that they will be happy to call other branches to see if they have the relevant product/size/colour. If you don’t have other branches, then teach them to ask nicely for the prospect’s number and explain that your customer service representative will call the prospect as soon as the correct product/size/colour comes in.

11) If someone buys something they have gone from being a prospect to a customer. Remember all that money you spent on launch party/PR/mailshots/leaflets/brochures/billboards/print ads etc? Well, you did all that for this moment. It wasn’t to create awareness, it was to drive this person to your store. And now he’s bought something, what are you going to do? Well, most of you let him walk out the door! Are you nuts? You have a 5% – 15% chance of selling to a prospect and a 50% chance of selling to an existing customer. So what is the point of letting a new customer walk out the door? It’s criminal! I’m serious! Be nice to this person, flatter him, spoil him, kiss him, do whatever it takes to get his contact information because he is now a customer. He is familiar with your product, your store, your staff, despite their best efforts. Your job now is to get him back into the store, preferably tomorrow!

12) Not every white person is a tourist. And not every tourist is a white person, but that’s another story. Just because a customer looks like a tourist, doesn’t mean he is one. Moreover, if he is wearing a suit, he probably has a white collar job which means, in Asia that he is probably paid well. Even if he is visiting, he may be back or he may be lonely so ensure your staff engage him.

13) The needs of a Saudi are different to those of an Englishman. And the needs of an Englishman are different to those of a Korean. You get the point. Invest in some training that teaches your staff to be able to develop rapport with different nationalities.

14) Pay your staff a commission on sales. If you don’t where is the incentive to sell your products? Without a commission, all the staff are doing is increasing your energy bill and destroying your brand.

15) While we are on the subject of remuneration, I suggest you pay your staff more. Every sales person I spoke to complained about their salary. One was earning RM550 per month, with no commission. That is slavery. Sales staff are an investment, not a cost. They represent your brand and, with the correct training, can multiply your profits enormously. And good ones are worth paying for. And before you tell me about the lack of loyalty, please don’t bother. If you create a nice environment with good pay, your staff will stick with you.

If you implement the above into your corporate strategy (if you have one, and many of the stores I visited over the last week can’t even spell it) then I guarantee you will increase your sales and move toward a more profitable brand.

I’ve got about 100 more of these but I’ve got a plane to catch. Happy Christmas!

Organisational excellence required to build global Asian brands

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Not too long ago, the Michigan (U.S.) State Business School reported that every US$1 (RM3.36) invested in marketing earned US$5 (RM16.80). By contrast, for every US$1 (RM3.36) invested in operational excellence, returned revenue was US$60 (RM201.75).

Despite such data, the majority of Asian firms have been slow to grasp the importance of everyday operational excellence that requires a continuing commitment to quality service, as well as processes that are effective from the customer’s point of view and advanced supply chain skills.

Many Asian firms prefer to spend fortunes on tactics to acquire customers yet very little on the operational and other strategic requirements needed to keep them. Sales and marketing growth based on increased awareness are fine and important but they are activities to be embarked on only after the operational foundations are in place. This is because an acquisition only approach is generally unsustainable.

Therefore, once a customer is acquired, it is critical to develop relationships to retain them. Firms cannot simply ‘hope’ they will come back time and time again because, with so much competition, so many alternatives, if you are not communicating with them – and selling to them, someone else will.

Customers build brands
And because customers have the power to make or break our brands, Asian companies must learn to do business on their terms. At the same time, they must become focused on creating PROFITABLE customers (on average, 15% of customers are unprofitable), ensuring those customers become our brand ambassadors, and consistently increasing their share of wallet.

Coca-Cola, Marlboro, Pan-Am, Ford and so on, represent mass-economy brands. These Western brands were successful because they shrewdly used the tools of the mass economy. They positioned themselves by repeatedly advertising in the mass media of one, two or three TV stations, one or two newspapers and knew where consumers were most of the time as there were few leisure time activities to take them away from the home.

