Posted: July 23, 2014
The debate on the shape of new model marketing is hotting up. Just a couple of weeks after Cindy Gallup, founder of BBH in the US announced to a London conference that, Its time we blew up the existing agency model, what Harvard Business Review acclaims as the “most extensive marketing industry review ever” undertaken by a cohort of very heavy hitters reveals just how bad things really are. If you are still living with the the cosy belief that change is just around the corner brace yourself. It seems you’ve already missed the boat.
Those of you who read my stuff know that I’ve had a number of constant themes running for the past few years. “You are only as good as your next big idea” has been my angle on the need to drive innovation in business and the fact that products are less important that the process that creates them and that’s certainty proving true now. Big business has become entrenched in the routine and beaurocracy that drives the perpetuation of their original offer, but that’s turning out to be the single greatest inhibitor to innovation and innovation is the future.
I’ve also proclaimed long and loud that brands are communities of like-minded individuals and created my Brand Discovery programme to help businesses define and bring their brands to life. This research tells us with absolutely certainty that any kind of purchase BtoB or BtoC is an emotional experience driven by the relationships (I coined the phrase “Brandships”) that we have with brands.
It’s always been my belief that all businesses are marketing businesses and that to succeed requires that marketing is placed at the centre of any organisation. I’ve been working for a number of years with my Full Effect Marketing approach to help my clients make that shift. Now this and other research has revealed that the businesses that have done so are performing far better than those stuck in the old model.
Way back in 1991 I created a digital business blue-print for one of the world’s biggest financial services groups and have launched numerous digital enterprises since, but sadly, especially in Europe business has been slow to embrace the digital age. I know that working with new media and sales channels requires a different approach and different skills, but that’s why we need a different model for both agencies and their clients. Unfortunately, too many businesses have clung to the security blanket of traditional structures and practices for far too long. Now they are, according to analysts, facing oblivion. If you don’t believe me take it from the authors of the new report who tell us that while smart CMO’s have been pushing for years for fundamental changes in the way their businesses operate the fact that marketing has not been understood for what it is and marketing departments have been siloed rather than centralised has resulted in 80% of businesses still trying to function on an out of date model. What’s really interesting though is that the businesses that are adapting are performing so much better than those that aren’t and the decline the the performance of the latter is steepening.
The same goes for the use of data. Businesses that have re-aligned their operation to collect and analyse data are way ahead of the game, but again, even this fact is less interesting than the rate of decline of those who haven’t. However, the really big winners are the organisations that have expanded their knowledge by combining analysis of why people buy the things they do to analysis of the relationships we have with our purchases and how the purchase is emotionally fulfilling. The fact is, its not always practicalities that drive a sale, emotions play a big part in every buying decision. But then, we knew that didn’t we? Back to the branding thing again.
While the Middle East, where I have been based for almost three years, went into its customary hibernation for Ramadan, I’ve been travelling Europe, talking to the movers and shakers who are driving the agenda here at the moment and they are not the big firms you might expect them to be.
As I mentioned earlier. Big business is suffering the legacy of its past success. Some years ago Tony Mooney, now of SKY IQ, but then part of the Experian Clarity Blue success story came up with an interesting illustration of how unweildly big businesses had become. I worked with Tony then to create a kind of “parallell universe” that took new strategy and the structures and practices it demanded, out of big businesses by creating a second semi-independent business unit that operated alongside the mainstream operations of an organisation to develop innovation to a point where it was self-sustaining, then plugging it back into the main business to act as a basis around which the business as a whole could be remodelled. Tony was ahead of his time it seems as in the past few weeks I’ve come across a number of businesses that are following this basic premise successfully. In fact, I had dinner this week with the CEO and founder of one of Europe’s most successful new model agencies who revealed that they have two financial products that they have created for an international financial services group and are taking them to market right now. The client doesn’t want these products associate with them, partly because if consumers associated the new products with a traditional financial services business they would almost certainly be less successful. This, in itself says a lot about how inappropriate big businesses and their brands are in today’s market.
We English are familiar with the stories of how our small, nimble sailing ships of the sixteenth century ran rings around the previously invincible Spanish armada with its big heavily-armed galleons. Small is fast, small is adaptable. Big is slow and unwieldy. What the world needs now is the former not the latter. It looks like history is repeating itself. When these discrete business units are running smoothly and the products established, the plan is to fold the new brands into the original business (in some way yet to be defined) It may even be that the new brands will become the senior entity and rescue the original business in more ways than one. Such is the demand from the more clued-up big businesses for agencies that can offer this kind of support and the failure of existing agencies to remodel themselves, that in addition to the work they are doing in numerous other sectors my host at dinner is working for as many as four international banks. It seems when something is so “right” the concept of client conflict goes out of the window (Another lesson I’ve been delivering to my agency clients over the years)?
