by Peter H Frank | Oct 30, 2015 | Business |
Earlier this month, I gave a lecture on critical thinking to an association of Hungarian economists in Targu Mures. At the end of the conversation, I was asked two questions: what was my first impression of business in Romania when I arrived here six years ago? And, what advice do I have for a young person looking to start a business?
As occurs all too frequently, it was not until after I gave my answers and sat down that I realized I wished I had answered them differently. After only a few minutes of reflection did I see how the two answers were perfectly related and how important they both are now as much as ever. Here is how I wish I had answered:
My first impression upon coming to Romania was of a reality that unfortunately remains as true today as when I arrived. Actually, I noticed it even before I arrived. After changing planes in Italy, I was on a Tarom flight to Bucharest looking through the in-flight magazine when I saw an advertisement for a Bancpost-American Express-Tarom credit card.
Having spent 12 years at the world’s largest credit card issuer and the pioneer of affinity/cobranded cards (and then several years after that teaching and writing on the topic), I immediately shook my head and saw what a financial failure that product was likely to be. I knew firsthand that this type of three-branded arrangement existed in other places, but replicating what you see from outside – without understanding the very challenging particulars that lay beneath – was a recipe for disaster. And from what I was reading, this was not going to work.
It was not until after I landed and began to live here that I found more and more examples of exactly this syndrome, whether in banking, in media, at retailers, in restaurants, or even inside American-inspired bars and cafes. Yes, the veneer looked the same – the products and logos and menus and concepts – sometimes, in fact, they were even more American than they were in America.
But it didn’t take long to discover that the product and messaging and service and flavors were but superficial in appearance and misunderstood. Indeed, there was generally a lack of any deeper understanding of the structure and of the strategy within the businesses and products that are required for success.
Six years later, unfortunately, I see little improvement. There still remain too many examples of this fundamentally wrong approach. And too many companies, from banks to newspapers to retailers to restaurants, still fail to understand. Most of them, especially Bucharest newspapers, seem to have no concept as to why they’re in business.
As I know the credit card and loyalty businesses rather well, let me give you a few examples I observe from that sector. In the several years after my introduction to that Tarom credit card (which, by the way, has moved to another bank), I came across the BCR Zambet card, a confused and expensive product that I’ve criticized before for not knowing what it was or why it existed. And after obtaining the bank’s internal presentation some time later, I could see the confusion. There were lots of superficial benefits, but little recognition of the challenges.
Then I noticed Raiffeisen’s cobranded SMURD MasterCard, which I confess led to a sad laugh. The demographics might be good, but clearly the basics of card affinity are not well understood. And then there’s a Steaua card – again, a good idea in other places, but a seriously dubious product here.
Or look at the other big banks and the hundreds of things that were copied and brought here: a credit card for doctors, for small businesses, for entrepreneurs, for students, for shoppers. Discount cards. No-interest borrowing. Points and rewards. Elaborate cash-backs. In each case, I guess, someone saw them in other countries, or read about them somewhere.
But also in each case I can tell you it doesn’t take long to see that too much is wrong – from ineffective benefits to badly constructed messaging to misconceived positioning to card designs without purpose to descriptions intended more for bankers than consumers – overall creating dozens of different products either virtually indistinguishable from each other or giving potential customers no good reason to want them.
And while I don’t know their profitability, these card programs must be attractive to issuers. Some banks are now willing to effectively pay you 100 lei to sign up or some other amount if you bring them your friends. But that’s not likely to work either as short-term acquisition does not necessarily translate to long-term utilization – not with the customer marketing that you find here at the banks.
In fact, of all the bonus and loyalty cards being offered here (whether from banks or any of the retailers), not one that I’ve seen is truly conceived and structured as anything but a product – not a program – and loyalty, to succeed, is not a product to be sold. No. Paying cash for new customers is not a way to build loyalty.