Global markets
They also used mass production to achieve economies of scale, and they used distribution to penetrate mass markets. Global markets were opening up, disposable income was increasing, competition was limited. Customer retention didn’t really matter. Markets were growing so fast, and the mass-economy tools were so powerful, that it is was fairly easy to acquire a new customer for everyone that was lost. They also had a large, essentially one segment, ready made affluent domestic market.

But today, the mass economy is dead. The mass economy was killed by the fragmentation of the media, new leisure time activities, the Internet, greater competition, globalization, immigration, increasing number of and power of retailers, marketing segmentation and other forces.

In its place, we now have the “Customer Economy.” Companies no longer have the exclusivity to make the rules and control information by “positioning” products or promoting “brand equity” through advertising and PR like they did in the mass economy. Moreover, where in the past, prospects were segmented by demographics and geography, now they are part of communities. In these circumstances, can advertising and PR be effective to build brands? As part of a comprehensive brand strategy, yes. On their own, no.

For example, in the 10 year period to 2006, the computer manufacturer Acer spent US$10 billion (RM33.6 billion) trying to build a global brand via advertising. The effort failed. Acer withdrew from the retail market and has only recently reentered it with a new strategy focusing on individual segments.

Sony mass market failure
In 2000 and 2001, Sony spent an incredible US$2.5 billion (RM8.4 billion) on advertising worldwide. The result? The first three months of 2003 saw stunning losses, a 25% slide in the company’s share price in just two days and layoffs of more than 20,000 workers worldwide.

Unperturbed, Sony again tried mass economy tactics in 2008, spending an astonishing US$4.9 billion (RM16.5 billion) to position its diverse range of products including televisions, Blu-Ray players, music players, Laptops, PlayStation games, movies from Sony Pictures and new music from Sony Music. The approach failed and Sony is now exploring a more specific product focused niche approach.

Asian companies
Asian companies obsess with using traditional marketing tools such as advertising and PR to acquire new customers. But what good does it do to acquire customers if you have no idea how long they are going to stay and how profitable they will be? Also required are investments in operational excellence and accountability.

There is also a belief by many firms that they just have to ‘participate’ in an activity to get business. One local firm we’re familiar with collected 200 qualified leads from a trade show, yet months later those leads were still collecting dust! They were waiting for the prospects to contact them!

Another Asian company invested over US$50,000 (RM175,000) on a trade show, instructed 3 ‘top’ sales people to represent the company at the trade show and then failed to train the staff on how to behave and sell at the trade show. Moreover, there was zero investment in a lead management programme for leads generated. This meant the company was unable to measure the effectiveness of the trade show.

Finally, within 3 weeks of the trade show ending, two of the sales people manning the booth left the company, taking all the leads generated with them.

As we work to move up the value chain, the goal of every Asian company that wants to build a brand must be profitability, backed by measurement and accountability. Reaching solely for sales or market growth is no longer enough.

Repeat business
Not so long ago, in the US, to reach its sales goals, Ford offered $3,000 in rebates and other special deals off the cost of the Taurus car. Ford maintained its market share – but at the cost of losing money on each vehicle sold. Interestingly, Ford learned from its mistakes. Its next TV ad campaign in the US was based on the following line: “The highest proportion of repeat buyers of any car in its class.” What better testimonial is there? Little wonder then that in a report released by LeaseTrader.com in August 2009, Ford had the highest brand loyalty of any American automotive brand.

Despite the obvious need to invest heavily in retention strategies, ask a typical advertising agency about the branding issues faced by Acer, Sony, Ford and other companies, and what do you think the most common response will be?

Exactly. Recommendations for more ads, in more media across more platforms! They’ll promise a better creative team to provide greater creativity, but what’s really required is accountability for results! The usual agency attitude of “spraying and praying!” may have been the best strategy during the mass economy when there were a limited number of media conduits. But in the customer economy, the proliferation of media outlets and competitive advertisers now makes it practically impossible to build a brand solely based on ‘spraying and praying’.

Strategic approach required
What Asian companies need more than anything else is a strategic approach to branding that is aligned with the new imperatives of the customer driven global economy. Branding in the customer economy requires a fresh look at how the organisation engages with customers, as well as market and profitability requirements.

