‘Carrot and stick’ approach in client acquisition and retention – the power of the press
Acquiring new clients is always the corner-stone for all advertising business successes. Working for an agency, you have been taught to praise your company’s strengths over the competitors’ weaknesses, to promise the best result with the smallest budget or to provide further consultation for free. The clients, in most cases, are gemstones that agencies have to win over by giving them the best offers, both in business and personal side, or say the ‘carrot’. However, the table is turned when you are working for a newspaper. And here comes the ‘stick’ when the agencies play the upper hand, not the clients. Knowing how to using the ‘carrot and stick’ tactic effectively is extremely important, especially in personal-relationship-preferred environment like Vietnam, for both the clients and agencies.
To understand more about this tactic, I am lucky enough to have a conversation with an insider, Mr Le Duc Trong, working as marketing and communication executive of Vietnam Investment Review Group (VIRG). Established in 1991 by the Ministry of Planning and Investment, VIRG is the owners of trail-blazing newspapers, including 3 printed newspapers Vietnam Investment Review, Dau tu and Dau tu Chung khoan as well as their digital versions. Its readers comprises the largest group of business owners and foreign representatives as well as government officials who are interested in political, social, business and economic life in Vietnam.
Photo taken by Duong
According to Mr Trong, the ‘carrot’ that the newspapers offer to the clients are not much different to which of a normal agency.
“Firstly, you still need to know yourself and the market to keep your both feet on the ground,” said Mr Trong, “what are your strengths in comparison with competitors and what kind of services, whether in advertisement section or PR articles, that your newspaper can provide to the clients?”
Operating directly under the control of the Ministry of Planning and Investment, the biggest strength of VIRG lies in its extensive business and governmental relation network.
“We usually hold networking events and invite the biggest sharks in the field to get the information and make connection with them. Remember that in Vietnam sometimes relationship is the thing that gets you the contract,” he said.
And the kind of relationship he mentioned is more likely relate to personal side which is mostly established in restaurants or golf fields (as a matter of fact, I invited him to a tennis court because I know about his love for tennis) and by under-table money. From Mr Trong’s sharing, the regular percentage for commission is around 5% of the total budget and it is usually transferred directly to the account of the client’s media planners. In return, the media planner will choose the newspaper as the “best” medium to run the advertising campaign. There is also an unwritten rule that when you’re doing “business” with a person, you cannot switch to someone else even if they are working in the same company. That’s what people in the field call “faith” – an extremely important factor to keep if you want to be in the business in Vietnam.
However, when all the carrots fail, the stick will be used.
“You know, we are called the fourth estate. There’s reasons for that,” said Mr Trong.
Recently, a famous automobile company had a conflict with VIRG and stopped advertising on their newspapers. It quickly turned out to be a bad decision when many of negative articles were published, covering the poor business results of the company which did a big impact on its stock value and investment. This company, after realizing the ‘stick’, hastened back to VIRG with a new double budget advertising contract.
That’s a lesson for all the companies working in the Vietnam advertising industry. There’s the ugly truth that the best agency sometime is not the winner but the one who wisest on making the relationship by using the carrot and stick approach, and that the power of the press should never be underestimated.
Interviewed by Duong Viet Linh
Proof of life photo taken by Thien Son
Word count: 656
Carnie, L 2013, ‘Client Acquisition’, lecture notes distributed in COMM2384 Client management, 25 december, RMIT University, Vietnam.