A few weeks ago Martin Sorrell was quoted in an interview with The Drum as saying that clients no longer get excited about TV campaigns and press advertising and traditional agencies need to start questioning their own relevance. There are undoubtedly far more crap agencies around than good ones and clients get what they deserve (and usually what they pay for). Maybe we are about to witness another clear-out of the dross in both client and agency sectors? Not before time I think.
I’ve been telling the agencies who are my clients for years that their offer to their clients has to lead with strategy. Its been the case for a long time that unless you are in the top 1% of creative agencies your work is going to fall into the “commodities” category, which means pressure on your fees and profit. To succeed beyond a few years an agency has to be able to strategise. Those who have managed this shift now have a better chance of success in the coming months and years, but what does the new model agency look like. The truth is there is no set pattern. Because every business problem demands a different and unique solution an agency needs a very wide range of skills and loads of experience on tap and the ability to combine them as and when necessary in an infinite number of permutations. This has implications for hiring strategy too. The kind of young account directors that appear to have become the norm for agencies in recent years don’t carry the gravitas or credibility to advise businesses on business strategy and clients think its insulting to suggest it. Why even refer to senior agency managers as “Account Directors” anyway. Why not, as one agency I talked to this week have CEOs of the business units?
There are very broadly three main opportunities for an agency looking to be in business in the next few years:
- Big businesses that recognise they can’t innovate and are looking to import solutions. They do this in two ways – go direct to an agency and get them to source or invent something, or hire an intrapreneur and develop their own incubator. The problem with the latter seems to be that the intrapreneurs I have spoken to all seem to face the same problem with internal politics and that kills a lot of great ideas. This is why the agency route is being favoured and even the intrapreneurs are turning to agencies now.
- Investors looking to invest in short-term and medium-term seeding projects. As I said, there seems to be plenty of these individuals or funds around, but the connection between the money and the concept is weak. This seems to be mainly because the innovators rarely have the skills to produce the documentation and make the pitch that will secure them the funds they need. These investors aren’t charities, they are looking for a return, usually a quick one, so you need a robust argument and to offer some kind of reassurance that you have sound business skills.
- People with great ideas, but without the business nous that will turn them into commercial enterprises. This is the other side of the previous point. The unanimous feedback I received this week is that innovators lack business and especially marketing skills. This is a big opportunity for agencies who can find a way to finance their involvement. There are a few models out there, but this represents possibly the biggest departure from the traditional agency skill-set and its where the weaker agencies will founder. The agencies that are having success are effectively taking over the management of the start-ups and I think this is the way to go. If you have control and the credentials to impress investors you should be looking to tie into an existing fund or start your own.
Surprisingly perhaps there is no shortage of money. Everyone I have met in the past month tells me this. Potential investors are everywhere although some of the traditional sources are probably the least useful right now (banks and their old-fashioned attitudes again!). It also seems there is no shortage of ideas. I have spoken to incubators who have assessed up to 800 innovations over the past twelve months, only to whittle them down to a handful that they have taken on. This is the result of a combination of factors. Firstly most innovators wear rose-coloured spectacles and few ideas measure up to rigorous commercial measurement. (I learned of a truly great product from a consumer’s viewpoint this week that may never see the light of day because however the agency concerned models it, they can’t get it to generate an appropriate level of profit) but mostly innovators just don’t know how to run a business or present a convincing business case.
I think the bottom line here is that there are plenty of opportunities, no shortage of funding and loads of innovations to keep enterprising agencies busy. It’s just that far too many agencies shouldn’t be in business anyway. They have bobbed along for decades without really contributing anything. Now is judgement day. I hope to see loads of so-called marketing consultancies, branding agencies and advertising agencies fold in the next couple of years and a new more vibrant, enterprising and useful consultancy model come to the fore. The clients who want an agency that just delivers a shopping list of wants are those that will fail and any agency relying on them for revenue will find business unsustainable, meanwhile the successful agencies will be those that are deeply involved with their clients and provide the support that evidence suggests they are desperate for right now. What kind of agency are you?
Posted: July 5, 2014
Richard Branson once said that “customer loyalty” is the same as “customer satisfaction” and who would argue with him? However, there’s a post on the LinkedIn group Dr Brians Marketing Network this morning about this very topic (although it leads with a question of “customer trust”, but it’s much the same thing) so maybe not everyone is clear about what drives loyalty nor what loyalty brings to an organisation?
Firstly, we need to get one thing straight. A loyalty programme isn’t a discount club. Sure, there will always be an element of discount among the benefits of a loyalty programme, but in these competitive times, what business can afford to commit to reducing their margins? So, if you want a loyalty programme contributes to rather than reduces your bottom line, you have to think a little broader than most people seem to.
There are two kinds of loyalty club member – mercenaries and genuine loyalists. The former are there just for the discounts. If they can get a lower price from your competitor, be sure they’ll be shopping there, so you might as well do away with the overhead of running a loyalty programme and just reduce your prices. All the research I have seen points to these kinds of schemes delivering no long term sales advantage anyway. The latter are the customers you want. Committed customers not only buy more, they’ll pay more and recommend you to their friends, but if you want these guys on your side you’ll need to put the effort in. Think of your loyalty programme as another channel, like on-line or physical stores. Yes, loyalty programmes can delver customers to both of these other channels too. To pick up their purchases for example and there are opportunities for additional sales in that for sure, but there are incremental direct sales to be had once you leverage all of the tools available to a modern loyalty programme, otherwise there no point.
