Saturday, December 29, 2012

Tale of Missed Opportunities - Are Loyalty Programs Serving the Purpose?

I fly a lot on the domestic circuit. I fly on airlines which have the frequent flyer programs and also on those which do not have. Since I also fly on value airlines like Indigo, Spice, Go Air etc., simply because of the convenience of timing, I was moved down a tier on Jet Airways as I did not fly on it that often. There were also instances wherein I flew a cheaper airline at the same time as the difference between the fares of Jet and the others was huge.
The moot point is I lost a tier and I lost it for some reasons. However Jet or for that matter any other airline is not bothered about it. - Maybe, I as a customer flew other airlines (which were the case); maybe I found the fares on other airlines cheaper - which were the case sometimes. There could be many reasons why I did not travel that often on Jet.
Just a few months back I was a member of the highest level/ tier on Kingfisher. This certified to other airlines that I travel a lot, but they tended to ignore the fact even though I had a baggage tag which showed my membership status.
As a marketing person I always wondered if other airlines chose to ignore that I am a frequent flyer and could make business sense for them or are they not bothered. And what is even more perplexing to me is why the ignorance?
As typical business people we look at Life Time Value (LTV) of the customer but somehow this seems to be ignored.
While I have used the frequent flyer programs as an example, some of the departmental stores are equally guilty of the same missed opportunities.

  • Complaint # 1

As I had mentioned before I was downgraded on Jet and all I got were a few mails informing that I would lose a tier. The mails did not really enthuse or tickle me to fly more. If they had delved deeper they would have seen that I seemed to be cutting down on my flights on Jet. If not a call at least a mail would have done. Throw in a small offer. And then maybe I would bite the bullet. Ah! Yes I did get a pack welcoming me to the lower tier.

  • Complaint # 2

After standing in the long regular queue for the general members, I reached the check in counter, not irritated that I stood in a long line but an enquiry as to why I have not been flying often when I gave my frequent flyer number would have helped.  Just imagine the wealth of information which would have been available to the marketing/ sales team.

  • Complaint # 3

In the flight, just imagine if the cabin crew welcomed me and asked me a few questions. The crew could have access to my FF number and it would be a great feeling if the crew member welcomed me back.

  • Complaint # 4

While the airlines do a fair job of treating high value customers differently, many retailers do not. I am a member of loyalty programs of practically all the chain stores in India, infact at one of them we shop every week. It is unfortunate that we are still treated the same way 4 years back, even though we are avid shoppers now. We buy our provisions, apparel, accessories etc., practically everything we need but.....

Frankly we do not care much above the loyalty program much less about the points. Infact there have been many instances wherein we do not even record the transactions. How about a separate line for bill check outs for the high spending regular customers? How about some special offers? 
High value customers like me can be treated differently in many ways - gifts, significant number of reward points. The point is that the high value customers are high value not only in terms of revenues but also from a loyalty standpoint. It is true that the cost of getting a new customer is far higher than retaining an old one.  Sometime these golden thoughts are so relevant!

  • Complaint # 5

I have a name and so do all others. Most of them like their own name. If the retail brand/ chain have my name why don't they use it? Why I am a nameless person? Incidentally the airlines companies in India do a fair job of this where I do get personalized mails, a greeting at the check in counter and so on.  
One of the easiest ways of establishing a personal connection between a brand and its customers is to get a little personal. When you acknowledge a person you are actually telling him or her that he/she is valued. In real life too would you liked to be called by a name or by somebody who calls you boy! 

  • Complaint # 6

Some programs have tiers which do not make any sense. They seem to be there merely to provide a psychological high. 
Some programs do have tiers, and treat customers differently once they hit a certain spending threshold. Others also have tiers but fail to provide any real differentiation once the threshold is hit.
For example Jet Airways has tiers Blue & Blue Plus but I simply have not figured out why there is an extra tier. The benefits once someone finally makes it are negligible.  No lounge access, no priority no priority check-in, nothing. While the program is successful, the absence to differentiate is galling to say the least.  People will see through pretentions and ultimately it is a big let-down for members (and I speak as one)
It  is a big let-down for those members expecting additional benefits, and as such, careful attention should be paid to how tiers are designed.

  • Complaint #7

Why is it that most loyalty programs are devoted to only increasing the customers spend size/ bill value. I cannot think of a program which drives more visits. If I were to visit a particular store/ stores many times, I am pretty sure that I would eventually spend more than what I would normally. Naturally it should be worth the while for me to visit an outlet multiple times in a particular time period.  
This comes from the thinking that the customer will only buy so much and the objective is to compete for the larger piece of the pie. The same loyalty program can also be used to create demand for products which otherwise would have not been bought. If only the Shell gas station near my office offered me a program which incentivised to me a come more often to fill up there. What’s more they could give me a good discount for picking up engine oil or even tires!

  • Complaint #8

In this day and age of real time information technology use data to get the insights- it has the ability to provide useful data about customers. The data can both produce insights about general buying behavior and allow the seller to target promotions to individual customers.
 At the rate we buy merchandise in Lifestyle/ Auchan, I am sure by the Inner Circle program would have a fair idea on our buying habits. It is perhaps sad that it has not been leveraged enough. Most programs in this country don’t seem to use analytics to the level it needs to be.

  • Complaint #9

When a loyalty program pledges to reward customers with special treatment it must ensure that the services provided are better than those available to regular customers. This is really galling when I see my luggage come out of the conveyor belt much after the regular customers have got theirs, even though my luggage has been appropriately tagged with the bright priority badge.

Let me be very clear, these are emotive responses but customers are irrational. Only some customers are logical. As a marketer I do understand some of the problems but I  am also a customer and I am also all of the above!

And sometimes you don’t realise what you are missing until it’s gone…

Friday, December 07, 2012

HP or Hewlett Packard - The Conundrum!