The fact is these could be tremendously successful if done correctly in this market. But there is not a bank or retailer here that seems to fully understand how to correctly position these loyalty, advantage, bonus points, or affinity programs – whatever you want to call them. Instead, it appears they have merely designed card products to look the way they think they should and they are probably wondering why none of them succeed as well as they do in other places.
In other words, what I found when I got here – and still find all too often – is that Romania has businesses that do everything done elsewhere. But all too often, they throw products on the shelves and compete mostly with price and waste a lot of money on new customer acquisition. And when all is said and done, it appears they lack the essential understanding of why these products exist or where they’re headed in the future.
One of the more common excuses I hear is that this or that product was already tried and it didn’t work. Or times have changed and the product won’t sell. Or it’s only been 20 years – you have to give it more time. What this typically means is the person has failed to understand. My guess is they did try that product as they saw it someplace else with the attitude that “I’m a smart person, I can see how it’s done.” But the truth is, they cannot. They never tried the product the way it actually exists someplace else. So they never tried the product the way it needs to succeed.
And that, very simply, takes me to the answer to the second question I was asked.
What advice do I have for young people and entrepreneurs looking to launch a new business? It sounds so obvious, yet it’s so often overlooked. Understand your business – better than anyone. Because once you truly understand what goes into a successful product and then design it accordingly, what you’ll be offering is precisely what your customer wants – not only what you’ve seen without understanding from a distance.
Your business does nothing without customers. And the best type of customers are the ones who like you. Customers who value you. Customers who like doing business with you no matter your industry or the flavor of your product.
And how do you create that? Through the design of your products, the delivery of your services, the internal procedures of your business, and the treatment of your employees. Everything aligned to satisfy your customers.
Whether you are a bank or a newspaper or a shop or a neighborhood restaurant, it’s not enough to offer your product and then pay for new customers. You must inspire your employees, create a business that others enjoy and be a good neighbor (whether you’re local or on the web). Your customers will feel it and the profits will come.
And never forget that it all starts with you.
Yes, the opportunities are out there. Others’ lack of understanding is like a gift made for you.
That’s how I wish I had answered those questions.
by Peter H Frank | Jul 18, 2015 | Business, Life in Romania |
The young woman looked at me like I was crazy. I had just handed her 21 lei to pay for groceries that cost 20.91 lei. She finished helping me bag the items, handed me my receipt and began to ring up the next customer when I interrupted her, forced an awkward smile, and asked her for my change. She looked confused. I repeated my request. “You owe me 10 bani,” I said, knowing there was no way she was able to give me nine. Forcing an awkward half-smile of her own, she looked down, and picked up a 10-bani coin from the small collection of coins that had accumulated near the plastic bags – you know the pile, that collection of assorted coins people don’t bother to pick up after she places them on the counter rather than in their outstretched open palms (which I happen to find incredibly rude, but that’s a different topic).
Now, because I could not explain to her at that moment why I did this, I’m explaining to you. I don’t need 10 bani. (For you someplace else, that’s officially 2.5 cents in America using the current exchange rate, though it’s more equivalent to a dime or more in people’s pocketbooks here). In fact, few people I see in stores here need 10 bani. Or, I should say, few people need only 10 bani. And banks here don’t hand out paper sleeves for you to wrap coins in and there are no automatic change machines to “cash in” your cash. So lots of this loose change gets left at the registers.
But not by me. Why? It’s true that sometimes I benefit when the cashier ignores that I owe her five or 10 bani and she tells me not to bother. But that is not nearly as common as her expectation that I should ignore the fact that she is the one who is doing the owing. No. More often than not, cashiers will wait for me to produce a paper 1 leu and then place eight or nine coins on the counter for me to pick up.
So the issue is not the money. It is the assumption of these people, and the tacit complicity of the grocery stores, that grates at me. As I said, five or 10 bani to me is not very important. Not in isolation. And, the assumption goes, it is not important enough for the store to bother about either. But think for a moment what is happening here. Consider the thinking. And consider the result at the end of the day when this same type of transaction has been repeated over and over and over and over. (Don’t worry. I’m not going to use the old silly argument that begins by asking what if what happened to me happened to everyone.)