Rather than a simplistic reliance on logos and creative driven, one-size-fits-all, repetitive advertising, branding today demands research, data, measurement, supply chain effectiveness, customer intelligence, service AND accountability to both customer requirements and resources spent. Only once the company has identified who it should talk to and how, can it start to talk to those prospects.

Because acquisition is so expensive, and existing customers make the best brand ambassadors, branding also requires an emphasis on the identification and retention of PROFITABLE customers. This is especially true as the balance of power shifts from sellers to buyers.

The payoffs from such customer-economy branding can be substantial. British Airways calculates that customer retention efforts return $2 for every dollar invested. The clothing label Zara has thrived against powerhouses like Gap by moving from four collections a year to releasing new styles every two weeks.

So, as Asian firms attempt to move up the value chain, it is imperative companies monitor their retention rates (which fewer than 20% of companies do), because it is the best indicator of future profitability and brand strength.

Track RFM (Recency, Frequency, Monetary Value) because it shows which customers may be prone to defection and which are candidates for up – or cross – selling. Since it is likely 20% of customers are generating 80% of profits, segment customers according to profitability, and develop unique value propositions for the top 1%, 4% and 15%.

Calculate the lifetime value of clients. For instance, Ford calculates that a customer who buys his first car at the age of eighteen, upgrades it every three years and services it at a Ford dealership is worth a six figure sum to Ford over a lifetime. Cadillac estimates the lifetime value to be $300,000.

Revisit dormant customers. And optimize spending by developing marketing ROI based on actual customer profitability.

Other areas of organisational excellence that are key to building global Asian brands include recruitment and training. The retail sector is only realizing a fraction of its potential. This is partly due to the lack of training of staff and subsequent indifference of frontline staff when interacting with customers. If there is no attempt to build rapport with a prospect, why should the prospect return?

This is also true of manufacturing. One company in Malaysia we contacted recently listed 2 markets it wanted to develop as the UK and France. Yet when we called the office, no one spoke English.

Building Asian brands will take much more than basic advertising and PR. Core requirements include research, accountability, operational excellence, data management and customer equity (lifetime value of customers).

In Malaysia, according to research carried out by PriceWaterhouse Coopers, 86% of Malaysian CEOs and their Board of Directors say that they believe in the economic potential of effective brand building. However, almost the same number of CEO respondents admitted that they do not have a brand unit to integrate brand practices within their organisation. Sentiments are similar in Thailand, Indonesia and Vietnam

Until those C level executives take the plunge and invest in their brands by building operational excellence into their brand strategy, the concept of building global Malaysian or other Asian brands will remain just that, a concept.

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What happens if a brand no longer means quality?

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I spotted an interesting bit of research carried out in the UK recently by PWC.

The study analysed the durability of clothes available on a typical UK high street. The study tested 10 pairs of jeans ranging in price from £7 (RM38) to £123 (RM680) and ten polo shirts ranging in price from £12 (RM66) to £85 (RM470).

PWC wouldn’t divulge the names of the ten retailers because, well they represent most of them but it did disclose that on the whole the cheaper versions of the jeans and polo shirts fared better than the designer brands.

The garments were put through 15 different trials to analyse the strength of their seams, if they shrank, and if so, by how much, their colour fastness and how they resisted abrasion. The study focussed on how well made the clothes were and the quality, not the fit, brand name or how fashionable the garments were.

The best performing jeans, in terms of cost were

1) Jeans priced at £9 (RM50)
2) Jeans priced at £18 (RM100)
3) Jeans priced at £9.50 (RM53)
4) Jeans priced at £123 (RM680)
9) Jeans priced at £40 (RM222)
10) Jeans priced at £25 (RM139)

It was a similar story with the polo shirts. The top two versions cost £12 (RM66). A polo shirt costing only £4.50 (RM25) came in an impressive 3rd. The £85 (RM471) came in fifth.

