Wednesday, February 20, 2008

Brand building’s key to LONG-TERM SUCCESS

Becoming An Entrepreneur Is Nice, But Building A Brand Is Quite Special.
How Early Should Start-Ups Seek To Build Brands.

BRAND building started on day one for Riyaaz Amlani’s new venture six years ago. His Mocha coffee shop chain wanted to differentiate itself from others, which Amlani thought had followed the Starbucks template faithfully. He spent several weeks planning nuances such as the quantity of the dessert scoop and the mix ‘n’ match of furniture. He designed the whole project with a belief that a coffee shop is not a restaurant, but a place for socialising. All this got early visitors talking about how different the experience was. And Mocha had got its brand baptism.

On the other hand, Internet portal didn’t begin a brand-building exercise until this year, though it had started as early as 2001. The company focused on developing a critical mass of users and let growth come from word-of-mouth. Unlike the flashy dotcoms that rose and fell during the bubble, Sulekha conserved cash for operations.

Start-up companies often grapple with the dilemma — whether to build a brand or not? While a strong brand equity can bring enormous value to the company, it also requires a large commitment of capital and management energy early on. Many businessmen wonder if they aren’t too small to attempt brand building or whether they can afford it.

Experts say new businesses should start planning for brand building as early as possible. For some, it might start at the pre-product stage, while some others would have to wait till they establish the core attributes of their product or service offerings. But, failure to build a brand and to start investing in it at the right time can bleed the company of much of its potential, experts say.

“A company should start building its brand, stagewise, as soon as it has validated its core,” says Harshal Shah of Reliance Technology Ventures. He says this ‘core’ comprises the team’s values, experiences and capabilities. For instance, when Steve Jobs started Apple in the mid-1970s, the computer industry was dominated by stuffed shirt veterans dealing in complex mainframes. Those who saw Jobs roaming about his office barefoot and in frayed jeans would have suspected he was going to convert the mighty computer into a gadget for everyone. And that’s exactly what he did. Today, the Apple brand enjoys a cult following as it stands for innovation and fun.

A strong brand is a profitable asset. People pay far beyond the manufacturing costs and nominal profit margins for products they recognise, trust and enjoy consuming. For an early stage company, it helps in defining the product to both potential customers and its own employees. It tells buyers that this company is investing for the long term, it will be around tomorrow and it will repeat the performance. Internally, it tells the team members that the entrepreneur stands for certain values which must be reflected in every action that they undertake.

Products without a clear brand definition eventually lose their direction, recognition and value. They will turn into commodities that will be bought from the cheapest vendor without a quality promise.

The identity of a brand flows from the organisational culture, experts say. It is the essence of the attributes of the offering, that will be consistently performed every time a customer experiences it. It is not mere advertising, nor even just marketing, but a clear recall in the consumer’s mind of all that a product or a service stands for. “Any moron can put an ad in the paper. Communication is the easy part. The process of communicating and then delivering on a promise builds the brand,” says Sanjay Anandaram of Jumpstartfund, who is also a visiting faculty at INSEAD.

But when does the core get validated? Shah says it typically is about a month from the starting day, but can vary depending upon the resources available and the opportunity at hand. For travel portal, which started selling to consumers before tapping business customers, the validation happened even before it started, he says. “When Yatra came to us for funding, we looked at a lot of other companies to understand the space. We found that these other companies didn’t have experience in the travel business. (But Yatra’s founders) came out of the travel industry and therefore had the domain experience and customer knowledge.”

With some companies, the first big customer win can propel a company into the branded league. Further customer wins become easier as a satisfied first buyer will provide the testimony. For WiMAX equipment supplier Telsima, such an opportunity came in the form of Reliance Communications. Shah says Telsima experienced its Big Bang moment with such a top name becoming its customer and there has no looking back since then.

The key to brand building is promising exactly what the business can deliver and delivering exactly what it has promised. Every time. From employee behaviour in front of customers to the words chosen for advertisement copy, every interaction that a company undertakes with the target audience defines, embellishes or destroys the brand. “Every interaction also gives an indicator. If a company promises to deliver on the next day and if they don’t, it is an immediate indicator,” says founder Avnish Bajaj, who has now turned a venture capitalist with Matrix Partners.

So, it is a good idea for a start-up to make sure that its product works well and is ready for brand-building. “You do not want to start brand building and then if your product doesn’t work, you will lose your customer and s/he won’t come back,” Praveen Gandhi of Seedfund cautions.

Once an early-stage company decides to invest in brand-building, the first step would be to define its own genome and go about imprinting it on its products. R Ramaraj, who steered Internet company Sify in the early days of access business, says: “Our core was to encourage an innovative environment.” Having taken this decision, the company went about encouraging that culture within the organisation. “After all, we were one of the first Internet companies. We had to be innovative as there weren’t enough role models.“ Today, Sify is not only a large access company, but a complete content and telecom services provider.

In Santa Cruz, a Mumbai suburb, sits a little company that has no fixed work timings. People play computer games when they want to and the company gives an X-box 360 to their most successful business partners. During their quarterly off-site gatherings, they spend half the day playing football and basketball. This is a gaming company and their theme is “Play together”. Quentin Staes Polet, co-founder and CEO of Kreeda Games, says ‘playing’ is part of Kreeda’s core and the brand values flow from it.

Quite often, entrepreneurs fail to recognise such intrinsic values that will help a company win against competition and provide a lasting value to customers. “The lack of value creation is because people don’t know what to focus on,” brand consultant Ramesh Jude Thomas says. In other words, value creation is the eventual goal. Those who don’t see this and claim to focus just on growth are wasting their time.
The next step, of course, is to ‘live’ the values that a newborn brand claims to represent and communicate to the audience that the same results can be expected in all the transactions. Promod Haque of Norwest Venture Partners gives an example: “One of our portfolio companies based in San Antonio is called Rack Space. They provide web hosting services. The management of this company calls their customer support “fanatical support”. Here, the brand of the company and the company culture are intertwined. It is drilled into their employees that they will provide fanatical support.”

Infosys Technologies, the oft-cited example for entrepreneurship, enjoys arguably the best brand name among Indian software services providers. One of the chief attributes of its brand was its ability to bridge the cultural gap between the East and West. Early on, it focused on training its employees to understand the finer points of Western culture and conduct themselves accordingly while working on customers’ sites. This, eventually, has got it better billing rates than other Indian companies.

Longevity and profits in the long term are a good reason for early brand building.

Article Resource:
Author: Jacob Cherian is the Chief Editor in the The Economic Times, Mumbai and the article appeared in one of their successful columns on Entrepreneurship/Start-ups called "Starship Enterprise".

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