3 words that can ruin your brand in Malaysia and Singapore

If you are in Malaysia or Singapore and you sell stuff to customers, there is one phrase that can ruin your brand.

“No stock Lah.” Is repeated time again by poorly trained and disinterested staff.

This seemingly innocuous phrase should be banned in your organization. While we’re at it, you should also ban the obligatory disinterested shrug of the shoulders that normally comes with the phrase.

For the uninitiated, the phrase is common in retail outlets the length and breadth of Malaysia and still, despite the alleged sophistication of the city state, in many of the malls up and down Orchard Road in Singapore.

This simple yet powerful phrase, used with annoying regularity in both discount stores and swank boutiques of luxury brands negates every penny your organization has spent on sales training, reputation development, customer service, customer relationship management and other operational excellence initiatives.

It renders worthless the massive investments you have made in licenses, real estate, interior design, stock, utilities and more.

It erases the hard work you have put into press releases, press conferences and other promotional efforts.

It undoes all the good of the advertising campaigns you have run for years in an attempt to get a consumer or two to give your brand a chance.

In a heartbeat, it ruins every single, expensive effort, financial and otherwise you have put into getting the consumer into your store.

In short, this seemingly innocuous phrase can ruin your brand.

Don’t expect prospects to build your brand

Yesterday I saw a video on the new sonos zone player. You can find the video on the site here but to brief you it is a cool looking internet radio and itunes player controlled by your iPhone that allows you to play music in all your rooms. Pretty cool so watch the video if you can.

The video was really well executed and I was sold by the end of it. I went to the ‘Find a store’ feature on the site and was impressed to find a dealer not far from my office in Kuala Lumpur. There was even a contact name and email address.

I sent the contact an email but also decided to post a request for information on Twitter. Probably because I have sent emails to electronics dealers in Malaysia before and never heard from them (it’s a fairly unsophisticated business here, dominated by old school Chinese traders). But I sent the email because it is slowly changing, as I found out when I had a technical issue with my Zepellin.

Anyway, I haven’t got a reply to the email but I did get 2 responses to my tweet, one directly from the manufacturer @Sonos and one from the distributor in Singapore @SeowHow.

Incredibly, the manufacturer told me to contact their distributor and the distributor told me to contact his sales office!

Here’s some free advice to ensure your brand doesn’t end up in the bulging cemetary of great brands.

1) Don’t expect an interested prospect to become a customer
2) Treat all your leads/prospects as if they are the most important person in your world
3) Don’t expect a prospect, even an excited prospect with buyer written all over his face, to do all the heavy lifting
4) Your brand may be the be all and end all of your life but it isn’t of anyone elses
5) There is a lot of competition out there

A is for Advertising

This is a good place to start a compendium of branding terms because unfortunately, it is where many companies start their brand building. And that’s a shame, no tragedy because it is an expensive exercise in futility to try and build a brand using advertising alone.

Advertising can be traced back to around the late eighteenth century when the first print ads appeared in the USA. However, they were rarely much more than extensions of the editorial copy and newspapers were reluctant to allow ads that were bigger than a single column. Even magazines preferred to print all the advertisements at the back of the publication.

Mass advertising only really began in the second half of the nineteenth century when firms began to produce greater quantities of more and more products thanks to improved production techniques. Soon after manufacturing, other businesses such as department stores and mail order firms jumped on the bandwagon and by 1880 advertising in the US was estimated to be in the region of US$200 million. This grew to almost US$3 billion by 1920.

In the mass economy of the 1930s to the 1990s that coincided with the growth of mass circulation magazines, advertising companies proliferated. At the same time, companies wanting to stand out from the competition determined, quite rightly that the quickest way to grow was to raise the profile and awareness of the company’s product or service by informing or reaching as many people as possible in the shortest time.

The most common way to do this was via advertising, especially via TV advertising. The business of advertising is based on a model of repetition across mass media. OK, creativity is important, initially anyway, but once you get over the wow factor, the idea is to repeat the same message through as many channels as possible for as long as possible.

Budget played (and still does) a significant part in what sort of advertising an agency may recommend. It is important for you to know that from the advertising company point of view, the size of the available budget will determine two main points, 1) who works on the project (in terms of seniority and talent) and 2) what channels will be utilised. A larger budget generally results in TV advertising becoming part of the recommendations.

Other platforms include print advertisements, billboards, lamp post buntings, banners, taxi, bus and tube trains, coffee shop tables, flyers, leaflets and more. The introduction of the Internet has seen a proliferation of banner ads, tower ads, unicast ads, contextual ads, takeover ads, interstitial ads, floating ads, and other options to an already noisy, crowded and complicated marketplace. It is important to note that none of these initiatives are branding, they are all advertising and advertising is a tactical initiative not a strategic initiative, like branding.