From a branding perspective, this study is interesting because consumers often justified paying a high price for a fashion brand because they felt that if it was expensive, it must be of good quality.

Does this mean that this is no longer the case?

If we can no longer trust brands to produce quality products, do we need brands?

Or are we able to get fashionability without the price tag?

What do you think?

Automation is a tool, not a solution

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In the mass economy that started before the second world war and ran until the start of the customer economy circa mid nineties, branding was a less complicated process. Consumers had little choice or knowledge and as a result would make brand decisions based on corporate promises or claims. Consumers needs were relatively simple and once they used a brand and if they were happy with that brand, they would remain loyal to the brand.

We’ve come a long way since then and branding has become a lot more complicated. As competition increased, companies tried to compete, often by slashing prices that ruined quality or making false claims about product capabilities. Advertising led campaigns focussed on aquisition and fed up consumers fled to the competition and the process continued.

A core element of brand building today requires brands to engage with customers to ensure a thorough understanding of the customer’s requirements for value and then matching the attributes of the product to those requirements for value. Once a customer is acquired, the process of continuous engagement continues through two way communication. The ultimate goal is to retain customers in order for the company to up or cross sell to them in the future. The icing on the cake is to turn them into brand ambassadors.

Up until recently, mobile service providers in Malaysia didn’t have to worry about subscribers leaving because they were able to create a number of road blocks to ensure the process of switching providers was too complicated. Even the recent implementation of number portability still punishes consumers which is why the response has been lukewarm.

I’ve been with my mobile provider, Celcom for at least 10 years and have put up with poor service, repeated dropped calls, confusing billing, lack of interest or understanding of my needs, inflexibility and non existent customer engagement for the majority of that decade. During a recent trip to Singapore I was checking email on a regular basis and have just been hit with an astronomical bill due to my usage of the data roaming service. I am not complaining about the massive hike in my bill because the reality is I should have checked the fees before using the service. (Having said that, I have done this in the past and not received such a large bill. Furthermore, a brief warning before usage would have been helpful).

But I am complaining about the fact that, after 10 years as a customer, Celcom sends me one text message warning me that I have passed my credit limit and then cuts my line without any consideration for my payment history or my time as a customer. This is even more irksome as my October bill is not actually due till 16/11. Despite this, and no doubt wary of the reputation of Celcom, my efficient pa had, yesterday instructed our despatch to pay the bill today, 11/11, five days before it is due. The balance is from my November bill and is not due till around the same time in December.

I’m also compaining about the company’s use of automation. If I try to make a call to my provider, using my handphone I am transferred to a machine that gives me some instructions that result in me receiving a text message stating the details of my overdue amount including dates due. That’s useful information. But it doesn’t give me an opportunity to pay the overdue amount or discuss the situation to someone. So Celcom is saying to me, “Your payment is overdue, you are barred from using your phone. We know you run a business but we don’t care. We know that some of you use your phone to go online and now you can’t, tough. In fact, we don’t want to help you or have anything to do with you until you settle your outstanding bill.”

So here are some suggestions for Celcom that brands in other sectors can also benefit from:

1) All customers are not created equal. Don’t treat those with a good payment record the same way as you treat those with a bad payment record.

2) Similarly, most customers are good people. If someone is late with their payment, don’t automatically assume they are a criminal. Find out what the problem is and see how you can make it better.

4) You collect a lot of data on your customers and their usage patterns. Use that data to form a relationship with those customers in the form of better service delivery.

5) Branding today is about engagement. Take the time to engage with your customers. Communicate with your customers in person.

6) Automation is a tool, it’s not a solution.

7) Just because you have acquired a customer, doesn’t mean you own them and don’t have to do anything to keep them.

8) You are not the only company doing what you do in the country.

9) At least give your customers the impression you are grateful for their business.

10) Everything you offer can be duplicated by other service providers, except the relationship you have with your customers.

Feel free to submit any recommendations to improve the Celcom brand experience.

Does Air Asia need to be a brand?