The MegaImage store where I most frequently shop has seven cash registers. In casual conversation with an employee there, I’m told the store easily has several thousand customers each day. A worker at one of those tiny MegaImage stores that has just one cash register in a different neighborhood tells me they have several hundred each day. Now, we could attempt to estimate this by assigning a 1 percent chance that each purchase equals a different amount of bani – you know, 9.00 lei, 9.01, 9.02, 9.03, etc. We could then estimate whether it’s more or less likely to receive the change from the cashier, or if she is likely to let me not pay the four bani, or if the total is 9.05 and I give her 9 and a 10-bani coin, whether I’d get back five bani, etc., etc., etc. From that, we could estimate how much change would be left over.
But really, let’s keep the math simple. Let’s say just 44 times a day at each store (that might be a very high 10 percent of transactions at one store but only 1 percent at others), someone doesn’t bother to receive (or pick up) the five, 10, 15, or even 20 bani that is owed to them. Let’s assume that the cashier will forego on average five or 10 bani from a customer. This would mean there is an average of 10 bani remaining each time in favor of the store.
If it happens 44 times at each store by the end of the day, that is equivalent to one euro. Not a big deal. But we assume it happens every day, 365 times in a year. That is 365 euros a year that this store might be “keeping.” Again, who cares? Well, the MegaImage group has more than 400 stores in Romania. So cumulatively, the company could conceivably be collecting 146,000 euros each year from all this “irrelevant” change just floating in or out of their system. That might not seem like much to MegaImage (it’s 2 percent of just 1 percent of its revenue), but for some folks out there, this adds up to real money.
Now if I knew the employees were slipping all this into their pockets at the end of their work shift as they balanced the printed receipts with the cash-in-drawer tally, I’d be fine with that. If this is the case, however, I’d prefer there was just an explicit tip jar at the register. Or they could do something similar to what you find in the US where there are often small bowls at the register with customers’ discarded pennies and a sign that says “Take a penny, Leave a penny” to help you provide exact change.
Or how about another option: how about some jars at each register in which all those unneeded coins are collected for children, for education, for battered women, for the homeless, for blood donation, for the hungry? Doesn’t that make a lot more sense than expecting me to carelessly “donate” it to the store that I’m already paying just so the cashier doesn’t have to bother to go out of her way and complete her job by giving me my money? In fact, isn’t that what companies do to demonstrate they care and that they are part of our community? Isnt’ that what they do to increase my sense of loyalty to them?
This sounds, I suppose, as if I’m attacking MegaImage. I’m not. Well, I am, but that’s not my intention. I’ve seen their press release about at least one community fund it established that appears to have donated about 14,000 euros last year (about one-tenth of the amount of our spare change scenario). And certainly, the company is not the only, nor is it the largest, retail chain where all this small change, from an accounting standpoint at least, mysteriously disappears. It merely has the misfortune of being the store in my neighborhood where I prefer to buy groceries.
So, let’s return to that register and explain this quite simply. No, young lady, it was not the 10 bani that I needed. I just wanted to put a stop for a moment to the tacit suggestion that you take customers for granted and that institutionally, perhaps, you don’t recognize the impact that even small change can have. And to repeat this once more, I’d much rather give that money to charity than just ignore it existed. But, of course, for me to do that, you would first have to give me my change – and please, just this once, try to place it in my hand.
by Peter H Frank | Apr 5, 2013 | Business, Media |
I am against child abuse. You should be, too. But I’m not sure you are. Not enough anyway.
And I want you to care. So to get you to care, I will soon publish photos. Photos of children with disfigured faces, beaten until they are bloodied, swollen and broken. Children with limbs that are twisted and snapped. Children with burns and unthinkable scars across their bare bodies. Children who’ve been tortured, maybe a few who are dead.