An $8.8 billion write-down of its latest acquisition - Autonomy seems to be the latest mishap in the HP saga. And with it comes proof that HP has been following a path which is heading south.
From the exciting times of Lewis Platt and John Young to the bleaker times started by Carly Fiorina, HP has lurched from disaster to disaster. And the list looks endless.
Fiorina decided to move to reorient the company to a marketer of computer equipment and enterprise systems. Her acquisition of Compaq Computer so that HP- Compaq would be the leader in low-cost personal computers was a disaster.  She tried to focus simultaneously on high-end enterprise systems. Luckily or unluckily she had bid for the business consulting practice of PricewaterhouseCoopers, but lost to IBM. 
NCR's Mark Hurd followed her and appeared to appeal to the stock market. The efficiency expert, he focused on short term sales growth and cost reduction, doubling the company’s earnings and stock price. His notable acquisition was Electronic Data Systems’ computer services capabilities which led to an $8 billion write-down in 2012. And given his short term focus, the company’s investment in R&D, fell to 2.3 percent from 4 percent.
In 2009 and 2010, HP acquired 3Com and Palm, the latter after an intense bidding war.
Hurd left primarily due to his entertainment of a certain person of the fairer sex on company expenses, the board hired Leo Apotheker, the failed co-chief executive of SAP. He proposed selling the company’s PC business and dropping its tablets and smartphones, to make HP a systems and software company (a la IBM). He acquired the British software maker Autonomy for $10 billion. 
Apothekar focused on what he knew rather than what was good for the company. As a matter of fact almost all CEOs Fiorina onwards, focused on what they knew.
Somewhere down the road in a string of unending disasters, Hewlett Packard became only HP.  That aptly summarized the fall of the company.

What HP Needs to Do
The founders Bill Hewlett and David Packard, developed a unique management style that came to be known as The HP Way. The tenets of the HP Way are as follows:
1. We have trust and respect for individuals.
2. We focus on a high level of achievement and contribution.
3. We conduct our business with uncompromising integrity.
4. We achieve our common objectives through teamwork.
5. We encourage flexibility and innovation.
It is very obvious that HP has deviated from the very tenets which were set. 

1. Go back to the roots - Innovate
The erstwhile  HP's bedrock has been innovation  for a company which or was once a great company. The answer lies in innovation and come up with products that have unique benefits. It seems apt to fall back on a by-line of HP which said 'Invent'.  To make the company great again, the need is to innovate, create new products/ categories.
Cost prudence and efficiency are processes which need to be followed as a rule and not as a differentiating strategy.

2. Spot the trends and recognize opportunities
The spirit of innovation creates opportunities across various markets. It gives a perspective to encourage and take risks. Somewhere in the cost cutting saga and cutting on R&D spends, risk taking decreases. This can be  seen in the missed opportunities too. 
Light emitting diodes - It was one of the early leaders in light-emitting diodes. Infact  Roland Haitz coined the industry-guiding Haitz’s Law while at HP. However the company did not think that there was a significant opportunity in the near future and the LED team was pushed into Agilent who in turn sold them off to Philips. Needless to say the lighting market is huge and LEDs are one of the main products to drive this.
Memristors -  HP announced in 2008 that they had designed a circuit with which one could make dense, long lasting memory chips. For decades other companies had been working on it with success eluding them. However, feeble efforts were made to take this forward and since then other companies have cracked the code to set standards.
It is very important that risks are taken especially if the innovation is unique. Agree that risks are higher but the company itself has proved that it is this risk taking ability which had created the HP of the glory days.

3. Split the company into Hewlett Packard and HP
Of the revenue of  $120 million, PCs and printers still account for roughly $ 60 billion in revenue and $5.3 billion in operating profit which is approximately half of the company’s revenue and 45% of the operating profit. 
In reality, HP is two diverse businesses - a personal computer and printer business which is highly commoditized and an enterprise focused systems, services and software business.
The former business with its wafer thin margins and high competitive pressure requires high efficiencies of logistics, distribution, and production along with quick product introductions catering to small micro-segments. The enterprise business requires high levels of customer engagement, customized solutions and sophisticated software.
Given that the requirements both internally and externally are very different, it makes sense to split the two.

d) Hire the right CEO
Over  the last decade, HP has hired stars - stars who worked in environments which was conducive to them. In a new environment like HP, these stars lurched from mistake to mistake. The CEOs tried to mould the company to suit them and not mould themselves to suit the company.  Each CEO has created more confusion and direction of the company changed very so often. It is important for the CEO to understand the ethos the company and then plan the way ahead. It’s not every day that you get a Steve Jobs who could change things! And he came back to company to which he had co-founded.

e) Get a new board
The board is to drive the overall vision of the company but the HP board has been an unmitigated disaster. Their selection of candidates has been pathetic and so to have been their understanding of the business they govern . They have also not guided the CEOs. 

There is still a lot of hope and the doors to growth are not shut. It calls for a mix of culture re-orientation &  practicality in approach. 

Monday, September 17, 2012

Replacing Yourself - Let Your Job be Taken!

Unless an employee is altruistic and has reached a fair level of self-actualization, I am sure he/ she would like to see her career grow in terms of responsibility, authority and financially.

While in some disciplines, organizations can make do with individual contributors, the business requirement is largely skewed to teams and teamwork. Teams would require a manager/ leader. One of the responsibilities of the manager would be to equip their team members/ subordinates with skills & knowledge which lets them mature and enable them to grow higher within the hierarchy.