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Whenever I find a brand that matches its offerings to my requirements for value, I become not only a brand loyalist but also a brand ambassador. For years I was a Marco Polo member and sang the praises of Cathay Pacific to anyone who would listen. Then about 15 years ago I moved to Malaysia. Initially I flew Cathay, even though it meant going in the completely opposite direction to Hong Kong to pick up a connecting flight to Europe. But after a while, probably around the same time as I had run out of miles and therefore could no longer get an upgrade, I looked around for someone else to build a relationship with. The obvious choice was Singapore Airlines and I dabbled for a while but the hassle of changing flights in Changi and the extra 3 – 8 hours that added to my return trip meant this wasn’t really an option.

Next I tried BA for a while but they were in the process of pulling out of Malaysia so the only other option was Malaysian Airlines. I was reluctant, really reluctant for a number of reasons. MAS was horribly managed or rather mismanaged at the time. Safety was an issue, coffee shop talk was negative, morale was at an all time low, rumours of imminent sabotage were rife and the numbers suggested a severe crisis was due. But by then I had no choice as MAS was the only airline flying directly to London.

It was a gradual process but in the first year I flew a lot of domestic and international miles. I learnt the system and was able to get the best out of the airline which allowed me to experience all classes. It wasn’t so bad and by the end of the year, I was a Malaysia Airlines loyalist.

When AirAsia arrived I dismissed it as a little upstart, out of it’s league and destined to go the way of Pelangi Air and many others. The LCC model wasn’t something I believed in. Since when was travel no more than stuffing as many bodies as possible into the smallest plane that could fly the distance required? But a couple of years later I had to fly to Macau and the only flight that matched my schedule was an AirAsia flight. I swallowed my pride, apologised under my breath to the MAS 747 taxiing past the terminal and boarded the brand new Airbus, so crisp, clean and shiny compared to the 25 year old MAS Boeings and their tired interiors.

As I boarded, I was greeted by a smiling face and enthusiastic personalities that was contagious and impossible not to like, especially compared to the glum and tired looking MAS crews. Since that December day in 2007, I’ve become a regular AirAsia customer but every time I chose AirAsia, my choices are made based on price – RM680 for my wife and I to fly to Singapore and back compared to RM1710 on MAS and so on. I justify delays by reminding myself of the price and the savings. I reluctantly accept the fact that I have to pay (more and more) to check in a suitcase. I bite my tongue at the instructions that say I cannot take my own drinks on board. And this is key, I don’t have a relationship with AirAsia. And with the exception of 2 trips where I flew the night before a meeting, none of the trips have been time sensitive. To me it’s simply buying a commodity. Perhaps this is the way the business of flying is headed. Perhaps LCCs are the new legacy carriers and this is how all flying will be.

If this is the case, then fine. But how does a LCC like AirAsia build brand loyalty and the far more profitable repeat business critical to brand building? I’m fortunate in that I’ve not been subjected to one of the delays just about everyone I know has been subjected to when flying AirAsia. But when I do, I’ll immediately look at the other LCCs plying the same routes and I will switch in a heartbeat. As far as I am concerned, there is no brand loyalty with AirAsia. So essentially, the company model is based on the hope that there will be enough demand enough of the time on enough of the routes. If this is the case, then AirAsia doesn’t need to be a brand.

Perhaps this is enough for the aviation business to survive, and perhaps thrive. But judging by the LCCs in the US, I doubt it. What do you think?

The organization is the brand

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This is a classic example of how a brand that spends millions on external branding, needs to also look at internal branding.

BMW has a number of dealers in Malaysia however, as far as I can determine, there are only 2 main dealers in the Klang Valley. We bought a BMW 3 series new from one of the 2 main dealers in Kuala Lumpur about seven years ago.

The dealer also has an impressive work shop and so we serviced it at the same dealer for the first six years. There is also a bodyshop and as my wife is the main user of the car, we’ve visited the body shop more often than most car owners. We own three cars but only one BMW so I consider us an ideal customer as there is obviously plenty of opportunity to cross and up sell us.

Indeed we’re intending to sell the 3 series and buy a new car in the next 3 months. However before we do so, the car require needs some attention.