Like everything else in any organisation, it all comes back to brand. In particular your “brand promise”, that undertaking, implicit or explicit undertaking you make to prospects and customers that makes them want to move in to your community and put down roots. In my Brand Discovery programmes we devote a good deal of time to discussing this, because its probably the most important aspect of a brand. I make my clients present me with, what Julie Meyer suggested to me last week was “proof of promise”, a list of four to six facts about their business that will convince me, their prospects and their customers, that they will deliver on that promise.
I can’t stress the importance of this promise and its delivery strongly enough. Delivering the promise prompts the feeling of satisfaction that Richard Branson referred to and its the key to establishing the relationships that will separate your loyalty programme from the discount schemes of your competitors. They say it costs ten times as much to attract a new customer as it does to sell to an existing one. However, if you attract a customer with a promise that you fail to deliver it can cost you a hundred times more to bring that disappointed customer back again. With new customers in every developed market as rare as hen’s teeth, every customer you alienate is a slice off your bottom line. So, I urge you, don’t screw this up.
Get it right and your loyalty programme will significantly add to your profit. Research a few years ago by Bain and Co suggested that a customer is fifty times more profitable in their tenth year than they are in their first. With each contact they have with your brand they gain a deeper emotional attachment to your brand, they trust you better and because of this and will be more ready to experiment with new products that you bring to market and your loyalty programme is your opportunity to make those contacts more frequent and more satisfying. Genuinely loyal customers will also recommend you to their friends, which all adds up to lower advertising costs and that all-important, higher gearing to your product lifecycle, which enables you to capture a new category before the competition arrives to put pressure on your margin. As I said. Don’t mess it up!
The rules of engagement when you are putting your loyalty strategy together don’t differ from those that apply to every other aspect of you marketing – stay consistent. In particular, stay consistent to your brand promise by making those proofs of promise the sole subjects of your communications with your loyalty members.
I’ve just completed a two-and-a-half year project that involved, among other things, creating a loyalty programme from scratch. These days, loyalty programmes aren’t just a case of issuing customers with discount cards and waiting for them to start spending. Its all about the data and the targeted communications this enables. Once your customers are signed up its your job to entertain them with information, editorial and offers that will improve their love for you. We signed up 450,000 members in a very short time span and because social media is now beyond question customers’ preferred channel of communication with vendors, social media was fully-integrated and utilised alongside e-mail marketing and telemarketing. We didn’t forget the usual in-store and e-commerce drivers though and when it was all put together we generated between a third and sixty per cent of sales of selected lines and found that over 80% of ongoing sales through both physical and on-line channels involved the loyalty programme in some way. Your loyalty programme can generate spin-offs too, including a great customer panel and the wealth of customer insights you will get from analysing the wealth of data you collect along the way. All of which helps you streamline your business generally.
Posted: July 1, 2014
After years of pushing my clients and regaling anyone who would listen with warnings of dire consequences if they fail to include HR in their strategy development, I’ve finally found a soul-mate in the shape of Michael Savage, Director of Employee Brand at JWT Inside. It’s no coincidence perhaps that he’s working with a marketing services firm, in fact, not just any marketing services firm, but one that “gets it” with a vengeance, as witnessed by Martin Sorrell’s on-going statements to the media.
In his article in recruiting trends this week Michael underlines that because it’s employees who deliver the brand promise, they need to be involved in its development and fully committed to playing their part in its delivery. Like my Full Effect Marketing strategies, Michael promotes the internal marketing (he calls it “reprogramming the workforce”) that is essential for any organisation committed to growth. In fact, because the business world generally is currently undergoing a radical transformation every business is going to have to seriously question its role, re-examine its promise and radically remodel its focus, structures and processes over the next year or so. While Michael asks business leaders not to miss the opportunity this presents to “treat their business as a start-up” I’d go one further and say, if you don’t get this radical you’ll simply not be in shape to compete in the very near future.
I’m not talking years here, I’m talking months. We are already seeing how tech companies are taking over. The David an Goliath story is being re-enacted every day as large traditional businesses are submitting to acquisition, often at far less than their book value, by new, young tech companies who represent their only hope of staying in business. Business is driven by an entirely different engine these days, which is both an opportunity and a threat. You can respond by accepting a new role in the lives of your customers, employees and suppliers, rebuild your business accordingly, introducing new skills through training or the introduction of new employees, but sitting it out is simply not an option. The businesses that succeed in the future will be those that can innovate and innovation is driven by technology. If you don’t have the skills, you’ll have to get them somehow and the first and easiest place to start is with your existing workforce.