And if that doesn’t do it, I’ll tell you they deserved it. They misbehaved and spoke back. They were messy or noisy or they just didn’t listen. And I say that’s what you do to children like that.
Are you with me so far? Did I get your attention? Now do you care?
Ok, don’t be too worried. The photos aren’t real. I created them on my computer. But I’m not going to tell you that. Because I want you to care. I need you to care. And so you can care, I first need your attention.
Here’s the best part:
Now that I’ve done that, now I want you to trust me. Because I’m here to be trusted. I came here to help. I want you to call me. Maybe give me some money. Of course, you can trust me. Why wouldn’t you trust me?
Sure, I just tricked you. Falsely provoked your emotions. Manipulated your feelings. (Oh, that was so easy.) But wasn’t it worth it? It was for a good cause. My intentions were good. And now that it’s done and I have your attention, I promise you can trust me. (Until maybe, that is, I do it again. But only if I need to. Because I want you to care. And I’m not sure that you do.)
For those of you who missed it, this is, in essence, what the Sensiblu Foundation did a month ago on March 8, Women’s Day. Except the issue was not children, but violence against women. Domestic violence. A serious, heinous, and unacceptable crime and one that happens all too often everywhere.
To get your attention, to get you to care, it seems the foundation hired a bunch of misguided (to put it kindly) advertising people who came up with the idea of arranging (secretly) to have a couple guys call Radio Guerrilla during a program (that the agency set up) on domestic violence and fake their support for beating up women, saying things like women needed it, or sometimes deserved it. (Can’t you almost hear the giggling in the background?)
But that’s just the first step. Then the next day, ProTV broadcast a news story about the controversy that the radio program generated. In the story, it included information from the Sensiblu Foundation about the fact that it offers support and programs for these women who are beaten. (Isn’t it great?)
Finally, the foundation, four days later, admitted the whole thing – including this precious nugget from Sorana Somesan, a senior copywriter at the advertising agency, G2 Romania, that dreamed this up:
“The way we implemented the campaign, live at Guerrilla in the Morning, generated revolted reactions both from listeners and online. That was exactly what we wanted.” (Yes, and of course, they had also considered using photos.)
“Everyone was disturbed. Perfect! This is the first step towards changing the attitude related to this phenomena that is perceived as a sad normality that one chooses to ignore.”
To which, I think, the only appropriate response is: WHAT!? Are you JOKING?! Are we in the eighth grade?! You have committed one of the most egregious examples of a corporate brand manipulating public opinion and then lying and you think that’s great? (Or maybe “super awesome” is a more apt expression here.)
Now, I was not going to write about this. Really. I was going to let it go. It’s been weeks since it happened. I’m not in Hyde Park. I don’t need a soapbox to sermonize and I have no desire to start a movement. I like Sensiblu. I like the stores. The people are nice. The stores are well-stocked. I think they do a good job. I shop there a lot. Well, I did anyway.
Because since this happened, I can’t shake the ugly feeling that this disgusting and ignorant campaign has created in me. Yes, it got my attention. That’s for sure. And now I find there is something about the brand Sensiblu that resonates in me with unease. Now when I see their signs and commercials, lying and trickery are the first words in my head. Yep, that got my attention. It certainly did. And you did change my attitude. And now you know what it is? I don’t want to shop there.
To put it simply: Sensiblu, you owe us all an apology.
Let’s be clear. This is not an issue about a failure in media ethics, using the news to plant a fake story. That’s bad enough.
No, this is a question of failing corporate ethics and a manipulation that, at heart, abuses our trust. You see, at some point companies have to recognize they cannot do whatever they want. They cannot play with us that much. They do indeed have a responsibility. And they are culpable when mistaken. There is, finally, a limit to their games. They can play with us a bit. We allow that. It’s called effective marketing. Messaging. Positioning. We permit that.
