Marketing – I Must, I Must, I Must

I attended a roundtable discussion yesterday evening organised by the Prague-based International Business Forum (IBF) on the subject of marketing, and especially marketing on a low budget. Low marketing budgets, unfortunately, abound when it comes to the members of the IBF, since most of us are small business owners.

The roundtable was led by the excellent Jo Weaver of JWA. Her theme was that marketing is as essential for most companies as desks, chairs, PCs, and telephones. (Actually, in my view, desks and chairs aren’t essential.)  Marketing can be a website, a business card, a dinner with clients or prospects, a newsletter, a battery of telesales agents, a seminar, an advertisement, a Facebook Page, an article on LinkedIn, a well-crafted press release, a commissioned PR article, or a blog (such as this). She pointed out that the large multinational fast moving consumer goods companies (such as Coca Cola, Procter and Gamble, and Unilever) spend up to 20% of their revenue on marketing. And when times get tough they spend more, not less.

lamppost

Most of us in the room, as Jo pointed out, run or own small businesses, and small companies, unless they’re directed from abroad by larger headquarters offices, are reluctant to spend money on marketing. We’re also inclined to think we can do it ourselves without professional help, and we approach the task without forethought, without consistency, and expect immediate results.

All of this is true. Every company must spend time and money on marketing. Not, in most of our cases, since we’re not selling consumer goods, 20% of our revenue, but probably more than we’re in the habit of spending. Many of us trust to ‘word of mouth’, but that is marketing, too, and we should work hard to make sure that the ‘words of mouth’ that get bandied about are the right ones.

Most of us in the room were also at the helm of companies selling to niche markets, and the larger amongst us have tried marketing of many kinds. My company, LLP Group, resells and develops business software, and provides consulting services to international organisations in Europe and North America. How to reach our market? And where? In the countries in which we have our offices, or in the capitals where our potential clients’ headquarters are based?

And how? Website, obviously (we have four, aimed at different segments of the market), Facebook pages, LinkedIn groups, blogs, Google AdWords campaigns occasionally, sometimes telesales, and so on. Even over many months or years, these have achieved marginal results (or, looking at it another way, they have kept us in business). We might spend more money if we knew how or where it would be effective. Or should we realise that our markets are small and that we are reaching them as effectively as we can? One of yesterday’s participants stressed the need for measurement. He made some good points, but how do you measure the effectiveness with which you are reaching potential customers if your market is a niche market? It’s not obvious.

But there are many easy mistakes to make in marketing, and I always find myself telling a story about our early days in Romania, when our amiable but ultimately crazy managing director (so possessive was he of our subsidiary in Bucharest that eventually he stopped doing what he was told and we had to fire him) complained incessantly that we weren’t allowing him to spend enough on marketing SunSystems.

‘Look,’ he said, as we travelled through the city in his vast and vulgar limousine, ‘our competitor, Scala, has advertisements on every lamppost. Every taxi driver knows about Scala.’

‘And how many taxi drivers are looking for international financial software?’ I asked.

It’s easy to spend too little on marketing. We should all spend more, and we must accept that we will never be entirely sure as to how much of our money is wasted and how much is effective.  But one thing is certain – market towards your customers –  and if your customers aren’t taxi drivers, don’t waste money on telling them a single thing about your products.

 

What’s the News in Bucharest?

laika

‘What’s the news in….. ?’ may be an unexciting opener, but it’s often the first question I ask when I arrive at one of our far-flung offices (LLP Group). It’s an open-ended question, and a good conversation starter, but I also ask it because I’m genuinely curious. What makes the news in Sofia, Budapest or Bratislava mightn’t have hit the headlines on the BBC or Sky.  

So, ‘What’s the news in Romania?’ I asked my Romanian colleagues yesterday as we sat down for a mid-afternoon Christmas lunch (the second in two days). They should know by now, of course, that what interests me is scandal and gossip, political or otherwise, but in the concerned silence that followed I suspect they were scratching their heads for trade balances, GDP growth, inward investment figures, and so on. Who cares about such things at this time of year, or ever, for that matter?!

