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CONCEPTS OF
GLOBAL BUSINESS
One of Eric's tasks was to record book orders onto daily tally sheets. After several months, Eric noticed that orders from overseas trickled in on a consistent basis. So, he decided to calculate the percentage of foreign orders Neo-Tech received. Neo-Tech's domestic mail-order business averaged a 1% response rate. That is, for every 1000 brochures mailed, 10 orders were received. Eric discovered that many mailing lists Neo-Tech Publishing mailed to had about 50 to 100 foreign addresses in them. By keeping track of foreign addresses mailed and foreign orders received, Eric found that the percentage of foreign orders received was almost twice the percentage of domestic orders. That is, for every 1000 brochures mailed to foreign addresses, approximately 20 orders were received. Thus, foreign marketing showed real red-to-black potential. Management encouraged Eric to investigate overseas mailings further.
Later, Eric discovered the reason why the percentage of orders from foreign customers was so high. The reason is because the United States is the single largest consumer market in the world. It is also the most competitive consumer market in the world. Thus, almost any product or service that succeeds in America can succeed overseas. In fact, American products are often more competitive in markets overseas than they are at home. That is why foreign marketing represents such a golden opportunity.
That initial forward-essence push led to many interesting contacts. For example, Eric learned that several leading business magazines had sizable numbers of foreign subscribers on their mailing lists. So, Eric arranged with several magazines to rent their foreign addresses and to mail Neo-Tech's direct-mail brochure to those addresses. The results of those mailings were in the black. Eric now knew that it was possible to market Neo-Tech's books abroad. Those initial direct-mail tests proved that red-to-black dynamics were possible.
Well, in just a few days of phoning around and "picking the brains" of Neo-Tech's direct-mail contacts -- asking for any information they might have about foreign marketing and international direct mail -- Eric began developing an understanding about international direct mail and what services were available. In addition, Eric received numerous leads for other persons to contact for additional information. After following up on those leads, Eric had actually acquired pieces of expertise on the subject of international direct mail.
As mentioned in "The Pick-Their-Brains Technique", Chapter II, whenever Eric ventured into a new area of business, whether it concerned foreign marketing, color printing, currency exchange, brochure writing, media advertising, or some other activity, he would first spend time calling and picking-the-brains of any person he could think of related to that area of business. Time and again, Eric found the pick-their-brains technique a highly leverage tool.
Eric discovered, during his travels abroad, that a certain personal rapport develops when meeting a person face-to-face. A person will open up much more during a personal, face-to-face meeting. Deeper levels of information, contacts, and cooperation are almost always obtained during face-to-face meetings.
Direct mail had not yet really begun as an industry in foreign countries. There were almost no mailing-list brokers outside of America. Nevertheless, Eric discovered that there were a few suitable mailing lists to be had abroad. These lists were not available through traditional channels of going to a mailing-list broker. Instead, Eric had to track down individual companies overseas that had built their own mailing lists through their own media advertising. Those lists could then be used for marketing Neo-Tech's books overseas.
Eric began a program to locate foreign mailing lists by looking through foreign magazines and newspapers. Eric would clip out any direct-response advertisements. Those advertisers had to have mailing lists of customers since they were selling goods via the mail.
Eric then sent a letter to each advertiser. He would ask if Neo-Tech Publishing could rent their mailing list. Eric would follow up each letter with a phone call several weeks later.
Since many foreign managers Eric spoke to had never heard of mailing-list rentals, Eric would explain in his follow-up phone call how American direct-marketing companies make up to 25% of their profits from mailing-list rentals. Eric would then state how direct-marketing is a major growth industry worldwide and that mailing-list rentals would become more and more important to businesses in their country as well. This often led to the manager agreeing to rent his company's mailing-list to Neo-Tech Publishing. And this would establish a permanent business relationship between Neo-Tech Publishing and that overseas company. Neo-Tech would continue to rent that company's mailing list in the future as they generated new customers.
Name-dropping is simple to do. Yet, too often individuals overlook the opportunity to effectively use this tool. A business person should always remember to use this technique whenever appropriate.