My advice to any and every business is define your brand now, using a proven process such as my Brand Discovery programme, identify what you have to do to deliver your promise, start the internal marketing that will engage your employees, get them thinking about their role in your new organisation and invite them to decide how their skills, experience and personal characteristics enable them to contribute to the delivery of your re-aligned promise. This gives you the opportunity to identify the gaps in your skill-base and fill them with new employees or training.
Posted: July 1, 2014
Tags: Elise Sass, Greg Banas, investors, Jarmila Placha, Jihomoravske Inovacni Centrum, Julie Myer, Martin Pejsar, Start-up, Start-up summit, Start-ups, Tech companies, Vojta Bednar, wayra
The Start Up Summit in Prague on Friday was a fascinating experience. While sometimes I despair at the lack of ground made by Czech business and political communities (Twenty-five years after the fall of Communism and the Czech Airline CSA still has Communist-era customer (dis)service, banks still fail to understand basic finance and the combined might of three telcos can’t deliver broadband that’s faster than a dial-up. And nobody seems to care!) Friday demonstrated that there are a few folks out there with the determination to find a way around the obstacles and achieve some real growth.
It wasn’t all roses, of course. A sell-out event produced an, at best, half-full auditorium. A typically Czech response that was explained to me as being because after subscribing people probably realised the event was on a Friday and the best you can hope from anyone in this country is a half-day of work on a Friday! There was also a marked tendency for attendees to favour the buffet over the main-event. Despite the very interesting and entertaining speakers, attempts to get delegates back into the auditorium following breaks proved futile in some cases, but having taken part in many similar events in Prague in the past I’ve come to recognise that many delegates think the refreshments are the point!
The venue was quirky and again typically Czech. An old cinema with a coffee bar in the entrance hall, most of the seats in the auditorium removed and replaced by seaside deck-chairs, beer-crates and a Communist-era Skoda convertible that you could choose to park yourself in to watch the event. The up-side of this conversion was a great stage, a full-wall screen onto which everyone’s slides were projected and a brilliant sound-system.
The line-up of speakers was impressive and included the unbiquitous Julie Meyer of First Friday fame, Experts from Denmark, the UK, Poland and Estonian Elise Sass from Microsoft’s CEE Start-up initiative supplemented by some very able Czechs from organistions like Ctreative Dock, the global accelerator Wayra and the Jihomoravske Inovacni Centrum, all skilfully and entertainingly woven together by MC and organiser, Tinternety.cz’s Vojta Bednar.
Between them the speakers covered a lot of ground, much of which I suspect was news to some of the audience and therefore very valuable, but for me the three main points delegates should take home with them were:
- In future all businesses will be tech businesses
- There’s a big difference between an idea and bringing it to life
- The greatest weakness of innovators, start-ups and small businesses is an absence of marketing skills.
In the past size mattered. The big concerns had the customers, the products and the resources, but their size meant they were reliant on processes and bureaucracy, both of which inhibit innovation. Today’s new products and services are pretty well exclusively made possible by technology and because the tech companies’ have the data management, analysis, media routes and sales channels they own the playing field. No longer are the techies on the sidelines waiting to be called on when needed. These days the roles are reversed and recent acquisitions of traditional businesses by new tech businesses make that clear.
Meanwhile, some big firms are opting for the full-body transplant, trying to inject new thinking and develop new structures and practices that they hope will enable them to stay with the game. They still, on balance have the money and they are using it to employ intrapreneurs to tell them what to do next, starting incubators and launching innovation units so that they can feed off the creativity of early start-ups. It’s a symbiosis that makes sense, but I can’t help thinking that there will be at least a few corporate executives secretly thinking they’ll use the vision of benefaction to exploit innocent young minds. However, history has proven that its tougher and takes far longer to adapt an existing model than to build a new one from scratch and by the time the old guard have got their act together the new kids on the block will inevitably be down the road and out of sight.
With the enthusiasm of youth comes an inevitable dose of naivety. Ideas may be (as I have repeatedly quoted over a number of years) the currency of business these days, but they are not the end of the story and the biggest challenge is always going to be bringing them to life. There are a number of stages to the evolution of an idea including financing and marketing, but innovators tend to be product-focussed to the exclusion of all else, which is why so many neat ideas fail to get off the drawing board. It was also pointed out that a high percentage of start-ups fail because they think when they receive financing, that’s “job done”, sit back and wait for the good life to start. The Entrepreneurs we heard from made it clear that the point at which you get the money is where the hard work starts.
A local business that’s helping bring an increasing number of Czech innovations to market is Creative Dock, whose co-founder Martin Pejsa was one of the speakers at Friday’s event. Crerative Dock take on ideas, researches them, even test-launches them, then either finds funding and mentors the owners through the process of building a business around them or helps them sell their concept to one of the increasingly hungry dinosaurs. They already have an impressive collection of case studies in the Czech market and are now turning to other markets for both ideas and funding. This is the new marketing services model that I have spoken about previously and I hope a few more agencies take the hint and start thinking of themselves more in this vein.