Unfortunately many managers/ leaders have a tendency to be threatened by such subordinates for a variety of reasons.

a) Insecurity of the idea of giving someone a chance to take their place
Some bosses are suspicious of their subordinates of someone taking their place. What if their failings are found out? What if the subordinates are better?

b) Protective & selfish of what he knows
Ownership is good when people nurture others, but can extremely detrimental when others are ruled out. These kinds of managers like to do things themselves and believe that only they can do it best. That’s good unless it becomes short-sighted.
They also create processes and systems which may be difficult for other to follow.

c) The boss thinks that the subordinates are not good enough
Subordinates are smaller in terms of seniority (quite obviously) and typically will have lesser understanding / knowledge. It is for the manager to groom talent. It is unlikely that subordinates will have all the necessary skill sets when they walk in.

d) Do not like to share the spotlight
Many individuals do not like to share their arguable popularity. If they have got 'it' they do not feel the need to share it. Glory can be a big ego booster and letting go is a problem for many.

e) The perception that the subordinates are smarter and may grow faster than the boss
While this can be true, it is not really a necessity. The smarter person will always win and if the subordinate is smarter than the boss then the subordinate needs to be a notch higher. However insecurities are more the reason than the actual smartness quotient!

  • While managers are an important part of a team, it is also more important to have a great team. The thumb is probably the most important finger but without the other four fingers the relevancy and importance of the thumb is greatly reduced. Likewise an individual contributor is good, but in tandem with the team, the effect can be exponential

  • If one has to grow within the system, managers need to hire people smarter than them or at least on par.  When his team performs well he will automatically be pushed up, because the manager is a manager because of his team and not singularly on the plank of his personal strengths.  If employees are trained for bigger and better positions they will push their managers up. Infact one of most important requirements of a successful manager is the ability to groom future manager and leaders.

  • If subordinates happen to be better leaders than their managers and move past them, they should be happy that the paved the way for a leader to come up the ranks.  Darwin's theory of evolution works in the corporate world too. If the subordinate has the makings of a great leader it will be a reality soon.

  • When future managers/ leaders are trained they need to be groomed in a planned & structured manner. Some amount of effort is required initially as they are, in a sense, raw to larger responsibilities. They will be have to moulded and skills properly honed.

  • Don't expect all subordinates to measure up. This can be compared to young sportsman with potential. Some these sports persons are able to cope with the increasing challenges and grow but many others fall by the wayside as they are not able to keep pace.

For any organization to grow it is necessary to have a pipeline of managers/ leaders. It is an ongoing process and cannot be held back. Any blocks to this pipeline will choke the system. 

Monday, September 03, 2012

The Vaginal Dialogues - And the Hypocrisies

"18 Again" launched with much consternation and hype a vaginal tightening cream. I am not going to talk about the efficacy of the product and neither is it to ridicule the product per se. Frankly, I don't care.
This is more to do with the hypocrisies associated with a product like this. 
  • The positioning of the product along with the commercial 
  • And more importantly sexual intercourse / sex is still looked as a matter which I dare say, most people enjoy but something which cannot be talked about in the open. What the f#@* (well ...fuck!)? 

Positioning of the Product

'Like a virgin' - the heroine croons in the commercial. But unfortunately this advertising reinforces the sexist view in India that pre-marital sex is something to be frowned upon, a taboo which is even seen as sinful by some. 

According to the company the cream empowers women but rather than empowering women it will reinforce the patriarchal view that is held by many here that women should be virgins on their wedding night. Well , what about the guys? Actually who cares what they do!

In India and with apologies to Cyndi Lauper the guys want to have fun. The girls should have a lock over their vagina and sexual calling. The hypocrisy of Indian sexual behavior is saddening. Is it not a woman's right to have sex when she wants to? Why should she remain a virgin until marriage? It is her personal choice on when she should have sex and not be decided by the warped societal norms. Infact a man with an active sexual habit is called a stud but unfortunately a woman is called a slut!

Sex and the Indian Mentality

I remember going to watch a movie with a few friends which included some women friends. There were some sexually explicit scenes. As if on cue, these ladies had a look of disgust when they saw the scenes and voiced their opinion against sex!  And these were all educated women. When I questioned them about it, they admitted that they enjoyed what they saw and would actually think about those scenes many times over. 

A lot of skeletons have fallen out of the cupboard of our so called lawmakers and religious practitioners. On one hand they talk about sex in hushed tones and on the other they have had super charged libidos. This shows the startling hypocrisy of Indian society.

When the condom brand Kamasutra was launched in India there was a furore when the famous photographer the late Prabuddha Dasgupta shot Marc Robinson & Pooja Bedi (which I believe was aesthetically done) for the advertising campaign - a series of black whites which did the task well of selling condoms. There was a hue and cry about the campaign with politicians having a field day criticising it. My point is that condoms are for sex and not to blow balloons! And very frankly, things have shown a marginal improvement only.

The hypocrisy is even more blatant when India is amongst the most populated nations of the world. I am very sure that procreation did not happen through storks or holding hands. If any country deserved the ‘nation of jack rabbits’ tag – it would surely be India.

Even now, I see the Indian man asking for condoms at chemist in a hushed tone as if he was apologetic about it. The chemist in turn would give the box back neatly encased in some paper which did not show the packaging. Infact a condom brand actually highlighted this in a campaign. Even in the movies, we have two bees circling around or two flowers swaying in the wind.

While Indians are moving to the forefront in many fields their attitude towards sex has really not kept pace.

However let me assure you I do not subscribe that we should have procreative pleasure in the open. I am not recommending that people go the extreme in a free bohemian kind of open lifestyle. It is just that people need to move with time and open their minds.

On another note would I recommend “18 Again”? My suggestion would be to ask ladies to exercise a bit and forget these gels and creams. Anyway most of sex is between the ears!

Monday, August 13, 2012

Why is the Transition from Product to Experience Brand Difficult?