At the same time, Neo-Tech's domestic marketing manager was running a big and demanding U.S. operation. The U.S. business operated under completely different dynamics than the foreign business. The direct-mail industry and mailing-list rental business in America is large and established. Scores of mailing lists are readily available for rental in America by going to any one of many professional list brokers. Thus, a direct marketer's key to success in America is a competitive focus on renting other direct-mail companies' most recent names before competitors, on new and improved marketing techniques, on demographics, on computer selectivity, and on numerous other competitive and technical factors. Neo-Tech Publishing's domestic marketing manager simply could not afford to spend an entire day or an entire week arranging to rent a small, 5000-name foreign mailing list when he was working feverishly to get a 200,000 name mailing in the mail each week in a race against competitors.
In contrast, Eric had no such pressures. He could afford to spend all his time, including evenings and weekends, experimenting with foreign marketing -- trying to locate and then negotiating to rent small, but highly-responsive, foreign mailing lists. To Eric, such time-consuming investigations to land small, but highly-responsive foreign mailing lists was a great experience that could lead to something big.
Once Neo-Tech Publishing began renting and mailing foreign lists, Eric had to investigate and test the most cost-effective methods to mail overseas. Eric tested re-mailers, surface mail, printing and mailing within overseas countries. At the same time, a whole new payment-acceptance system had to be set up at Neo-Tech Publishing. Neo-Tech had to set up foreign bank accounts to accept foreign currency checks. Eric had to devise and implement a separate product-fulfillment system because the high-volume, streamlined domestic order-processing system could not be bogged down by the time-consuming procedures required for processing a foreign order. Eric had to hire and train a part-time worker to handle the customized order-processing necessary for foreign orders. All of this had to be done so that a little 5000-name overseas mailing list could be mailed. But, as mentioned, the key point was that foreign marketing was in red-to-black dynamics.
Eric soon identified a concept crucial to launching an international program: The Separate Operations Concept. Eric realized that the only way to enable the successful development of international marketing was to clearly separate the foreign operations from the domestic operations. Neo-Tech's foreign business required a separate marketing manager and a separate order-processing and order-fulfillment system.
The following example demonstrates the importance of the Separate Operations Concept. A very successful, aggressive direct-mail entrepreneur whom Neo-Tech had dealt with for years decided to expand his direct-mail business into England. After a few months that entrepreneur gave up his overseas marketing in disgust. He said that he could make ten times the return on his time by focusing his efforts in the U.S. rather than in England. From his traditional approach, he was correct. For, as discussed above, a marketing executive would have to spend just as much time to get a 5000-name U.K. mailing list as he would to get a 500,000-name U.S. mailing list.
In addition, once that entrepreneur's overseas marketing began, it clogged up his company's entire domestic operations. He had an extremely efficient, streamlined U.S. operation that processed thousands of orders daily without a hitch. Suddenly, his order-processing and fulfillment system was thrown into disarray because a few foreign orders came in that required different computer formats, different banking facilities, different fulfillment procedures.
Thus, from that entrepreneur's traditional approach, his decision to abandon foreign marketing was correct. But, Neo-Tech Publishing identified the Separate Operations Concept. By separating out Neo-Tech's fledgling foreign operation, Neo-Tech's highly demanding and efficient domestic operation was not bogged down. And, Eric, a young worker making an entry-level salary, was put in charge of pursing foreign marketing. The complicated, small-time foreign business was kept out of the way of Neo-Tech's large, streamlined domestic business.
If, however, Neo-Tech's domestic marketing manager had to run the foreign marketing program, he probably would have done some initial testing and concluded, like the entrepreneur just mentioned, that foreign marketing simply was not worthwhile pursuing when the same amount of time and resources invested in domestic marketing would yield much higher returns.
Thus, Eric persevered as Neo-Tech's unofficial International Marketing Director. He diligently worked to build increasing red-to-black dynamics within the foreign marketing program.
Failure to identify the Separate Operations Concept led another mail-order company with whom Neo-Tech Publishing dealt with to failure overseas. That company was large and mailed several million direct-mail pieces every month. They decided the time was right to expand into the European market. So, its marketing director travelled to Europe, investigated the direct-marketing industry, did several test mailings, and promptly gave up. Why? His test mailings were profitable. But, he stated that he would have to spend twice the man hours to achieve half the volume as he would working on marketing projects in America. So, his time was better spent developing new marketing projects in the U.S.