In the coming days and weeks I’ll be exploring further some of the thoughts and ideas that emerged on Friday, but for now I’m happy to report that Prague’s Start-Up Summit, was definitely a step forward, albeit maybe a small one, for a country that might otherwise be stuck in the mire created by its politicians, bankers and traditional business leaders
Posted: June 18, 2014
I met up for lunch with Vit Horky founder of Brand Embassy and The Future Care Initiative in Prague yesterday and he brought me up to date with new developments in the, currently red-hot world of what’s come to be known as “social care”.
One of the subjects I touched on a few months back was the need for organisations to re-engineer their marketing/customer service, social media infrastructure to accommodate the way that we connect these days. There’s no doubt about it, the trend towards social media platforms as customers’ channel of choice to connect with vendors is now well entrenched. Of course, managing social media can be very labour intensive and sometimes its difficult to spot the return, especially if you are using traditional metrics and KPIs, but the on-the-ball operators who have made changes apparently see only gains once the metrics start rolling in.
The big question remains though, “who manages social care?”. There are a number of models being pursued at the moment. The one involves splitting social media conversations between the marketing department and customer service. This seems to me to be a bit messy and rather less of a commitment than it should be. Vit was telling me about one of the big contact centre groups who are experimenting with a new business model where better trained operators filter off the social care conversations and handle them discretely. This is proving to be a bit of a “wow!” in that it is generating all kinds of benefits beyond the immediate customer engagement. For one they have found that better trained operators perform way-beyond those of the traditional cookie-cutter call-centre operators. They are faster, more efficient, get higher satisfaction scores and are better engaged themselves. In one case the employee lifecycle is ten times that of a traditional call centre, which kind of turns the old call-centre model on its head. Imagine a contact centre whose primary concerns didn’t include the desperate scramble to keep up with employee churn! What on earth will managers do with the time they no longer need to devote to recruiting and training operators!
This brings me back again to another of my recent themes. That of the need and opportunity for marketing services businesses to develop new models if they are to remain relevant. It’s my belief that businesses other than airlines, telcos and banks, who are highly reliant on customer interaction and already have their own in-house contact centres, aren’t going to be able to manage their customer support/social care in-house for much longer. It’s becoming far too specialised and complicated. This seems to me to be the perfect opportunity for contact centres, who have always operated at the periffery of the marketing services industry, to legitimise themselves. Now any contact centre could create a social care cell with more highly-trained operators managing conversations with customers through social channels. All they need is a platform to work on and Brand Embassy lead the field with their inexpensive and highly sorted offering. In fact, in keeping with the pace of change in this sector Brand Embassy are continually and significantly improving their interface so that all the smart (and for some people intimidating) stuff is hidden from view, which makes the transition from contact centre to the social care model far simpler.
Beyond modifying existing contact centres could this also be the opportunity for a completely new marketing services business model? Using the filtering capabilities of Brand Embassy a consultancy could put together an entirely new customer management offer. I’ve just created an integrated CRM/Loyalty programme resource for an international retailer that used in and out-bound telemarketing, social media, direct e-mail marketing and web to not only handle customer queries and service support, but provide a new channel that made direct sales and generated store traffic. With a platform like Brand Embassy this is so much simpler than the processes I had to engage, but it would have been great to have an agency who could take the whole thing and run with it.
Posted: June 17, 2014
They say that necessity is the mother of invention and the really great thing about a tough market is that it drives great ideas. As marketers its our job both to stimulate creative thinking and to contribute most of the innovation. I reported recently on how the agency sector is being inventive in it’s search for a new model more appropriate to our time and we are all familiar with the scramble for the silver bullet that’s going on in retailing. Now I see that the UK retailer Primark aren’t content to be just another retailer, they’ve decided to up the anti and buy an entire shopping centre.
Primark’s idea, it seems, is to create a flagship store and then rent out surrounding units to complimentary retailers. It’s not a completely new concept of course. Primark aren’t the first store group to become landlords. Many others, including Tesco have operated models like this for some years and its not a million miles from the department store model. I even launched a similar initiative with the supermarket group Delhaize in Central Europe a while back. For those of you who aren’t familiar with the world’s fifth-biggest supermarket group, privately-owned Delhaize are food specialists rather than generalists. They don’t need the space of a hypermarket, but acquired a few big units in their march through the ex-Communist markets. Our idea was to create a mini-mall within the unit, but outside of the area of the supermarket and rent spaces to local retailers. This guaranteed them customer traffic and an alternative to the demise that small local traders meet when a big international retailer comes to town.
Initiatives like this are good PR and even better business. They really endear multiple retailers who move into town to the local population by countering common criticism that the multiples are the death knell of the independent store. They may be responsible for the closure of many independents, of course, but this has rather more to do with the incompetencies of some independents than it is the fault of the multiple and by placing the locals in the thick of shopper traffic they generate the big boys are at least giving the small shopkeeper a chance to show what they are made of. Those that have what it takes can experience their best ever business, but the few that just don’t make the grade and doubtless never would.