In the mass economy and unfortunately still to this day, once a campaign has launched, probably to much fanfare, the client waits with anticipation to see the promised sales spike. Meanwhile the agency submitted any well executed commercials to one of the numerous creative shows that offer awards for creativity.

As mentioned earlier, repetition is important and with enough frequency, and perhaps a little vague targeting, this repetition was expected to encourage enough consumers to walk into a store or other outlet and choose or request the advertised product.

The model worked, to some degree fifty years ago but in today’s crowded marketplace, using advertising alone to build a brand is leaving too much to chance. It is simply too difficult to stand out from the crowd. Can you remember the last ‘great’ TV commercial or print ad that you saw? And even if you can, have you bought the product?

Quite often, the promised sales spike didn’t happen, unperturbed and with a straight face, the agency would ask the client for more money, arguing that it is the client’s fault as it should have made more money available in the first place for increased frequency. If you have gone this route, I suggest you bin the advertising agency and call a brand consultant.

Should you still use advertising? Absolutely because advertising will help your company project a vision of the relationship you can deliver to the customer. The ads also help you to educate customers about the value that you can offer them. Advertising must also communicate trust. Unfortunately this is forgotten by most advertisers, especially in South East Asia where outrageous claims made in advertising are rarely backed up in reality. In Malaysia for example, after years of being let down by claims made in advertising, only 14% of Malaysians now believe what companies tell them in their advertising.

But instead of seeking to increase awareness of your product or service with as many consumers as possible, ensure your advertising seeks to communicate with those consumers that are most likely to adopt your product or service.

Make your advertising relevant to those consumers you have targeted. Core messages must be related to those consumers interests, needs and/or desires. So rather than a one-size-fits-all approach in your communications, it is essential for messages to be about offering value to those specific customers and making their life better as a result. How to identify those consumers and what is relevant to them will be explored in brand audits and targetting.

The goal is to ensure a consumer incorporates an offering into their personal or business lives.

Adoption will ensure your brand is seen as the best, hey perhaps even the only choice. This won’t happen on its own. It is a process built on operational excellence, superb sales incorporating ‘top of game’ customer service and the ability to match offerings to the consumers individual requirements for value, on an ongoing basis. To build a brand retention is key and retention requires relationships and without relationships, adoption is not achievable.

And this is good news for Asian companies because the fact is Asian companies, and especially those from South East Asia, simply don’t have deep enough pockets to compete with international brands using outdated one-size-fits-all, mass economy tactics.

Stop your product joining the 95% club

According to an Ernst & Young study, the failure rate of new U.S. consumer products is 95%. 95%! Imagine if Boeing or Airbus had a 5% success rate! Yet despite this appalling return, companies spend approximately US$1.5 trillion on marketing, and in particular advertising, annually!

A couple of years ago, (before the explosion of social media, Dominique Hanssens, a director at the Marketing Science Institute in the US and a professor at UCLA’s Anderson Graduate School of Management, reported that the average advertising elasticity for established products is .01. He went on to say that if one of those brands increased its advertising expenditure by 100%, it would see a sales increase of only 1%.

He used as an example Anheuser-Busch. If the firm doubled the US$445 million that it was spending at the time on TV, print, radio, outdoor, and Internet advertising, it would enjoy a 1% increase in net revenues from the then base of US$5.7 billion. Put another way, Anheuser-Busch would spend a total of US$890 million to make US$57 million.

We have to accept that mass economy models that made global brands out of such products as Coke, Budweiser, Marlboro, Sony and others are no longer relevant. And if firms continue to invest in outdated tactics that no longer work, their products will join the 95% club.

If they are to survive, brands today must address current branding imperatives. Current branding imperatives include building and maintaining relationships with customers and partners, internal communication, education, understanding and adaptation of corporate goals throughout the organisations.

Clearly defined organisational processes that are developed with the customer in mind and not shareholders or the organisation. These processes must be developed for both customer facing and non-customer facing departments, not independently but in tandem.

Communications, including advertising are important, but not the traditional one size fits all mass market approach. Communications must understand the requirements of prospects and customers and communicate with them using content that resonates with them via channels that are relevant to them.

Branding imperatives also require effective use of technology and, most important of all, ongoing feedback, measurement and improvement. These establish the foundations for identifying prospects and acquiring and retaining (key to brand success) profitable customers.