But it’s a delicate game. Don’t play with our trust. And all of you involved have gone way too far.
I do understand that A&D Pharma, which owns Sensiblu, might never have been told of this asinine campaign beforehand. But the fact is it’s their name on the door, Sensiblu, whether for the shops or the foundation. It comes back to them. And they have not said a word. I know. I asked.
Indeed, asking just made it worse. I emailed six simple questions to A&D Pharma’s media office in the middle of Tuesday afternoon with a clearly stated deadline of close of business Wednesday. In essence, I wanted to know what the Sensiblu company thought about this.
Within an hour or two, there was evidence the foundation was notified. Yet it was not until well after 6 p.m. the next day, on Wednesday evening, that I received a response – not from the company press office but from Cristina Horia, the executive director of the Sensiblu Foundation. In an email, she thanked me for my interest and asked me a series of questions apparently to understand me better. She wanted, she said, to be certain to give me the “appropriate information” depending on my audience. Oh, and because of the “large number” of questions, they could not meet my stated deadline, which had already passed.
No, I concluded, they don’t understand. I responded Thursday morning that in my opinion the “appropriate information” from them would be “simple, honest answers” and I wasn’t sure how different audiences would affect that. And, I added, six questions, in my many years in journalism and corporate communications, was never considered a large number.
But mostly what I wanted to tell them was that these types of games – waiting past the next day’s deadline and responding to my questions with questions of their own – seemed to be part of the same misguided approach that led to their problems in the first place. By the way, Ms. Horia, given a new deadline Thursday, was never heard from again.
Similarly, an attempt to talk to G2 Romania didn’t fare much better. Reached during a meeting yesterday afternoon, G2’s Creative Director, Mihai Fetcu, assured me he would return the call later. He never did. (Does the press here usually tolerate this stuff?)
So given these responses, or lack thereof, let me attempt to explain this again. I’ll try to keep it simple:
It is wrong to start a fire and create a quick panic all in the name of building support for the fire department.
Understand? Trickery, deceit, alarm – those are the tactics of children and the ignorant. Ms. Somesan at G2, the agency, was further quoted in the press release as saying: “This is the first step towards changing the attitude related to this phenomena…” To this I respond: “No, my dear. You have set back your cause by cheapening it with a tasteless trick and a lie.”
If it was just to raise public awareness, your agency, I would suggest, has a distorted sense of what is justified. Because only marketers who have lost sight of their basic responsibility would do something like this. The agency brief might have said “Get Us Attention!” but the responsibility goes further, always, to safeguard the brand trust. Besides, the irony is we were so gullible to your trick precisely because we DO know it happens and we DO know there are imbeciles and apes who still think it’s ok.
The fact is you could have run naked through the streets with a sign on your head (which, by the way, would have been at about an equal level of sophistication), and you would have received the same momentary gawking attention, but without the long-lasting negative impact on the company and the brand.
But obviously, we disagree. I found this to be a disgusting, easy, adolescent manipulation of people’s emotions on a very serious issue that needs to be dealt with like an adult. You thought it was “perfect.”
So what, I wonder, will some agency or foundation think up next? Pretend, with fake photos and a news story, that there was a horrific car crash so that the issue of safe driving is raised and someone can announce a program for driver safety? How about an urgent report that thousands of children have been suddenly struck with a terrible disease in Bucharest so someone can promote a program of child wellness? Maybe they should go on the radio and talk about the benefits of rape, or perhaps the joy that is found in the organized killing of some minority, or how much fun it is to steal babies. Then their client can come to the rescue and remind people they have a program to stop it.
The simple fact is we did not need you to manufacture some phony controversy to make violence against women important. There is nothing fake about it. There is a very sad and dangerous reality out there of women being beaten. It is indeed a serious problem, a very serious problem, which is all the more reason you do not play with it. No matter what you believe the benefit will be.