Although we get plenty of generic direct mail and the occasional and predictable after service call asking if we are happy from the original dealer, the original sales person moved on a long time ago and we haven’t got a call from anyone else on the sales floor. Even when the car was 5 years old, an ideal time to sell and buy a new car, we didn’t get a call inviting us in for a test drive.

The original dealer hasn’t tried to build a relationship with us and therefore we don’t have any loyalty to them. So we sent the car to the original dealers main competition in the Klang Valley and asked them to look at the car and quote for the repairs.

Now in my business, if a client who has been with my competition for 7 years, were to knock on my door and offer me the chance of getting his business I would be all over him like the proverbial white on rice! Customers are the source of profits. Without them, brands would not exist. Existing customers are the most reliable source of future revenue. The thought of taking one of those nice profitable customers away from the opposition is, I have to say, a pleasant thought.

After all, we’re in the midst of a global recession that has seen marketing and other costs slashed. Passenger car sales are predicted to be down over 15% this year. In this environment, new customer acquisition is a massive drain on dwindling resources and any prospect is valuable, especially one that walks in the door and has “I’m a genuine prospect’ written all over him.

But no, instead of looking at us as an opportunity. An opportunity to acquire a new customer from the competition, we were viewed as another expense and the mechanic told us that they would carry out the inspection but would charge in the region of RM250 (US60)!

As you can imagine, this riled me. Sure I’m going to compare the quote with a quote from somewhere else but so what. That is a cost of doing business. But surely it is important to look past the issue at hand and the opportunity for future business?

With the right internal brand that includes standard processes for new prospects that are essentially a number of simple questions that lay the foundations for rapport. A dealer, who in this case represents the BMW brand, will be well positioned to acquire a new customer for a minor investment of RM250.

In this instance, I have a negative impression of the dealer and BMW that will require a lot of work and a much greater investment, to undo.

Developing a sales culture is key to brand building – part 2

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Too many companies manage sales as a series of “events”, not as an integrated sales effort that forms part of a corporate brand strategy. And yet, if you are a sales driven organization, the sales force is often the first touch point a prospect has with the company. Mess this key moment up and the significant investment made in preparing the organization for the moment and getting the prospect to this stage is wasted.

Despite this, some executives even turn their noses up at the mention of sales systems or dismiss the concept of a sales force being an integral part of the organisation. When good sales people leave, they often don’t replace them till there is a specific need. If the quality talent is not in the market when that need arises, they end up with poor quality sales people. Unable to sell products, this leads to the inevitable fallback – discount – and prices get cut day after day. This discount culture may spike sales in the short term and may work in a developing market. But in the long term, it hurts profitability, and is a fast track to a brand graveyard.

Over the last twenty years or so, sales development was not an organizational priority. This was generally due to demand in most sectors that outstripped supply. But over the next 10 years, as Malaysia prepares herself for the giant leap into the ranks of developed nations, with an economy based on service and not price, the ability to sell products and/or services, both domestically and globally, in competition with foreign companies and their slick and well trained sales force’ with be critical to the success of this transition.

If we get it wrong, not only will we fail to develop global brands, we’ll be unable to compete locally and internationally.

The branding rules of engagement are evolving quickly

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What many brands don’t appreciate is that we invest a great deal of our valuable time, effort and money waiting for the opportunity to spend our hard earned cash on them. Paul McCruddon, a digital strategist and blogger in the UK knows this better than most and got tired of brands mucking him about and appearing not to appreciate the fact that they are, as he puts it, “stealing my attention.”

Earlier this year after calculating his time is worth about £102 per hour, he recorded how much time he spent waiting for service in diverse places such as a post office, shops and restaurants as well as spending 45 minutes waiting for a train at Preston station and so on.

