A loyal customer is worth more than a raft of exciting prospects. So how can localisation help deliver more?
It’s a business principle that doesn’t take an MBA from Harvard to understand. Whether through high-profile campaigns or gleaming product launches, businesses have always fought to attract new customers. But whether you’re talking about a local corner-shop, or a huge corporation, there’s a better route: building stronger relationships with existing customers is cheaper, quicker, and brings more lasting profitability. And, for global brands operating in diverse cultures and markets, effective localisation is essential in developing a very personal sense of customer loyalty.
“80% of a company’s future revenue will come from 20% of existing customers”
Food for thought
The evidence is compelling. In a study by consulting firm Bain & Company, a 5% rise in customer retention in the financial services sector was seen to produce a more than 25% increase in profit (1). Other studies suggest this profitability surge could be as high as 75%. A Gartner report suggests that 80% of a company’s future revenue will come from 20% of existing customers.
Selling to existing customers is a bit like cooking dinner for your friends or family. Since you already know what tempts their tastebuds (and, hopefully, how to avoid dinnertime disasters), it’s easy to create a selection that will have them licking their lips in anticipation. Perhaps you’ll dish up a firm favourite alongside an exciting new recipe. You can build on known preferences while encouraging your diners to be a little more adventurous.
Translated to our marketing environment, a detailed understanding of preferences and a track record of successful delivery is always likely to be a winning combination – just season accordingly.
A new paradigm
So how does localisation fit on to the menu? From fast food to luxury brands, for much of the 20th century, the key focus for global players was standardisation. A brand is, after all, built on shared customer expectations of standards and quality. A Gucci dress should look as fabulous in Mumbai as it does in Milan.
Except, in the 21st century, growing numbers of global brands are starting to understand that standardisation is only one part of the equation. In an age where products and prices can be compared at the click of a mouse, customers are more discerning and demanding than ever before. Social media has redefined the marketing landscape, with peer-to-peer networks putting the consumer at the heart of brand influence and recommendations.
Location, location, location
There is therefore a new paradigm, in which customisation plays an increasingly important role in the development of brand loyalty. Taking the example of the world’s most famous fast-food chain, we can ask: when is a Big Mac not a Big Mac? In India, for a start, where consuming beef is illegal in most states. Instead, for this market McDonalds developed the Maharajah Mac, made from chicken or available in a vegetarian option. By combining cultural sensitivity with an eye for a commercial opportunity, McDonalds has hit the jackpot in India, where it is in the process of doubling the number of its restaurant outlets in the five years to 2010 (2).
“Starbucks realised that a change of approach was needed to deliver coffee shops successfully to the tea-loving Chinese.”(3)
Elsewhere in the food and drink sector, some of the world’s biggest brands are starting to catch on to this idea that the power of a brand can also be expressed in its ability to contextualise itself in different settings. Loyalty, after all, is earned rather than imposed. In 2012, the seemingly-all-conquering Starbucks realised that a change of approach was needed to successfully deliver coffee shops to the tea-loving Chinese (4). Instead of focusing just on coffee, it has developed a new range of non-coffee beverages that retain the signature Seattle-born style but have a broader appeal to Chinese tastes. An example is the red-bean frappucino, which has had a good take-up.
This subtle yet significant new customer offering has played a part in a massive expansion strategy for Starbucks in China, where it is opening 500 new stores a year. Even the world-famous store layout has been refashioned, with a greater emphasis on shared tables and moveable chairs to accommodate the Chinese preference to meet in larger groups.
There are now an incredible 600 Starbucks in Shanghai alone, double the number to be found in New York City (5). Still an unmistakable brand that draws on its aspirational US heritage, it has nevertheless used canny shift in tactics, and this has paid off handsomely. In terms of customer loyalty and the value of localisation, Starbucks has truly woken up and smelt the coffee (or green tea, perhaps).
“In Japanese business etiquette, it is considered vulgar to directly criticise a competitor, so Apple tried a subtly different approach.”
When it comes to language, gaining your customer’s trust and loyalty is not simply about providing a technically accurate translation. Effective localised content relies on understanding how brands need to adapt to different cultural environments. In 2006, for example, Apple launched one of the most acclaimed advertising campaigns of the new century (6). The world’s most valuable brand developed a series of ads highlighting the differences between PCs and Macs. One actor represented the PC –corporate, boring and decidedly uncool – while a much hipper and more approachable actor represents the Mac: fresh, fun and definitely the one you’d prefer to hang out with.
The campaign was considered a global success, running in a series of 64 different versions that built on the same theme. In Japan, however, Apple was savvy enough to realise something very important about the cultural context. In Japanese business etiquette, it is considered vulgar to directly criticise a competitor. So Apple tried a subtly different approach, suggesting that while PCs might work in the office, weekend fun was definitely better on a Mac.
Google’s “I’m feeling lucky” is a button that directs users directly to the top-ranked result of their search, bypassing the results page (and any associated Google ads). But the concept of “luck” is not uniform across different cultures, but very much dependent on social and sometimes religious attitudes. So in Pashto-speaking Afghanistan, Google uses the phrase “I trust in God”, reflecting and respecting the beliefs of its target audience.
H&M, the Swedish “fast fashion” giant, is another brand that has understood that lasting customer loyalty is best built through an understanding of how local culture shapes values and perceptions. In 2014 it launched its “Conscious Collection” to emphasise the brand’s sustainable credentials and to position it as a leader in this field. But, as with “luck”, the concept of “sustainability” means different things to different audiences. In the English-speaking version, H&M discusses how the use of organic cotton is beneficial both for the environment and for the safety of workers. For the Chinese audience, the “conscious” message is somewhat different. Here, H&M focus on the introduction of recycled polyester fibre which helps to reduce the usage of labour-intensive non-recycled polyester.
Localisation and the loyalty dividend
These are just a few examples of how some of the world’s biggest brands are realising the value of the localised approach – both in product offering and in brand communications. Here at Alpha, we’ve worked with many of these brands to create and implement localisation strategies that deliver enhanced customer loyalty and, in turn, improved profitability. American business trainer Jeffrey Gitomer writes: “You don’t earn loyalty in a day. You earn loyalty day-by-day.” We think that is a sound principle which can also be adapted as follows: “You don’t earn loyalty with a single message. You earn loyalty message-by-message.” And this is what localisation is all about.