So instead of provoking rock-and-roll listeners, you might consider provoking the police, the judges, and the politicians to take this more seriously. Now there is something that might be effective.
I don’t know if that would work. I do know, however, that if you spent a little more time thinking things through and considering the repercussions of your actions, you might come up with a better and more honest way to get our attention. And our help. Because if you want us to care honestly and deeply, then it requires you to be honest and deeply genuine with us. What sort of concern will we have if we are tricked into caring?
You said you wanted to generate “revolted reactions.” But everyone knows it is not difficult to upset people. There are many photos you can fake and lies you can tell to disturb us. We’re easy that way. Thankfully. Our emotions are quick and human and real. The question is have you motivated anyone with your cheap trick? Is that an effective teaching tool? Did your charade truly further your cause?
No, I say you did it a disservice, because the next time there is controversy about the need for public support to fight domestic violence, I among many others, I suppose, will wonder if it was staged, merely and cynically to provoke a response. In other words, I no longer trust you. And by extension, I’m not sure I trust your eponymous supporter.
Because you both might do this again. For another good reason. For another good cause. Maybe something else will need help. How about some quick corporate profit?
So let me repeat: I did not plan to write this. I did not think it was needed. Until I saw the response. And who got the blame? The radio station and agency. Sure, they were to blame in the sense that they were complicit. The agency certainly more so for creating the idea. (One of the radio hosts, to his credit, apologized to listeners.)
But the responsibility is not there. They created ideas. The responsibility, ultimate and clear, is with the foundation and the company for which it is named and by which it is supported.
To digress for a moment: the fact is that much too often in Romania I see the idea of ultimate responsibility painfully misplaced. The lowest employees are blamed for bad decisions. Their pay is cut in a simplistic punishment as if they were children granted a weekly allowance.
Why is it so difficult to recognize that it is the responsibility of the owners and managers to ensure that bad things don’t happen? And when they do (because they always do), these adults then accept the ultimate blame, learn from the mistakes, and work to ensure they don’t happen again. It’s like a disease in Romania, blaming the wrong person.
The simple fact is, if you don’t identify the right people as responsible – the companies, the owners, the top politicians – then nothing will change. They will continue to do whatever they want.
So yes, in this case, I understand why the agency was blamed. But that is overly simplistic. The responsibility, finally, is with those who have condoned this and have the power to change it. That’s the foundation and the company. Yet for the dozens of comments, angry and upset, that I saw on the internet, not one – not one single one – thought the company was responsible or should be criticized for this.
I disagree. The fact is I’ve worked at foundations and I’ve worked with many charities. We all knew that any repercussions from a mistake would be felt by the individuals or corporations who sponsored, or funded, or placed their name on the door. They were our boss, perhaps unofficial, but very, very real. Because if companies want the benefit of looking to do good, then they have to accept the risk of things going bad.
So Sensiblu, I want you to fix this. I would like to trust you again. I would like to feel good about shopping in your stores. I would like to know that some of the profit, which comes from my pocket, goes to your foundation that is doing good work.
Because the stated purpose of your foundation is admirable. They are all good causes and I have no reason to doubt the foundation works well. But in this case, they messed up and in truth, it raises serious questions to an outsider as to how well they manage or understand their tasks. A simple recognition that this was not an appropriate way to attract public attention would go a long way towards reassuring the public that the foundation does indeed have the maturity and judgment needed to fulfill its mission.
But you’ve not helped yourself. No, not at all.
So have I cut up my card? No. I considered it. But that seemed a bit dramatic. I have, however, taken it out of my wallet. It will now stay at home and the company’s competitors, which are usually next door, can have all my business. Maybe those companies will take domestic violence a bit more seriously – at least seriously enough not to play with it in some childish stunt.
Some related links from the past month:
March 9 – ProTV, here
March 12 – Sensiblu Foundation, here
March 17 – Blogger Simona Tache, here
March 18 – Blog Pagina de Media, here