The data is impressive. For instance, and I quote: “ (I) spent 20 hours and 50 minutes with Transport for London mainly taking the tube day in day out. And as a result of that, I’ve spent 2 hours and 35 minutes reading Metro and 80 minutes reading The London Paper, not to mention all the planted PR stories and adverts they contain. For the food shop, I spent more time at Marks & Spencer (5 hours, 16 minutes), but significantly more money at Sainsbury’s (£455). And as for eating out, then Pizza Express will find that their 2 for 1 voucher went down a treat (6 hours, 53 minutes), meaning that I didn’t spend nearly as much time and money in their competitor restaurants, with the exception of the reliable Carluccio’s (5 hours, 40 minutes).”

Paul feels therefore that these companies all owe him money. So, and this is where it gets really interesting, he sent invoices to 50 of these brands for £6,250 for his time that the brands had wasted! To make it more appealing, he offered them all a blanket 75% discount.

So how did he get on? Well the results are quite surprising. You can read about them on his blog, but here are some examples:

Pret A Manger founder Julian Metcalfe sent a cheque for £62 for spending time in their cafes. Pret really got into the spirit by also paying his food bill (£22) and also an extra £1 for to compensate for the hassle of walking to the post box to mail the cheque to his bank!

Little Chef offered vouchers to the tune of £30. Squat + Gobble, an independent restaurant offered a £5 discount card. EAT a small family run company with stores all over London, sent him £15 worth of vouchers.

Boots the chemist failed to get into the spirit, writing a letter stating that they do not recognize the time customers spend in their shops in ‘monetary terms’.

What does this tell us about branding? Well for sure, this is not going to evolve into something that we all do. Although bearing in mind how long most transactions take in Malaysia, if anyone here feels compelled to copy Paul, you should, on paper anyway, earn a lot of money! However it does reiterate that mass economy company driven tactics such as positioning, have no place in the customer economy.

Positioning proposes that the organization concentrates on a word or idea that defines the company in the minds of consumers and then communicates that idea or word relentlessly for as long as budgets will allow. Basically this is how it is and we tell you how our products are positioned. Take it or leave it.

This ‘episode’ reiterates that branding today is a very different place than it was even 5 years ago. Branding today is about entering into two-way collaboration with consumers because consumers have more power than ever before. It is imperative that brands understand and respect their customers.

If brands fail to work with their customers, those customers will take their business elsewhere and tell others of their bad experiences. Paul updates the story regularly on twitter where he has over 1,000 followers on twitter. Those followers (One has 17,000 followers) will retweet (forward) his updates onto hundreds of thousands more and so on. He has been interviewed on TV, radio and print. Many consumers will take note and go out of their way to avoid the brands that don’t appreciate his investments.

Paul used the data collection website Daytum to record all his interactions.

Positioning, an exercise in naive manipulative futility

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I have a great dialogue going with Derrick Daye at branding strategy insider

I told him that positioning is an outdated strategy that wastes money, is immeasurable and should be confined to the marketing graveyard. He replied that I am wrong because although the world has changed in the last 40 years, the human condition hasn’t.

Here is my response in full.

Derrick you make the fundamental mistake that the majority of other marketers make – that the human condition hasn’t changed. Do you really believe that? Do you really believe that despite all that extra noise and clutter and, let’s face it, false promises on product capabilities and deliverables; despite the radical changes that have occurred in the way we lead our lives and so on, the tools and channels that we use to source information, the human condition is the same in 2009 as it was in 1969?

The world has been through unprecedented changes since Mr Trout published his first article on positioning. Yet advertising agencies and brand consultants continue to recommend positioning to clients, whatever their industry. I do agree that in its day, positioning could work, and I stress the word could, for large consumer-oriented firms but with MAYBE one or two exceptions, it is not the right way forward.

It is exactly because of the multiple sources of information available to the consumer, including from those that the consumer respects and, more importantly, believes and the subsequent over-communication of product controlled messages as mentioned by you, as well as the fact that there is an abundance of choice and channels, the consumer can now control the relationship the brand has with them and therefore define the brand.

Indeed, any attempt to ‘own a singular concept in the mind’, or as someone else put it, ‘find an empty space in the consumers mind and then park your brand there’ is basically an expensive exercise in naive manipulative futility.