If John McEnroe were to play tennis against Roger Federer today, using the racquets he played with back in the day, he might win a few points but he is going to lose the match. It is the same for companies who fail to adapt to the branding imperatives of today.

If consultants recommend you emulate models used by such brands as Coke, Pepsi, Sony and other mass economy brands that were built when tennis racquets were made of wood, show them the door. Likewise, enormous budgets, integrated, synergistic, holistic, innovative, design or creative driven, energetic, positioning campaigns will not establish a brand.

Companies, and governments must understand that there is no quick way to build a brand. It is this obsession and belief that there is a silver bullet and it is called advertising that keeps the 95% club growing.

Malaysians haven’t changed since 2003

Omnicom Media Group (OMG) announced yesterday that newspaper advertising in Malaysia is as effective as it was six years ago. The report also states that readers ‘take note’ of 57% of newspaper ads and that this figure has not changed, I repeat, has not changed since 2003.

The sample size was 1,023 readers aged between 15 – 34 in four locations. They were tested on their recall of 15 ads in different sizes and in different places in newspapers they had read. The number of ads tested was 2,452 that appeared in 15 ‘main’ newspapers.

The agency developed what they describe as ‘three indicators of effectiveness’

1) Ad Noting or ad recall
2) Ad read or readers attention
3) Brand recall

The reports states that bigger ads perform better with a full page ad yielding 21% higher ad noting than a quarter page. Furthermore 60% of colour ads are noticed compared to 53% of B/W ads.

I got my information from this article and not from the original report which I would love to see.

So I can only go on the above data, plus some other results that don’t deserve to be published.

So what is my beef with this report? Well, in no particular order, the first issue I have is with the methodology. The report doesn’t tell us if the responses were aided or unaided. Critical. My second beef is with the ‘indicators of effectiveness’. There was a time, many years ago when newspaper advertising, with its one-size-fits-all mass marketing approach was effective. But not today. Awareness, or noting, or recall is simply not enough to turn a prospect into a tryer. And even if readers are bucking the global trend and not blanking out these and other messages but are indeed noting these ads, so what!?

Another beef is with the number of ads and the channels. 2,452 ads that appeared in 15 newspapers. That’s a lot of ads in a lot of newspapers. Most of us would find it hard to think of 15 mainstream newspapers in Malaysia. I’d also like to know which ads they were shown. For instance, were 15 year olds shown Louis Vuitton ads? They might recall it but what are the chances of them buying the product?

When we have a first meeting with a prospect, one of the first questions we ask is, “Have you read the paper today and if so, which ads do you recall?” Very, very rarely does someone actually recall an ad. And many of them were reading the paper as we walked into the meeting!

The time spent by Malaysians online went up 24% from 3 hours a day in 2006 to 3 hours and 46 minutes a day in 2008. With broadband penetration forecast to be 50% in 2010, that figure is going to rise significantly. Already, 80% of affluent Malaysians (those with a household income above RM5,000) use social networking sites. The time Malaysians spend interfacing with traditional media will suffer. But perhaps the most telling statistic of all is one that appeared recently in the Star, “78% of people trust the recommendations of other consumers, while only 14% trust advertising.”

So even if consumers are noting or recalling or whatever the latest term is, it doesn’t really matter because 86% of them don’t believe what they read in the advertisements so they’ll never buy the product!

Dodge seeks survival with mass economy approach

Chrysler has, like most US auto manufacturers, with the exception perhaps of Ford, seen its market share drop further in 2009. But this time it is down below the psychological 10% barrier at 8.9%, down from 11% in 2008. Sales are down a worrying 40% over the same period. This is not good, especially as the company stated in early 2001 that it intended to have 20% of the US market by 2005.

A restructuring plan in November 2009 introduced a number of initiatives including using models from Europe to mask the fact that Chrysler has made little investment in new products.

In what has become a depressingly familiar process, executives at the restructuring also introduced a number of new positioning strategies for the Jeep, Ram and Dodge brands. According to the executives, new models are to be redesigned or improved in times quicker than ever known to the industry. Ambitious sales figures include global sales targets of 2.8 million vehicles by the year 2014, of which about 60% are projected to be in the US. The firm forecast break even in 2010 and anticipated posting a profit in 2011. Revenues are forecast to be in the region of US$70 billion.

Specific brand initiatives include the biggest marketing budget for the Jeep brand in four years. Showrooms are to be redesigned to reflect off road heritage and Jeep managers will engage more with consumers at events. Meanwhile at Dodge, another new logo has been created to reflect a ‘sporty, youthful, inexpensive’ car. New entry level cars are to be available in different ‘flavors’ or equipped ‘differently’ not ‘expensively’. Are there such words as ‘differently’ or ‘expensively’?