Commodities > Products > Brands > Experiences 

From a marketing standpoint there has been an evolution of sorts. As customers’ expectations move up, so do the expectation of benefits. To elucidate this further, it would best be explained by a product close to my heart - Coffee. First we had raw green coffee beans which were traded across the world ( and it still is) - a commodity. As the expectation of the customers grew then we had varietals like different types of roasts, monsooned coffee, instant coffee and so on - products. This entered the next phase when the expectations of customers increased along with aspirations. This led to brands for example - Nescafe. In effect these were product specific brands. However as tastes and the expectations evolved further, customers wanted more and hence did not look at just the brand but the whole ceremony around it - Starbucks is an apt example and closer home Cafe Coffee Day.

(While the transition in expectations has happened, it does not mean that customers will not buy commodities. The same customer may buy commodities, products or brands both within categories and also outside depending on what their needs are. For example - a housewife may buy rice for her daily use but then may buy Basmati for a special reason but also pick up Kohinoor Basmati for an extremely important occasion.)

Without a doubt, the expectations of the customers from an experience are much more. And if a brand is able to cater to these expectations then they are customers for life.

The more that marketers can build experience brands, the more they will succeed. The transition from product brands to experience brands has been a big battle and till date there have been very few examples wherein brands have managed this transition successfully well. Many of them come from the electronics/ lifestyle space like Apple, Nike etc. This has been copied by other PC manufacturers albeit less successfully.  In the case of lifestyle brands it is safe to assume that they are more retail/ experience brands. In the FMCG space, as far as I can recollect I can only think of some ice-cream brands, Red Bull and Nespresso. It is more an exception that the rule. Interestingly Nespresso is a separate division run independently not controlled by the FMCG machinations!

Quickly let us what understand an experience brand delivers:

a) Delivers on experiences that are promised at every point of interaction with the brand. What people at every point of remember is what they actually experience. No amount of exciting messagery through communications can justify any faults. You’re defined by what you do—not just what you say alone. Every touch point or interaction is an opportunity to let customers experience the brand. 

b) Since experience brands understand that each and every interaction is important, they appreciate the importance of good people. The last mile in the service delivery is handled by people who can make or break the brand experience. Infact most interactions are driven by people in the forefront or in the background. They invest heavily in employee engagement activities that helps create better alignment and performance in support of the brand proposition.
c) The experience has to be real and authentic representing the true values of the brand. Any misrepresentation creates a dissonance in the mind of the customer. Interestingly most experience brands have the largest number of diehard fans (customers) who serve as brand ambassadors because they invite interaction and engagement, and hence take customers from relative indifference to commitment and advocacy more quickly than other brands.

d) Experience brands involve customers in activities. They engage in a dialogue with their customers and not a monologue. It is not a one way street but a two way process. It cannot be restricted to the Facebook's and Twitter's of the world; social networking sites/ tools are merely devices which facilitate this interaction, and have to go beyond that. For example - Coffee Day involves its customers in coffee festivals which enable them to participate and understand the nuances of coffee brewing/ making.

e) Creation of multiple ways for people to interact with them, above and beyond the products and services they sell. For example - Coffee Day involves with local NGOs and creates meeting places within cafes for discussions on socially responsible topics. In a new initiative Coffee Day tied up with Taxsmile to enable easy filing of income tax.

Transition from product brands to experience brands

Somehow FMCG brands have not been able to transition well in a truly comprehensive manner. They are able to touch on some parts but are not able to deliver on them in a comprehensive manner. The reasons

a) Mindset - I noticed time and again that marketers from the FMCG frame of mind need to understand that experience brands are different in terms of touch point interaction. They are used to the tried and tested ways of mass media advertising, some activations and usage of the latest craze - social media. I believe that more than anything else FMCG organizations need to think afresh and different.

b) People, people, people - In the FMCG business, the last mile is delivered by a retailer who is not connected with the FMCG brand and on the contrary will communicate his/ her organizations core values. The FMCG marketers need to understand that they need to invest in people who for all practical purposes come with limited educational qualifications and skill sets. It is a huge challenge to inculcate the ethos a brand to them.

c) Even the final delivery of an FMCG product is through a robust mechanism. Small variations in the service do not really compromise the experience. However for an experience brand even a minor variation can create huge dissonances

d) Responsiveness trumps efficiency - More often not, customers expect a good listening too rather than efficient response. The whole idea is to be more personable, and prompt to listening.

e) Uni dimensional - For an experience brand, the marketer needs to have a 360 degree perspective and should be responsible for all aspects of the brand touch points as each every point is a communication point. Unfortunately FMCG marketers restrict themselves to mass media and have a uni-dimensional view.

Wednesday, May 30, 2012

Get Real, Get Human - Brands as Humans!

When I was in B- school I was taught about brand personality and to the people who are still confused about it (and believe me many still are!)- 'Brand personality is the way a brand speaks and behaves. It means assigning human personality traits/characteristics to a brand so as to achieve differentiation. These characteristics signify brand behaviour through both individuals representing the brand (i.e. it’s employees) as well as through advertising, packaging, etc. When brand image or brand identity is expressed in terms of human traits, it is called brand personality" ( I do agree that there is a difference between brand image and personality but for convenience we will stick to personality)

Ages ago when I was a part of the advertising business, I remember being asked to describe the target audience vividly. Give a face to the target audience! Make them real.

Given the fact that we want to make the brand as human as possible, it is only natural the people also treat those brands (who are as human as it can be) with more feelings.

Customers are willing to accept and expect that brands are with flaws. It is comparable to real life interactions that we still adore people even though we know that they have flaws. Even the most lovable people have flaws and others are willing to ignore them largely. The same holds good for brands too. This acceptance comes from the realization by people that other people are never perfect.

By that logic, brands need to show all human emotions which endear people to people - a unique character, understanding, genuine, humanity, maturity, generosity and others.

Like in any relationship between brands should connect with people in various ways to further cement a relationship or  maintain it.