On the other hand, if that marketing director had recruited an enthusiastic worker willing to exert integrated thinking and forward-essence movement, and then given that worker the go-ahead to test foreign marketing, trying to slowly but consistently build red-to-black business, that company could have been in an entirely different situation today. Unfortunately, that company's marketing director did not make the identification of keeping foreign operations separate from domestic operations. So, that marketing director, like the entrepreneur in the previous example, expressed frustration with overseas marketing and promptly abandoned it. "I don't want to waste any more time in those limited overseas markets!" he exclaimed. But that was an enormous long-range mistake.
Neo-Tech Publishing, on the other hand, gave Eric the green light to pursue foreign marketing. Thus, large amounts of Neo-Tech's valuable management time was not consumed experimenting with foreign marketing. And, the small overseas tests Eric carried out for Neo-Tech Publishing did not cost a lot of money. In addition, Eric's pay was not much above minimum wage.
Eric Savage, a young and dedicated worker, was capable and willing to exert the integrated effort required to do forward-essence movement. (See Integrated Thinking: The Essence of Power And Wealth, Chapter V). Eric was open to maximum creativity and improvising -- two traits crucial when pioneering a new area of business. Managers in large, established companies, on the other hand, tend to have a "You can't do that because it's never been done that way before," attitude. This limits innovative, integrated-thinking.
As Eric pursued international marketing, he was faced with a pioneering situation. There were not established mailing list brokers overseas who could organize a direct-mail campaign. So, Eric got creative. As mentioned, Eric acquired foreign magazines and clipped out direct response advertisements. Then he wrote those advertisers a letter introducing Neo-Tech Publishing Company and asking to rent their mailing lists. Next, Eric would phone the marketing manager of each company. "If your mailing list works for us, I will recommend your mailing list to other direct-mail companies," Eric would state. "Direct-mail and mailing-list rentals are a growing business worldwide. "Get into the action now and you will reap a very profitable business advantage before your competition."
Eric began to develop real negotiating power. His introductory letters and follow-up phone calls would initiate a rapport with managers of overseas companies. In addition, Eric had a powerful advantage on his side: most foreigners like the idea of doing business with an overseas company, especially an American company. It is something different, exciting, worldly, and genuinely informative. Eric would play on that advantage. For example, in his follow-up phone call to an overseas company, Eric would announce that he was calling from America. Then, in addition to reviewing the points in his introductory letter about renting mailing lists, Eric would talk about what the direct-mail business is like in America, industry norms, even cultural factors. Eric would then ask that manager questions about the direct-mail business in his country. Managers Eric spoke with were usually flattered by Eric's attention and would open up. They liked dealing with an overseas businessman. And, Eric usually acquired valuable information from those overseas managers -- information that Neo-Tech Publishing could use in its American operations.
Imagine a manager in a small American company. He never does business with an overseas company. "That's only for the big guys," he thinks. Then, one day, an interesting letter arrives from a foreign company wanting to do some business with his company. Next, that manager receives a phone call from that overseas company. Then he does some profitable business with that overseas company. It's exciting, different, and a genuine learning experience for that manager.
After Eric had been pursuing international marketing for about a year, Neo-Tech's foreign business began to really pick up. Eric started working full-time in the foreign area and was building a solid international structure for Neo-Tech Publishing. Next, Eric decided to invest the profits Neo-Tech had made from foreign marketing back into the business via taking overseas trips. Eric's first trip was to attend a marketing convention in Switzerland. Although the trip was expensive, costing several thousand dollars, it paid for itself right away. By having person-to-person meetings, Eric was able to line up several good mailing lists. Those mailing lists paid for the trip by the profits they generated.
Eric discovered several important factors during his first overseas trip. The effect of a visiting American businessman on foreigners is excellent. Most managers were excited to have an American businessman visit them. First, Eric met with companies that were already renting their mailing lists to Neo-Tech Publishing. Eric informed each manager beforehand that he would be visiting that manager's country and would like to meet with him. When Eric met with individuals in person, communication really opened up. Eric would talk in-depth about Neo-Tech's operation. Often, by the end of a meeting, Eric would end up with a special deal that he would never have gotten without personal contact. For example, marketing managers sometimes agreed to rent Neo-Tech Publishing their brand-new customer names each month as they were generated. That would mean a tremendous increase in response rates for Neo-Tech Publishing and would do wonders for Neo-Tech's profit margin. Through overseas trips, Eric began building lasting international business foundations.