Ralph V. Gilles was appointed President and Chief Executive Officer of the Dodge Car Brand in October 2009, with full profit and loss responsibility for the Dodge car product portfolio. Before this he was VP of design. He is responsible for halting the Dodge slide but to do so he is going to need more than a new positioning strategy, new logos and a one-size-fits-all approach to marketing. Unfortunately the signs are not good as he has appointed Wieden & Kennedy, an advertising agency to build the Dodge brand.

Gilles is on record as saying that Dodge cars are, “Cars that make you feel good, that are niche-like in their demeanor, but have mass appeal.” Well I’m sorry, but that sounds to me like a one-size-fits-all typical mass marketing ad agency driven concept that will, in the end, appeal to nobody.

What do you think?

How not to sell a London property to Malaysians

I spotted the sign below on a lamp post in Damansara this morning. In case you can’t read it, the content is as follows:

London – Condo
Good Buy & Invest (sic)
West London £220k
Call for Preview

I cannot believe that a genuine UK property developer or estate agent would encourage a company to sell million Ringgit properties with signs on lamp posts. After all the UK property market, and in particular the London market is benefitting from substantial investment and has hardly been affected by the global financial crisis.

Commercial property
Jones Lang LasSalle expects the total direct investment in commercial real estate in the UK to be around £23 billion (RM125billion) for 2009. Prime yields in the West End are 5% and in the city, around 6.25%. That’s impressive compared with a bank rate of, well about 0%.

Residential Property
Meanwhile, the residential market is also performing strongly. International buyers increased by 25% in 2009 compared to 2008. Most of the investment is coming from Europe, Russia and the Middle East. Knight Frank estimates demand from new buyers is “almost 25% higher than a year ago” and “prices have now risen 13.8% in the nine months since March.”

In fact, most of the investment is coming from the overseas market. Foreign buyers account for 80% of the investment, the highest ever. Indeed, the average over the last 10 years has been closer to 46%. The latest sources of this overseas investment include Oman, Libya, Lebanon, USA, Korea and Ireland.

UK property roadshow
Little wonder then that Malaysian firms want to get in on the act and sell UK property. I can’t find any figures on the total Malaysian investment in the UK or London property market however, the recent launch of a luxury development at Imperial Wharf, London, Malaysian buyers purchased £9.25 million (RM56 million) worth of luxury apartments and penthouses over the 2-day road show in Kuala Lumpur.

Olympic games
With more than 10,000 Malaysians studying in the UK and a number of companies keen to make the UK their European HQ, there are going to be plenty of willing buyers. Especially with the Olympics to held in London in 2012.

Wrong way to sell
But this is not the way to sell those properties. It dilutes the value of the property, negatively impacts the credibility of the local representation and makes it harder for future efforts to sell UK properties here in Malaysia. But worst of all, it portrays Malaysia as an amateur in a professional world.

Updated: 11th January 2010. I have since called the number on the bunting. I spoke to a nice guy with a pleasant attitude. I asked him where the property is. He stated the property was in South Ealing. As I know this area well I asked for the exact location and I consider it to be more Brentford than Ealing. He asked for my email address and promised to email me more information.

That was last Thursday, I have not received anything as of today.

Case study – How a Malaysian Company built its brand from the inside

Senior executives at a Malaysian technology related firm were frustrated. Sales growth was not meeting expectations, despite the firm’s 20-plus year track record, strategic partnerships with top international firms, excellent service and high profile advertising campaigns.

To boost sales, the firm had explored common alternatives – price cuts and an expensive marketing campaign. But although such actions had a short term impact in the past, there were no long term benefits and they hurt profitability. So the senior executives decided to look at another option – increase sales effectiveness by reviewing sales processes and tools, increasing the sales close rate and shortening the sales cycles.

Headquartered in Kuala Lumpur, the firm specializes in boosting supply chain and other efficiencies through both product sales and software and other integration. With offices in Singapore, Thailand and other Asian countries, the firm has a blue-chip list of customers that includes some of Malaysia’s largest companies. Sales had grown steadily over the previous decades, but the firm was now facing price-based competition from China at the same time as it was weighing opportunities to go public.

After looking at the issue, senior management determined that the sales problem was not due to a lack of leads. The firm received a steady supply of leads from word-of-mouth and customer referrals, as well as from its strategic partners. The sales staff also cold-called regularly for leads.