‘I’ll tell you what’s the news in Britain,’ I offered, as the pause lengthened. ‘We’ve just sent a man on a dangerous mission to space, and another one on a dangerous mission to Brussels to renegotiate the terms of Britain’s EU membership. And a thousand happy and relieved immigrant Syrians are already complaining about the weather. If that’s not assimilation, then I don’t know what is.’

‘Been there. Done that. We sent our man into space years and years ago,’ one of my colleagues proudly pointed out, though it was probably before she was born.

‘And did he come back?’ I asked. And from there we quickly got to the factoid that I was born on the day that poor ‘one-way-ticket’ Laika (a Russian terrier of some kind, I believe) was blasted into space.

‘I saw Angela Gheorghiu in the street,’ another colleague offered (perhaps knowing that I have a soft spot for opera, if not for preening divas).

It was a gloomy afternoon, and the background music was funereal, though the words, apparently, were Christmassy and joyful. A sense of the absurd prevails in Romania and Romanians are naturally and properly distrustful of Government, of the Judiciary, of officialdom in general. I shouldn’t have expected good news.

To my mind, some of the best recent news has been the resignation of the Prime Minister, Victor Ponta, already a proven plagiarist, and the possibility that he might be charged with criminal fraud. But according to my colleagues it’s quite likely that a deal’s been done and he’ll avoid prosecution as a reward for resignation. So much for an independent legal system.

The fact that Romania’s jails are crammed with corrupt politicians and corrupt businessmen and women should also be cause for celebration, I thought, but there’s a sensible ‘let’s wait and see’ attitude about whether the judiciary is truly independent and sufficiently powerful. After the next election it’s possible that the jailers and the jailed will simply swap positions.

There’s also an interesting story about dogs. Romania, and particularly Bucharest, has always had too many. Former President Basescu, when Mayor of Bucharest, impressed his electorate by sterilising the wild canine population of the city, to non-Romanian Brigitte Bardot’s dismay (see Street Dogs). Some dogs were also offered to the Russian space programme, but were refused as being insufficiently Russian. Now, apparently, the aim is to forbid farmers from possessing too many – a ‘one dog on the plains and three dogs on the mountain policy’ is to prevail in rural Romania (see Romanian Shepherds Protest Dog Policy).  Who the beneficiaries might be (ramblers?) is not clear to me, but the result was an invasion of farmers waving agricultural implements that brought traffic in the city to a standstill on Tuesday. It’s good news of a kind, I suppose, that Parliament has nothing more important to debate.

Parliament has also brought a number of businesses to a halt by forbidding the public use of buildings over a certain age unless they’re certified as possessing sufficient structural strength to survive the next, long overdue, earthquake (see Might Close Down).

It was a jovial afternoon, and the food and wine were good, even as the sky darkened and the rain began to fall. It was a cold walk to the Athenee Palace Hotel.

atheneum

Thursday was, by contrast a glorious day, and it felt as if the news could only be good. The sun was shining brightly on an ever-tidier Bucharest. Secret Santa called at the office while I wasn’t looking and left me with very good news indeed – a loaf of traditional Christmas bread (here shown a little squashed during my onward journey to Budapest).

bread

 

 

At the Athenee Palace in Bucharest

It was Olivia Manning’s Balkan Trilogy that first drew me to Bucharest. I had been sent on a consulting assignment to Budapest in the summer of 1987, and only three weeks into the assignment couldn’t resist travelling, a long and arduous overnight journey, in appalling heat, by train, to its like-sounding and neighbouring capital (famously, an international rock star recently greeted his Bucharest fans with ‘Hello, Budapest!’). A sinister security man inspected every item in my luggage as we crossed the border, and then pronounced, like Dracula on the threshold of his castle, ‘You are welcome to my country.’

My Hungarian colleague were astonished that I wanted to visit Romania. The country was skidding into its last two Ceausescu years, and Hungary’s relationship with the regime, despite fraternal socialist solidarity, was hostile. Ceausescu was bent on ethnic homogenisation, apparently destroying traditional Hungarian villages and collectivising their inhabitants into insanitary concrete bunkers.

So, I was realistic about what I might find in Bucharest. I didn’t imagine that the shabby grandeur and glamour that Olivia Manning describes would have survived. Olivia and her British Council employed husband, Reggie, arrived in Bucharest on 3rd September 1939 (the day war was declared in Britain) and remained there as the country succumbed gradually to German influence. It was then, as now, all about oil. Romania possessed vital oilfields of strategic significance to the Reich.