The city of Birmingham, the English location of the proposed Primark centre, is also a classic demonstration of how renovations, revised traffic flows and new developments can dramatically change the dynamic of a place and with it the fortunes of shopkeepers and other businesses. Coincidentally, I’ve been working with a major shopping mall in Dubai recently that had suffered as new, bigger malls opened and the epicentre of the city shifted – radically in the case of Dubai. The same is true to a lesser extent of Birmingham, the centre of which has has been in a constant state of flux for as long as I can remember, with the focus shifting dramatically with every new development. It will be interesting to see what Primark can make of their acquisition, which has been something of a victim of all of this. I will also be fascinated to see what tenants they attract to the mall which has been sliding down-market for as long as I can remember. Primark do entry-level retailing as well as anybody and they have a choice here to leverage either their fashion credentials and create a popular younger environment or focus on their low-price credentials and attract the Poundstretchers of this world. With two new fashionable mass-to-premium-market malls within a stone’s throw, this isn’t as easy to call as it might seem, but my guess is that a mall with lower-mass-market, but tasteful tenants would stand a better chance of success than a mix that would compete with the two other malls. Are there enough of these kinds of retailers? It might be a struggle, but time will tell.
This does however raise another thought that may be the driver behind Primark’s plan. As a tenant they have no control over who their neighbours are. They can take space in a mall that promises to deliver the customer profile that suits them best, but if we are honest there’s always going to be a degree of compromise in sitting in a mall that’s controlled by someone else. Even if the profile is right for you today, the landlord can choose at any time to change all of that and leave you in an alien environment. Then there’s the fact that the reputation of any brand is also coloured to some extent by the company it keeps. By owning their mall Primark get to choose their neighbours, which gives them the opportunity, if they are smart enough, to optimised the profile of the mall’s traffic to suit their own offer. It also means that they can be seen to associate only with retailers that enhance their reputation and if that wasn’t enough, they can also eliminate competitors. Now, this seems like a plan that other retailers might want to consider!
In the Middle East, of course, because pretty well all the retailers worthy of a visit are franchises and most franchisees own more than one franchise (Companies like Chalhoub and AlShaya seem to own most of them) you wonder if it wouldn’t be worth these companies investing in their own malls. This is especially true because many mall owners and managers are just chasing rents and aren’t sufficiently marketing savvy to manage their brand well enough to maintain a focussed customer profile. Of course, the franchisees have the money even if they don’t have the mall management expertise, so it will be interesting to see, with places like Dubai, Saudi Arabia and Bahrain now over-accommodated with malls who is first to raise the game by taking on a mall and optimising it. Things could get interesting!
Posted: June 9, 2014
If you’ve ever taken a business to IPO you’ll know that its never as simple as it looks. An IPO is a long journey for many businesses, especially those that have emerged from informal cultures or developing markets. I’ve been working with a Saudi business for the past two-and-a-half years to help them get in the kind of shape you need to be to go to market. In fact they have been pursuing their mission for over three years and that’s usually the kind of time you’d expect to take.
Ernst and Young published a paper a while back, which outlined the process and in their polite way underlined to anybody thinking of heading down the IPO route, that if you think you are going to pull it off in a few months you are probably not sufficiently clued up to go to IPO anyway.
There are basically three parts to an IPO pitch, which is much the same as any business/marketing strategy. Firstly there’s a load of financial stuff to sort out before you can really get to grips with a project like this. You have to have all your numbers in a row, loans consolidated, financial processes in place and accounting compliant with legislation in the country where you are going to market.
Then you need to get people and processes in place for every function in the business. Its not enough just to have folks working away in departments doing things their own way, even if they are doing just fine. You have to document every process, which, in itself can be a major project. You’ll probably need a process engineer to help you describe the processes you use and design any that are missing in every department. They have to be formatted with flow-charts and filed in a manual. You also have to have your executive team in place, which often proves to be one of the biggest challenges. A recent EY survey highlighted that once the financial stuff is out of the way, people came top but one in the list of things that influence investors most. This means having director-level experts in the main areas of your business – marketing, logistics, production, operations and finance for example.
The third thing that you need to focus on is strategy. It’s top of that list of investor influences and its probably a large part of your submission document. This is where we marketers make our biggest contribution to the IPO process. These days business and marketing strategies are synonymous. Investors need to know what you will do with the cash they are injecting and that you are ready with the innovations and initiatives that in three or five years time will result in their slice of the action being worth more than when they bought it.
An IPO often proves to be the push businesses need to focus. If you aren’t intimate with your market, have clear objectives and have a clearly defined strategy you’ll struggle to attract investors, especially in an IPO where the equity on offer to investors won’t give them much influence. This is marketing #101 of course. Quantifying your hard and soft resources – identifying the opportunities – defining how you are going to exploit them. And strategy, of course, starts with your brand. You need to prove to investors that you know exactly who you are and what opportunities that gives you. My Brand Discovery programme has proven just the device I have needed in these cases because it doesn’t just help businesses define eleven coordinates of their brand, but introduces a clear process that applies to pretty well everything they do thereafter including the all-important innovation.