The main issue was converting those leads into sales. Qualified leads languished in the sales pipeline for months or even years. Too often, active senior management involvement was required to close sales, which took time away from expansion, financial and operational issues. The sales force constantly pressured management for price cuts to make sales. Even when sales were made, opportunities for sales to other divisions or branches were rarely leveraged. Too many sales were for low-margin commodities and replaceables, when the firm wanted more profitable service, maintenance and IT integration contracts.

Management had earlier tried to address these issues with automation (providing laptops to the sales force and installing a low-end CRM system), new sales compensation schemes, re-organization (creating a department just for telephone sales) and other steps. But sales still were not meeting expectations.

Traditional sales training
So the managing director decided that the best solution was to upgrade the skills of the 15-member sales force and other customer facing departments, and requested bids from multiple training companies. The most common proposal focused on sales training that emphasized lead development and closing skills. However, such training was generic to almost any industry.

Another, more expensive option, was a comprehensive approach that included revamping its sales processes and skills around the company’s offerings and requirements of its customers. After careful consideration, the company decided that an improved sales process and customized training provided the most value, and contracted with the sales development division of Malaysia’s leading customer driven brand consultancy, FusionBrand.

Sales audit
The first step was an in-depth sales audit that sought to uncover issues hampering sales as well as opportunities for improvement. FusionBrand conducted hour-long, confidential interviews with senior management, sales managers and many sales personnel. All sales material, including brochures, proposals, quotations, sales scripts, pipeline reports and other information, was reviewed and analyzed. Current as well as “lost” customers were interviewed for their critical perspective on the sales process and their reasons for buying/not buying.

The sales audit resulted in a comprehensive sales process analysis that identified strengths and weaknesses in the sales process as well as in the sales material. For example, the sales pipeline report, a key tool for sales forecasting and supplier orders, was both out of date and contained inaccurate information, making it difficult to prioritize resources and estimate future sales. The sales process analysis included numerous specific recommendations for improving sales processes, reports, collateral and proposals.

Many graduates of training courses complain that the material studied was not relevant to their industry or customer requirements. This issue did not arise because FusionBrand carried out a sales audit first. Information learned during the sales audit was then used to develop two customized sales training courses that incorporated actual customer, product and sales situations. Furthermore, the number of attendees was limited to 12 to ensure that each sales person gained maximum benefit from numerous role-plays and hands-on exercises.

The first customized, two-day course focused on sales basics, ranging from lead development, time management and closing. Special attention was paid to dealing with price-based objections. About four weeks later, the second customized course was held in 5 half-day sessions over a three-week period to minimize the impact on sales time and provide more opportunities for review and retention. This course focused on “strategic sales.”

Many training courses assume that sales can be made in a single sales call. However, only commodity, low-margin products can be sold in one call. More advanced offerings inevitably require strategic sales, characterized by longer sales cycles, multiple corporate decision-makers (ranging from finance to IT to actual users) and complex requirements. Such strategic sales require understanding differing requirements for value among various departments as well as internal political issues at the prospect. Using an existing prospect that was difficult to close, each attendee developed a focused sales strategy and delivered a PowerPoint presentation designed to win over all departmental decision-makers involved in contract approval.

Sales manual development
The final phase of the multi-month effort was a sales manual. A sales manual includes standardized information on sales processes, compensation (eg, commission schedules), reporting, requirements, resources (ranging from key telephone numbers to report and presentation templates), sales tips and more. The sales manual gives the company more consistent management by acting as teaching tool for sales managers with new staff and ensures more consistent operations and reduces training time.

Results have been achieved in both sales and other departments. Ordering is based on more accurate pipeline data, which has reduced inventory, freeing up capital for expansion. Morale has improved, sales personnel are more confident and less inclined to reach for a calculator at the first objection and offer discounts. The company has made its sales and presentations more customer-centric. Most importantly, sales have accelerated and sales cycles are starting to decrease.

Other internal branding initiatives were embarked on to ensure the successes were communicated and integrated throughout the organization.

Companies invest a lot in marketing to generate leads. But even all the leads in the world mean nothing until they are converted into a sale and, ideally, a long-term customer. That is why investing in your sales organization, processes, and personnel is crucial for ensuring that customer requirements for value – whether at the MD or user level — are consistently understood and addressed by the brand. Such understanding is hard to achieve from a ‘one-size-fits-all’ sales training class.

A sales process audit, customized sales instruction and sales manual can give companies the framework and structure to close more sales more often – without having to compete just on price. This in turn will build a comprehensive, well respected and, most important of all, profitable brand.

Tips for building a retail brand

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

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.