During such in-person meetings, Eric would probe each contact even further for recommendations of all other companies in his own country that might have mailing lists. Many more leads were generated this way. Eric would then rush back to his hotel and call each recommended company. This had a good effect. Eric would explain "I'm an American visiting your country, and Mr. Valentin of XYZ company recommended I call you." Eric would then state that he would like to visit them. Most managers Eric phoned were happy to meet with Eric. And, with such a personal visit, Eric's success rate increased dramatically when he requested to rent a company's mailing list.
During his trips abroad, Eric would also call on those companies that had turned down his proposals to rent their mailing lists. When Eric met with a manager in person he was usually able to exchange good general information. And, by the end of his face-to-face meeting, some of those managers would end up agreeing to rent their mailing lists to Neo-Tech Publishing after all. A face-to-face meeting builds a special trust that letters and phone calls cannot do.
While visiting a foreign country, Eric would also visit trade associations such as the Chamber of Commerce, the Direct Marketing Association, the Advertising Association, and so on. Trade associations can recommend companies to contact related to almost any industry. Eric would get many recommendations of companies related to direct mail. Eric would then call up and talk with the managers of those companies. That way, Eric would get a feel for the entire direct-mail industry within a particular country.
Eric discovered that his first, expensive overseas trip was a great investment with both immediate and long-range payoffs. Eric had made contact with a number of European mailing list owners. In addition, Eric received many recommendations of other European companies to contact who also had good mailing lists. Neo-Tech Publishing's foreign business picked up dramatically after Eric's trip.
Because Eric exerted integrated thinking and forward-essence movement, he was able to locate foreign mailing lists and negotiate to rent them when, to other direct marketing executives, it appeared that almost no overseas mailing lists existed for rental. Some very seasoned American businessmen had given up their pursuit of overseas direct mail. In contrast, Eric persistently exerted integrated thinking and forward essence movement. Thus, he began locating overseas mailing lists by the creative methods mentioned. As a result, Neo-Tech's shoe-string foreign business began generating substantial profits.
True, Eric experienced much initial frustration by not having list brokers available overseas from whom to rent mailing lists. Eric had to spend a lot more time and effort to locate and obtain foreign mailing lists himself. But, Eric discovered that he could indeed locate and rent foreign mailing lists himself. And, such mailing lists were usually virgin lists. No outside company had ever rented those lists before. As a result, such mailing lists drew exceptionally high rates of response. Over time, Eric's repertoire of foreign mailing lists became significant. Neo-Tech's foreign operation began to reap profits that rivalled its domestic operation. Eric found that he had a mighty business blossoming under him.
Over time, as that foreign manager continues to focus on international marketing, he or she will accumulate increasing knowledge, make valuable contacts, and increasingly pry open opportunities. A momentum will build. One day, a company will find itself rolling along and profiting enormously from foreign business.
Consider how other seasoned American businessmen had stated to Eric Savage that overseas business was not worthwhile. So, why was Neo-Tech successful? Because Neo-Tech Publishing applied the Separate Operations Concept. Neo-Tech's domestic marketing manager was left free to pursue the highly-competitive U.S. market, while Eric was left free to integrate all his time and energy with developing foreign markets.
Those other American businessmen were not wrong in their initial assessment of overseas markets, for they were managing a very large and demanding American operation. They simply could not justify flying off to Europe to negotiate in person to generate a small business deal. But, those businessmen failed in not identifying the Separate Operations Concept. If they had identified the Separate Operations Concept, they would have set up an enthusiastic and dedicated worker to pursue foreign marketing. That would have avoided bogging down the management of their domestic businesses. And, with a dedicated worker persistently pursuing foreign markets, a momentum would have steadily begun building.
As a company's foreign business continues to pick up momentum that company will suddenly find that the foreign market is where its greatest future potential lies. What at first may have appeared to be a limited market or even a non-existent market, will eventually blossom to its full, dynamic potential. For, the American market represents only one-quarter of the world's market. Three-quarters of the world's market is overseas. Thus, the company that gets its foot in the door overseas will one day find that most of its future growth potential lies in the enormous global market. That is exactly what happened to Neo-Tech Publishing. Those exciting dynamics will inevitably happen to any company that establishes a separate, low-cost foreign manager to relentlessly pursue foreign opportunities.
Meanwhile, at Neo-Tech Publishing Company, young Eric continued to push his integrated thinking and forward-essence movement out in all directions. His negotiating skills grew, his money-making skills grew, and Neo-Tech's foreign business grew.
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