A part of the growing acceptance of mistakes has been the free information flow of any wrong doings. Thanks to the power of media, people are just a second away from the latest information. While there is growing sense of responsibility and ownership, in parallel there is a growing understanding of the infallible nature of people and and hence brands.

It is not surprising that the more human brands like Starbucks Zappos, Harley Davidson and closer home Cafe Coffee Day have built a great relationship with customers. If you were to visit the Facebook page of Cafe Coffee Day you will see that it has become an integral part of their customer lives with all the faults.

In a further twist to exposing the flaws of people, the people themselves 'expose' themselves especially on social networking sites thereby increasing the acceptance of human brands!

Infact like a person without flaws is a fallacy likewise is a brand without flaws.
  • Implications for brands
  1. Be transparent - If a brand or company makes a mistake, accept it and take corrective action. Do not hide behind a veil of lies or deceit. The repercussions can be life threatening like what happened to "News of  the World".
  2. Be kind - Brands need to be benevolent and engage in activities beyond the commercial realm. Donations to charity, support to environmental causes are some of the examples.
  3. Be genuine - do not be hollow in your interactions with your customers

Monday, May 07, 2012

Flying Just Above the Ground - Thoughts on the Airline Industry Ecosystem

The airline industry in India has been going through an enormous amount of pain. It has seen more downs than ups. At a time when the economic outlook is far better than the US or European geographies, the whole business is going through a crisis of sorts; some due to its own doing and some due to extraneous factors.

In recently announced statistics, the domestic market has increased 1.1% year-on-year in Mar-2012 to 4.87 million passengers. This is the slowest month of domestic passenger growth since May-2009 when passenger levels declined 4.4%. Passenger traffic increased 6.55% in 1Q2012 to 15.3 million. For 34 consecutive months the market has seen growth however it is the third month in the same period which has seen a single digit growth. There has been 16 months of double digit growth prior to that.

The drop in traffic can be directly attributed to the reduction in coverage by Kingfisher Airlines. Till such time, India's growth rate was among the highest in the world. India has seen a 16.5% compounded annual growth from 2004 - 05 till date. Domestically, number of flights per week increased from 8724 in 2006 to 12,107 in 2011 and the number of airports handling scheduled air services increased from 50 in 2000 to 82 in 2011. Total domestic passengers carried by all scheduled and non-scheduled operators have increased from 36.2 million in 2006/07 to 60.7 million in 2011 (calendar). Domestic traffic has increased by 96% since Mar-2006, with domestic traffic now 45% above Mar-2007 levels, 31% above Mar-2008 levels and 54% above Mar-2009 levels.

Actual Scenario
Given this background of a growing economy (even a 6% growth is good) it could have implied that the airline and related businesses are seeing a high. That unfortunately is further from the truth. Apart from the airlines, the related business which includes a) Airlines b) Airports c) Services like catering, ground handling etc. has been going through a strange quandary.  While passenger numbers are growing, the losses are mounting. The joke is that 'in the airline business everyone from the business makes money expect the airlines". But jokes aside, the turmoil seems to have affected everyone in the airline business - the airports, the ground handling agents, catering services, support services etc.

For the industry to survive -The whole business needs to be re-looked at. The recommendations are not a panacea for all ills but triggers to solve some of them.

  • Government & Policy

1. Anti socialism - There is a notion is that the airline is an elitist offering. This thought has stemmed from the early 'be good' policies structured by the government when equality was the right thing to do. Being rich was anti poor and being capitalist was bad. It was a crime to be seen as rich and it was good to be poor. 
2. 'Anti' - Anti Socialism -By a rough estimate, 50% of the cost of a ticket is actually taxes and levies which pretty much sums the status of the airline industry in India. With a so called altruistic attitude of policy makers, this by default has made it prohibitive for the common man to access the airlines. I am sure even the common person would like to travel to a particular place faster than what he is doing right now (which either by train or buses) and is willing to pay a slight premium. If the airline industry needs to be actually democratized and made people friendly to make it within their means, taxes need to come down. As more people take to the skies, more revenues would more than offset the loss in the taxes and incomes. Increased loads will surely be a part panacea for the whole airline ecosystem and I would not be surprised if takes care of most revenue projections.A sort of democratization has been achieved by the advent and success of Low Cost Carriers (LCC) but what has been holding back further growth is the skewed nature of Indian policies.
3. Infrastructure status -Imagine if all the airlines were to shut, I am sure that the country would come to a standstill. In spite of all the advances in technology there are certain products and assignments which requires physical presence in another city. It is true that like all other forms of transport airlines too require extra care and a status befitting its importance. I really would like to see how politicians would survive given the amount of travelling they do given the time spent on politicking!
4. High fuel costs - The irony is that it is cheaper to full fuel in other countries rather than India as the costs are frightfully high. I am told that even some domestic carriers tank up at locations other than India to avoid paying high. Just imagine the revenue lost
  • Airlines

1. Get of the high horse - While the airlines continue to bleed, I have seen that many executives (but positively not all!) still talk of the superiority of airline industry. My only request - please look at the writing on the wall!  Partly it is due to this sense of arrogance and complacence which has resulted in this situation.  Arrogance breeds inefficiency and inefficiency breeds wastage and wastage breeds losses.
2. Relook at the business; benchmark against other related businesses, Treat it as hospitality and retail business - Airlines need to look at all aspects of business to maximize revenues and minimize losses. For example - why can't airlines use the real estate within the aircraft to advertise other brands or even run activation/ engagement campaigns? The target audience does not get any more captive than this.
3. When we mention inflight crew we immediately associate it with good looking eye candy. But is that why passengers fly. What we need are efficient crew members! And why these crew members can’t be trained to sell on board. Treat the flights as a good revenue generating opportunity. Each aircraft can be a store which retails products like food, electronics etc. Airlines should take a leaf out of the retail business where you have exceedingly smart retail staff that can surely fit as crew too!
4. Competition: Railways -While a typical airline would like to think that the other brand is competition what is forgotten ( or some lip service given) is that how can passengers from railways be weaned away to move to flying. Imagine the potential if just 0.1% of all railway travellers moved (to give a perspective, the Indian Railways carry 30 million passengers every day)
  • Airports