I’m in Bucharest, again, 28 years after my first visit, staying at the Athenee Palace Hotel. I visit often, since LLP Group has a branch in Bucharest, but I don’t usually stay here. It’s a five-star Hilton Hotel and expensive. But business deserts Bucharest during the heat of the summer and I got a very good rate, and thereby access to the cooling indoor swimming pool.

athenee palace

This hotel plays an important walk-on role in the Balkan Trilogy. Its English Bar is the scene of social ascent and descent, political gossip and shamelessly overt spying. Olivia Manning and her husband lived just around the corner in a flat that I think is one of these:

Olivia Manning

The Balkan Trilogy is largely autobiographical and one can plot Olivia’s and Reggie’s lives directly from the pages of these three novels. She found the city daunting – exciting and appalling in equal measure. She described it as being on the margins of European civilisation, “a strange, half-Oriental capital” that was “primitive, bug-ridden and brutal”, whose citizens were peasants, whatever their wealth or status.

When Romania became a dictatorship a couple of years later, Olivia and Reggie escaped on ‘the Lufthansa’ to Athens, and then, when that city fell, to Cairo.

Whatever charm the hotel once possessed has been subtracted by the Hilton chain, so there’s little to remind you of the dreadful but fascinating first years of the Second World War.

After the Communists came to power the hotel declined rapidly into socialist shabbiness. Whether it’s true that every room was bugged and every waiter a spy I do not know. I can’t imagine that anyone of interest or note stayed here.

I saw the hotel myself during its lowest years in 1987, during my weekend away-break from Budapest, mainly to drink in the atmosphere of the Balkan Trilogy, and I found myself drinking a warm unlabelled beer in the courtyard of the hotel as a toast to Olivia and the past. I waited nearly 40 minutes for it and nearly missed my train to Brasov.

In 1989 the changes came, Nicolae and Elena Ceausescu got shot, and in due course Bucharest became less interesting, more modern, and, as the years passed, even service at the Athenee Palace became sharper. I’m sorry that the hotel is a bland ghost of its former self, but I don’t think Hilton had much of a choice. It’s comfortable, and I’m grateful for the air-conditioning during this summer’s European heat wave.

The only spying you’ll find is on the contents of your minibar.

It’s just not worth it sometimes!

I don’t want to encourage criminality, but sometimes it’s worth breaking the law, or, certainly, convention. I don’t mean laws that protect us from seriously harming each other or ourselves. Rather, I mean the little laws, such as those about when you can cross the road, or, in this (admittedly slightly dull) case, how you do your debits and credits. Where no harm is done it’s always worth asking, does the penalty exceed the cost of compliance?

dont

I’m not thinking of anything particularly alarming, unless you think that the way you present debits and credits is an issue of morality.

Don’t read on if you’re not remotely interested in accounting.

In a number of Eastern European countries accounting rules require that you make a distinction between a credit and a negative debit, and a debit and a negative credit. This would sound weird to most of the world’s accountants. In most of the world, the opposite of a credit is a debit and the opposite of a debit is a credit and that is the end of the matter. There are debits and credits and no other kind of transaction.

Not so in parts of Eastern Europe. If you make a mistake in your accounting system, you do not ‘correct’ a debit with a credit but with a ‘negative debit’. This enables the reporting of both credit and debit ‘turnover’ on an account, ‘turnover’ consisting of debits and their correcting negative debits, and credits and their correcting negative credits. ‘Turnover’ is something that the tax inspectors look at with quite remarkable enthusiasm, but I am not sure why.

Most Western accounting software packages don’t handle this well. They are built to handle just debits and credits, but convention, if not law, requires that when the tax inspector comes knocking on your door in Budapest, or Sofia, or Bucharest, or when they bash your door down in Moscow, you must serve up reports that show ‘turnover’.  Never mind that your business obtains no benefit at all from this.

But what happens if you can’t?

I remember doing some consulting in Bucharest, many years ago. During a system design workshop (we were putting in SunSystems) the chief accountant went on at length about negative debits and credits.

‘We have to have them,’ she said.