An IPO is something that you simply can’t cut corners with. I’ve seen a number of businesses who think the answer is to squeeze their business dry in an attempt to impress prospective investors for the usual three years prior to an IPO. They hold back on investment, go for short-term gains by cutting prices or quality and if their preparations go smoothly and they keep to their timeline (which is often not the case) they just about manage to drag a dead horse across the finishing line. What happens then, of course, is that the business crashes and investors are left with a stark choice – invest further to fix the accumulated problems or accept the loss. Its all a bit like buying a used car in fact! If you take this short-term approach and fail to keep to your deadline your business will die before you get across the line, you won’t get your IPO and you’ll have to find investors some other way to pay for the remedial work your three years of squeezing have necessitated. Alternatively, of course, you could just shut up shop!
Actually the used car analogy goes further in that. If you buy from an established dealer there are some inherent or at least inferred guarantees. In the case of an IPO of course the “dealer” is the bank that manages things for you and because their reputation is on the line, they’ll conduct due diligence that will make a drug-squad strip search feel like the start of a beautiful relationship. So, if you survive this scrutiny you’ll probably be OK when you make your submission to the authorities.
The point to bear in mind with this is that your IPO submission is nothing more than the kind of good marketing strategy document that every business should have anyway, so if you don’t have one the first question you have to ask yourself is “Am I really ready for an IPO anyway?” However it might be a good idea to put your strategy together as though you were going to IPO anyway. As I said, its only what any good business should have.
Posted: June 3, 2014
One of the eleven P’s (the coordinates that define a brand) in my Brand Discovery models is “Purpose”. You will imagine, each of the elements that go to make up a Brand Discovery brand model involves some discussion and some a degree of soul-searching. That’s what we do in our workshops, but purpose is among those that often takes the most time to resolve. Appropriately so in fact, because a business without a purpose is a ship without a compass – you might hit land sometime … but then again, you may just remain at sea!
Most clients start with the assumption that their purpose is clear-cut and it isn’t until I test their resolve that they recognise the importance and complexity of this apparently simple subject. For example retailers will often say they are there to “provide the lowest price for their customers”, but their commitment to this starts to wobble a little when I point out that this might be in conflict with social responsibilities such as sustainability or avoidance of worker exploitation. Likewise there’s often a conflict between what’s best for customers and what’s best for shareholders. There’s no escaping this issue, you have to make a decision and stick to it.
Its also quite common for the executives in my Brand Discovery workshops to confuse “purpose” with “promise” and/or a strap-line, so let’s define what a purpose should be. I define purpose as “your role in life’s great plan”. This isn’t necessarily the same as what you are good at or what you offer your customers, hence the distinction between purpose and promise. Purpose is the contemporary replacement for what we used to call “vision” (which is rather more wishful thinking from most companies than the here and now) and as such should be supported by a list of actions that lead to the realisation of the purpose (or the achievement of the vision) My Brand Discovery brand models refer to these as the pathway (yet another “P”) but in the traditional context these would be your mission.
For example, the purpose of the UK’s national trust might be “to preserve history and beauty for future generations” but this isn’t the promise they make to the market, which might be something like “We enable you to experience history first hand”. Strangely, they don’t appear to have a strap-line and I’m not going to presume to offer one here.
When I was researching this post I came across a really good article by Mark Di Somma on Branding Strategy Insider. Mark has been around nearly as long as me and I’m sure from the ideas he promotes he’s experienced much of the same kinds of things, so its hardly surprising that he and I are pretty much on the same page.
Of all the Brand Discovery coordinates purpose is one of the most substantial. Many of the others will change, probably quite frequently, but purpose is pretty constant and as such provides an anchor for your business, so its worth taking time to define it.
Posted: May 29, 2014
Some years ago there was an emerging trend among London advertising agencies to launch their own consumer products. From what I have seen it didn’t amount to much, but some high profile agencies were promoting the idea that in order to authenticate their proposition agencies should start practicing what they preach by setting up business initiatives of their own. There were a couple of product or brand launches as a result, but I’ve not seen much of this kind of thing since.
Last week I saw a report in The Drum of Tim Williams from Ignition Consulting expressing the belief that, in the light of the decline in traditional agency business, agencies should give this kind of initiative serious consideration and he was able to cite a few successful projects of this type to underline his point. Not only do such projects provide agencies with a revenue stream to offset the fall in income they are experiencing these days, but as Tim says it gives an agency greater credibility with clients whose needs have changed a whole lot since the traditional agency mould was set. Sharing clients’ experiences with production, distribution and the like certainly won’t hurt any client/agency relationship. These days clients are looking for agencies that they feel can offer them serious business advice, not just the arty-farty stuff that was their forte in the past. This has all kinds of implications for agencies, not the least of which regards the age and gravitas of account handlers and strategists (how much weight does the recommendation of a college-leaver carry when you are making a major investment decision?) as well as the structure, skills and processes contained within the agency offer.