I suspect that most airports think that since they are operating in a monopolistic situation they can demand or command a certain fee. True being a single player makes the airport one but with this attitude comes the perils of arrogance which has haunted the airline
1. Terminals for LCCs - India are probably one of the few countries which have the same terminals catering to most full service and LCCs. The LCCs, by the nature of the business require some services and facilities only and if it is not required why provide them?  Not that that the airlines or airports benefit!
2. Transit point -With an increase in the number of airlines servicing a particular airport it is only natural that revenues will increase of the core services and also ancillaries from engineering to food and others. I do not see any conscious effort from any of the airports to let airline companies to use the airport as a transit point. All large airports especially in Asia namely Singapore, Dubai, Abu Dhabi and for even that matter Bangkok are making efforts to use their respective airports as transit points. Apart from the regular revenue upsides the ancillary revenues from shopping etc. sees a huge growth too.
3. Parking - When aircraft's are parked at a particular airport, parking charges are incurred. Right now there are very few international carriers who park their aircraft's in India. And I really don't see any concerted efforts to do so either.
4. Treat the shopping area as a mall. Increase shopping - It’s very easy to see passengers loiter around doing practically nothing. How about an entertainment area with bowling, arcade games? How about a resting room payable by the hour for a quick shut eye! Can we provide for movies in airports, paid for ofcourse? 
  • Concessionaires

They not were given enough importance in the scheme of things in India. I am sure that this group can actually change the revenue mix of the airports and also the airlines. Given their skills in retail and merchandising, it is advisable to leverage to maximize revenues both on the ground and in the air.
  • Ancillary Service Providers (Ground Handling, Catering etc.)

The forgotten lot. Imagine flying without food. Many of these service providers need to re-look at their business model. For example - Caterers should look at business opportunities outside the airlines and airports. Since the kitchens are of the best quality in terms of infrastructure, human resources and processes they can surely look at offices, QSRs etc. to utilize their infrastructure optimally. 

These are just some of the recommendations for attitudinal and business shifts which I believe can go a long way in easing the pressures on the airline business

Tuesday, April 03, 2012

Dialogue Over Monologue - The Key to Customer Relationships

The old paradigms have changed. To build a relationship with a customer, a brand has to engage with him/ her through various means and one way of doing so is to interact with them. But one of the better ways is letting them talk back to you.  An essential component of a brand-customer relationship is the 'humanness' of the relationship and the interaction they have through communications. 

In simple words - 'Enter into a Dialogue'.

A dialogue by its very definition is an attitude or orientation towards communication wherein each participant possesses genuine concern for the other and it is this concern which drives interaction. Atleast on the face of it, dialogue is free from any ulterior motive like financial gain (there is a thin red line though!). A dialogue is based on such factors like care, trust, sensitiveness, sincerity, openness, empathy amongst others. This is devoid of manipulations of untruths, coercion, exploitation etc. In effect, the more transparent and honest an interaction is, the more the dialogue it is.

Martin Buber, the renowned philosopher based interactions on relationships or concepts called  I-Thou and I-It

I-Thou relationships are dialogic, while I-It relationships are monologic in which one is more interested in self than in the relationship. While people will indulge in both it is without a doubt, better to indulge in a dialogue in the present day market dynamics. 

Dialogic communication and I-Thou relationships are characterized by:
1. Mutual Openness:  Open-heartedness, directness, honesty, spontaneity, frankness, lack of pretense and  care in the sense of responsibility of one human for another.
2. Nonmanipulative :  One's belief is not forced on another. 
3. Recognition of Uniqueness: Each person is unique and hence should be treated differently. This is accepted in a dialogue. This implies that all persons in the dialogue are treated as equals.
4. Mutual Confirmation: Each person in the dialogue is treated with respect and acknowledgment by the other (and is not treated as an insignificant bystander).
5. Turning Towards: Each person will reach out to the other in a symbolic sense.
6. Non evaluativeness: There is an attempt to see the other's point-of-view even if it is opposed to one's own. 

On the contrary, monologues involves manipulation and control which is typical of the way an inanimate object would be treated:
1. Conquer - A person employing monologue seeks to command, coerce, manipulate, conquer, dazzle, deceive, or exploit. The other persons are taken to be viewed as "things" and not persons (with opinions) to be exploited solely for the communicator's self-serving purpose. 
2. Focus on Self - Focus is on the message of the communicator, not on every one's actual needs.  
3. Misused Feedback - Feedback is used only for the convenience of the person employing the monologue to further his /her purpose. An honest response from a receiver is not wanted and if at all it is given it is ignored if it is contrarian.
4. Impose Belief -Monologic communicators  like to impose their truth/belief  on others. They suffer from a superiority complex and expect that others should follow them in thoughts and action. 

In the years gone by communication traditionally followed the one way traffic method. Any communication was designed only with the perspective of the brand or organisation thereby making the audience mere receivers of the information and thereby superimposing their beliefs on the audience. Even if the brand does try not being deceitful or manipulative; by nature of the interaction it ignores rational decision making. There is also no insistence on relationship building. Given the nature of the media and the orientation of their thinking, the brands view their audience and relationships with them simply as the means to an end while actually the objective should be to build long and time enduring relationships.

The very nature of evolution and the resultant dynamics is the entry and usage of means which will help democratize information and interaction. The Internet is one powerful such tool which banks more on the power of dialogue and hence personalize relationships.