Her boss, the British Finance Director began to look concerned, so I tried to demonstrate some workarounds. But the chief accountant was adamant. I suggested some more expensive workarounds, maybe five days of work. Finally it occurred to me to ask:

‘What happens if you can’t show these negative and debits when the tax inspector comes?’ I asked.

‘Well, you may be fined.’

‘How much?’

‘About 50 dollars.’

Not much. Indeed, immensely less that the cost of working around the constraints of the software to make the right reports possible.

The Finance Director looked relieved and we quickly moved on.

The moral of this story is this always work out if it’s really worth doing something that brings you no benefit, even if it seems wrong.

Someone may tell you you’ve got to do it, but always ask, ‘What happens if I don’t?’

Who loves to queue?

It’s often said that the British like to queue, but I don’t think that’s true. What the British like is to queue well, in an orderly manner, where precedence is properly established by our time of arrival, and where discipline is maintained even when the bus arrives. For the British the concern is more with quality than quantity. We really don’t like to queue (it’s humiliating), but if we have to queue, we like to do it well

.Bus queue

There are other nations, though, whose people seem to revel in queuing, so much so that they like to do it more than once. I was reminded of this when I was in Rome last week.

In Italy you often get the chance to queue at least twice. At bars and cafes you queue at the cash desk to ask for what you want and to pay, and then you queue again at the bar to ask for what you want and to get it. I’m a system designer. This is bad system design. Who would design a system where you have to enter the same data twice? It widens the scope for error, especially if you don’t speak the language.

But the Italians aren’t nearly the worst. When I lived in Hungary in the late 1980s the Soviet-prescribed model was that you queued three times in shops. First, you queued to ask for what you wanted (often, of course, they didn’t have what you wanted), then you queued at the cash desk to pay for what you’d chosen, and after that you got a receipt and joined a third queue to get what you asked for, all wrapped up in brown paper and ready to go. It kept the working population busy, I suppose, and you could idle away a Saturday morning queuing fifteen times to buy five things.

But the worst queuing I’ve done on a regular basis, in terms both of quality (poor) and quantity (huge), was at Sheremetyevo Airport in Moscow in the late 1980s. The queue at passport control was a disordered scrum where you could spend ninety minutes elbowing your way to the front, kicking at the shins of those who try to get in front of you.

Departure from Moscow meant five queues: a queue to have your luggage checked, a queue to check in, a queue at passport control, a queue at security and then a queue to board the plane.

And then there was the time I queued eight times in Bucahrest to buy a small ball of string. No, that’s enough about queuing.

Suffice it to say, when it comes to queuing, the British are best.

Honesty is the best policy – No, really!

In December last year I visited my former colleagues in Bucharest. They work for the Microsoft Dynamics division which we sold to Xapt Hungary at the end of 2013. Our remaining LLP Group staff still work in the same office so we often meet and we’re still friends.

‘How is business?’ I asked, expecting gloom (since Bucharest is a gloomy place in the winter and it was a dark day), but I was surprised to hear that business was going rather well.

‘We’re selling more software than before. We’re the market leaders. Not only because we’re the best, of course, but because some of our competitors are now in jail.’

honesty

I’ve always insisted that we do business without offering bribes and favours and I like to think that even after 27 years in former communist Eastern Europe I am still not tempted. It’s meant that we’ve lost some business that we should have won, and it’s meant that most public-sector tenders have been closed to us.

But it seems that honesty really is the best policy in the long run.

My golden rule when offering any kind of hospitality or gift to an existing or potential client is that the recipient must be able to mention it to his or her boss, or owner, indeed to anyone. Losing business because of this rule was occasionally upsetting for our sales team, as for me, but they were proud of our principles nevertheless. Now they can be smug.

LLP never offered bribes, but some of our competitors did, and a few of them are now in jail, their businesses hobbled. Romania has been trying hard to clean up its act. It’s taken a long time, but corruption may finally be in decline in Central and Eastern Europe, even in the Balkans. I am an optimist.

Here are some of the sorrier tales from Bucharest:

Siveco former president Irina Socol placed on house arrest.

Two Romanian businessmen taken in for questioning in Microsoft licenses case.

Justice awaiting in Microsoft file