Maybe the agency of the future looks something like a business I encountered recently in Dubai? There a woman called Asil Attar is investing in promising fashion jewellery and furniture designers, providing an incubator with mentoring and support from her team of marketers. As I understand it she’s devised a programme where her wards are able to gradually buy themselves out, but meanwhile they become part of a promotions machine that includes features like pop-up stores and I believe, shortly a fashion store in one of the big Dubai malls. Isn’t this an approach that a few traditional agencies should be looking to adopt right now?
Adam Healey, a friend of mine in the US is involved with an incubator that provides a roof over the heads of start-ups but additionally a club-type venue for students with ideas. Here they can hang out and hope the magic of the start-ups rubs off and they can attend talks from experts and successful entrepreneurs. So far, at least HackCville, as it is called, doesn’t invest in its members but philosophically, at least, that’s a small step to take.
I really like the idea of agencies as incubators of new businesses. It gives them a chance to put their money where their mouths are and I can envisage such agencies evolving into stables of talent with varying degrees of cudos. Like a grown-up university start-ups could enhance their value by association with particularly successful stables. Its an all-round win-win.
The agencies would have to have deep pockets and be prepared to invest in fledgling businesses or maybe tie up with an investment bank or consultancy for third-party investment, but I can see it working. Is this the solution for traditional advertising agencies? Well, there are definitely some who might be able to pull it off. You might even see this as sorting the men from the boys, given that any agency worthy of the name should already have the business nous a start-up needs. I’ve already worked this in reverse a few times by working with investment consultancies to develop strategies for businesses they were thinking of taking on and in the past few weeks I’ve raised the subject with senior figures I know at investment consultancies, banks and agencies. It seems there are a number of ways this could work and nobody has said “no way!”. Read More
Posted: May 16, 2014
You can imagine, I’ve seen the inner-workings of quite a few businesses and encountered numerous senior managers, but I’m still amazed at the lack of balls some managers demonstrate when it comes to making a decision. I was particularly interested therefore that, in this month’s Transformation Monthly, the transformation specialist Rob Llewellyn explores this inertia.
So what is it that in the current marketplace where opportunities are rare, competition is tough and ruthless, that leads those charged with the success of a business to hold back on initiatives that might give them the advantage their business need? Rob probably has as much experience of this as I and he explores a few examples and ideas in his article. As far as I am concerned though, it’s mainly about the insecurity of the managers concerned.
When I was starting my career I was lucky enough to have the ex-Publicis Regional Chairman Michael Conroy as a boss for a while. If you ever encountered Michael you’ll know him for his charm and wit, but he was also something of a sage and took delight in dispensing pearls of wisdom to young-bloods such as I was at the time. His attitude to decisions was simple – make them! Michael’s argument was that so few of the decisions you make in your life have any real consequence and you can never tell at the time which those are, so you may as well just go for it! (actually, Michael put it far more eloquently than that, but you’ll get the idea).
Don’t get me wrong, Michael wasn’t cavalier by any means. His sharp mind, considerable experience, knowledge and ability to think forward meant that his quick decisions were always a product of an even quicker and thorough assessment of all the pros and cons, but that’s what every senior manager should be capable of and if they aren’t they are simply not up to the job. Sadly, we appear to have manufactured two critical obstacles to the development of decision-making managers. The first is we are dumbing down. By this I mean many managers are very ordinary. This isn’t my judgement, although its not a hard one to make, you just have to look at the evidence, its the news from the managers themselves. I touched on this a couple of months ago when I referenced research in which over half of managers admitted they felt they weren’t up to their jobs. The same report also highlighted the belief held by managers that on average they didn’t expect to be in their roles longer than two years, which means that, right or wrong, they wouldn’t be around on judgement day anyway. All they are looking for therefore is an easy ride and making decisions that often prompt change and could possibly be wrong, isn’t the quickest route to a restful night. To make this worse, the consequences of failure loom like the sword of Damocles over today’s managers. In most sectors success is expected rather than rewarded, so you can see why so many choose to play it safe and and take the easiest route to a simple stress-free life.
Having chosen not to do anything though, I do wish managers would fess up and be honest. Comments like “No we won’t do his ’cause I’m chicken would go down a lot better with me than the usual “We’re not ready for this yet” or “This puts us too far ahead of our competitors. We don’t need to take it that far” which leave me somewhere between incredulous and incensed. Comments like this usually come from managers who have put-off making decisions for so long that their business is incapable of being ready for anything, and that is often why they are calling me in the first place. The point is that their competitors are often not only ready, but some way down the road to putting similar ideas into practice.
In today’s competitive marketplace you are either fast or dead. You can’t afford to ponder over decisions, so make sure your inability to make them isn’t holding your business back.