The ability to leverage the 'power of one' has personalized marketing.  In combination with the interactive possibilities, the Internet has provided a platform for brands and customers to talk to each other.  While brands can be selective in their communication, customers are not and hence from a perspective of past vs. future, there seems to be an increased amount of interaction. 
As customers get more conversational and word of mouth gets more and more relevant, communication has also changed. There is more emphasis on one to one conversations and it is not surprising that direct marketing, experiential marketing and even mass media messagery have taken a personalised note. This paradigm shift can be seen in the simple contact numbers or help line which in effect is a step in the right direction. In a sense even mobile telephony has hastened this process as phones are available anywhere, hence the customers can pick up the phone anytime and talk.

However, inspite of all the advantages, there seems to be diffidence from marketers to engage in a dialogue. They have made poor efforts to engage in what is supposedly a dialogue but actually borders more on a monologue. These monologic conversations attempts at representing or simulating relationships rather than actually establishing on-going, dialogic relationships. They rather stick with the tried and tested formulas. In certain cases there seems to be an apprehension on the marketer’s side. Communication through advertising still follows the traditional image creation formula with a semblance of an effort of creating a relationship and showing that each individual is different. 

Fundamentally marketers need to understand that no relationship can prosper with only a monologue (in the short term it could work). Mass media at best can at inform the people of a brand/ organisation's actions. Fact is that all mass media is impersonal and not matter how hard we try it will only reduce the impersonal aspect but never can we remove it. To establish closer relational ties, there is no substitute for the actual establishment and maintenance of relationships with individuals. Regular advertising can be treated as a monologic conversation as they are only moving images. The only way it can be salvaged is when they are backed up with concrete actions. The "talk the talk" needs to be backed by "walking the walk" to establish credibility. Generation of images and "saying the right things" or "telling them what they want to hear" is not enough to establish stable, long-term relationships. Words and actions must be congruent if credibility and trust are to be built in a relationship with a dialogue.

Listening - One of the oft repeated phrases in B School and also in the corporate world is listening to your customer. But this fundamental is often ignored. While listening to your customer can give you deep and better understanding of the psyche of the customer, it is often given lip service - quite literally! One can hear executives talking about how they listened to their customers but somehow these companies seem to do a poor job of it. With particular reference to marketing, I have noticed communication which has been designed in offices and catered primary to the tastes of the executives and not to the target audiences. Listening is a basic component of interpersonal communication and the heart of dialogue. It is inevitable that listening skills and awareness will be a vital component of "relationalizing" brand - customer relationships.

Historically the shortsightedness of organizations of not attending to the interests and needs of their publics has resulted in dire consequences. Examples of effective and sensitive, dialogic listening is less abundant but there are a growing number. For instance, listening to the need for parents of seriously ill children to have affordable housing near treatment centers led directly to the establishment of Ronald McDonald Houses. 

Perhaps equally serious is the short term quarter to quarter view taken by businesses more dictated by the equity analysts and stock market prices. The need for quick gains has negated efforts on dialogue based relationships. Such relationships take time but that is the strength on which a rock solid business can be built. Starbucks was amonsgt the few who decided to focus on what the customer wanted and listened to them. Infact it also decided not to quote same stores sales growth to pre-empt any compromise on their relationships with customers.

Monday, March 12, 2012

Living Together - Does Your Brand Have a Relationship With Your Customer?

The dream of any business is to have committed customers who treat their relationship (with their brand) - more than just a brand-customer interaction but show a commitment which is emotional and creates 'feelings'. As brands transcend from a benefit orientation with their customers to an emotional connect, the benefits for the brand grows exponentially. These stand the test of time and in the minds of their customers the brand stands for values beyond functionality.  Customers of such brands rate them much higher in their value systems.

Apple, Harley Davidson and Triumph are some of the few examples who transcended the barrier to create diehard fans/ lovers. For example - Apple’s commitment to their Mac User Groups. Apple interacts with them regularly and constantly integrates their feedback in the new products/ software thereby respecting the relationship. This not only helps them from a marketing standpoint as a 'brand which listens' but also helps improves their offerings. However such brands are a handful. Short term focus has resulted in many brands falling by the wayside.

As possibilities of interactions between brands and customers increase, thanks to the mushrooming of offline and online alternatives, brands can establish a bond with their customers thereby strengthening their relationship and having a committed customer.

But having said that, I wonder how many marketers actually do what it takes to build a relationship. I am just not referring to advertising, loyalty programs and the like but to get deeper into understanding relationships between their customers and their brands or business.

The basis for a relationship is pretty much similar to a relationship between two individuals or even a group of people. Look at such relationships like we would do for people. People make the relationship more interesting, fun and exciting. It also gives it a personal touch.

Basic Principles of a Successful Relationship

Mutual Demand - Relationships are created from a mutual demand or need for something - maybe emotional or physical/ materialistic or both. The needs can be personal, professional etc. Likewise a brand and it customers need to get something out of each other. While it is pretty simple what a brand wants, customers may adopt brands for various reasons just like in a person to person relationship.
Beneficial to both - Relationships are healthier when it is beneficial to both parties. It builds up and is nourished only when it is positively beneficial and giving to either parties or individuals concerned.
Share something in common - When people can share something in common, the relationship gets stronger and creates a way to a better relationship.  Common interests create opportunities for conversation, understanding, mutual respect and also admiration.
Healthy communication - Just like couples need to talk to each other, brands and its customers need to talk to each other too. It cannot be one way traffic but a two way dialogue. Customers are more demanding than ever and brands not only need to listen to them but also act. Each customer is different and marketers must make efforts to understand each and every one. That is because each customer has different perceptions. Poor or improper communications can result in thawing off the relationships and ultimately the customer can get his/her needs met elsewhere.
Deep commitment - It is about hanging in there, through the good times and the bad. Brands need to commit to a relationship. It cannot be in 'ifs and buts'. Commitment lets your customers know that the brands are serious about the relationship; it’s the foundation that allows trust to develop.
Strong connection - When you show your customer that you are committed, apart from bring an effective and healthy communicator, the basis for a deep connection has already been set. Discover what makes your customer feel close to your brand and communicate what you need in order to feel close to him/her. Not all roads lead to a connection —become aware of and respect these differences as no two customers are alike.
Sincerity -You cannot force someone into a relationship, likewise you cannot force a customer to like you and talk to you. Relationships which are true and positive should be sincere, natural, and voluntary. Only real relationships stand the test of time.
Mutual respect - The two people in a relationship should respect each other. Any arrogance by one party will hamper the relationship. There are umpteen examples wherein brands have turned arrogant and forgotten to listen to their customers and thereby leading to their demise.
Companionship - Successful relationships are based on being friends and companions. Friends often have similar interests and engage in enjoyable activities together.
Similar core values/desires - Customers adopt brands which have similar core values or they atleast desire them. This is especially critical when brand is being re-positioned. Many customers have taken to a particular brand because of certain values but in the re-positioning it may be lost.
Expressing & appreciating each other - Everyone likes a pat on the back. Both brands and customers like it too. The more we demonstrate the more successful the relationship is. Brands need to create moments/ occasions for customers to interact and appreciate them for what they have done - more so if it is personalized. I know it is easier said than done but that is the way people are.
Never ending process -Maintaining a relationship is a never ending process. Relationships need to be nurtured. Neglect will lead to decay and breakdown. It needs to be worked on constantly, repaired when it is frayed and nurtured. Neglected relationships make it tougher to take the test of time.
Spend time - Especially in the age of quick gains and quarter focus, time has become scarce. Brands need to spend time and have a whole lot of patience to build a relationship. Results take time but are far more robust.

There are not many people who have ever not been through a relationship which is full of positive things. All the relationships needs to go through the test of times which either makes it stronger and sometimes it just breaks down.

Tuesday, February 21, 2012

Corporate Arrogance - Hara Kiri, the Price to Pay

While we pay our respects to a blue blooded brand "Kodak", I can't help but think what led to its dismal performance and downfall. People may blame it on disruption, creative destruction and ofcourse the irony of the digital age, but to me it reeks of something deeper and more innate - leadership arrogance.

In his book 'The Sacred Art of Soul Making', Joseph Naft had said 'Arrogance - Those to whom much has been given sometimes suffer from arrogance; or rather the people around them suffer. Arrogance is doubly a pity, because the talents of the arrogant serve primarily themselves. The arrogant assumes his views and opinions are The Truth. In arrogance, natural confidence goes sadly awry. Rather than the self-assurance born of knowing his own strengths and limitations, arrogance admits no limits. The arrogant brooks no weakness in himself and may even secretly rejoice to find flaws in others. But imperfections are inherent in being human, so the arrogant, like everyone else, always has feet of clay, however well hidden they may be. Fearing exposure, haughtiness forms a hard shell masking inner emptiness." 

While Naft had written this in the context of human leadership it can well be extended to corporates as a whole.  The arrogant corporate behaves as a power on its own. The self-grandiose opinion is that they rule the market and believing in one’s so called strengths and oblivious to the weaknesses. There are imperfections and it are these imperfections which competition will latch on to.

In the 70’s, Kodak had nearly 90 percent of the film and camera market. With a near monopoly and unassailable position, there was a certain haughtiness which crept into Kodak. Arrogance and complacency are often the by-products and Kodak has been no exception.

Success cannot be forever and an organisation has to keep working to be ahead of the pack. Organizations like Kodak came to believe their success is due to an inherent superiority they have and even worse that this superiority will go on forever. So typical of the superiority complex syndrome!

‘Hubris’ - the word was used to refer to the emotions in Greek tragic heroes that led them to ignore warnings from the gods and thus invite catastrophe. It is considered a tragic flaw that stems from overbearing pride and lack of piety. The word is taken directly from the Greek hubris, meaning ‘insolence or pride’. Companies loose contact with reality and have an overestimation of one's own competence or capabilities. This leads to complacency which is when the rot begins to set in. This insular behaviour prevents organisations from reacting to changes in technology. They tend to live in the past and believe that what was successful in the past will be successful in the future.

Leadership can be a curse.  In 1976, Foster coined the phrase ‘incumbent’s curse” Companies become so captive to their core business that it can scarcely imagine another way of doing things.  Kodak infact invented the digital camera in the 1970’s but since it had become successful in the film related market, it developed a logic called dominant logic which overpowered any other logic which was contrary to it. When the photography world went digital, Kodak's strengths became weaknesses. It could not overcome its dominant logic and look at an alternative one logic.

The incumbent's curse has been evident in many other companies today, such as Blackberry-maker Research in Motion, Hewlett-Packard, Digital, Best Buy, Intel and many others.

It does not mean that an epitaph has to be put out for Kodak. Kodak has much strength to leverage. Many other companies have got out of the rut and looked at things anew. IBM, GM and to a certain extent even Apple have done so. It calls for a complete change in mindsets and to take a route which different from the past.

June Tangney on one of her papers had identified a number of key features of humility which can be adapted to a corporate:

·        An accurate (not underestimated) sense of one’s abilities and achievements – stay humble
·        The ability to acknowledge one’s mistakes, imperfections, gaps in knowledge, and limitations. – reflect honestly
·        Openness to new ideas, contradictory information and advice – grasp the current condition
·        Keeping one’s abilities and accomplishments in perspective.
·        Relatively low focus on self and the ability to “forget the self” – stay humble

Has the Kodak Moment passed?

The Age of Distrust and The Age for Trust

Loss of Faith The last few years have seen an increasing ‘loss of faith’ against politicians and media (because all communication happens ...