by Wu Jianbo
China Translation & Publishing Corporation
Meeting the clients and providing them with useful information or services are probably part of the everyday job for everyone who works in marketing. “Customer comes first”, the old saying seems to be even more strengthened in nowadays. In the customer-oriented society, there is no doubt that how to improve services and win as many as possible clients are the main concern for companies in service industry. Translation companies are no exception here. Like any kind of companies who produce and sell and survive depending on the constant needs from the clients, translation companies provide services in the form of language, which facilitate communication between cultures. Thus, those who need information presented in other languages constitute our client group. In this case, to successfully catalogue these vast varieties of customers and to have them better served hold the key to the healthy development of a translation company.
I. MARKET SEGMENTATION PERFORMED IN TRANSLATION COMPANIES
If it is market segmentation we are discussing today, a lot of work has been done by us already. For example, if we have a student who wants to have his transcripts put into English in order to apply for studying abroad, and a government official who needs his speech in a international conference translated into different languages, there is no doubt that the two would get totally different quotations and working schedules. During this process, we have actually made market segments. To be specific, we firstly put the two customers into camps according to their entrusted documents, the student to the legal document translation group, the official to the translation group specialized in literature. A workflow for translation of similar documents would be applied then. What comes next is just finishing of the task.
Actually, most of our clients’ information is listed, catalogued and managed in the above mentioned way. We store the information of theirs as “clients in law field”, “clients in economic field”, “clients as officials”, and “clients in the technology field” etc. Then, every time, based on their specific requirements, we would tailor the workflow a little bit. But the whole process is more or less the same. By putting clients sharing similar demands into the same group, we save a lot of time in deciding which translation group or department would be responsible for the very task. On the other hand however, this grouping mixes everyone within and shows absolutely no priorities. The decisive factor in this kind of market segmenting is field and time—“first come first served”. Under such system, to some degree, we are still production-oriented rather than taking the client as core of our services. Lacking the conception of priority of the clients, all we can see is the piece of entrusted document, which we take as the focus of our work. It is quite likely that we are more concentrated on our productivity, rather than doing everything we can to meet requirements of the clients. The difference between “what we can do” and “what we must do” will in fact greatly influence feelings of the clients. If a very good client, who never brings troubles during the whole cooperation, suddenly one day asks for a “mission impossible”. According to the previous mentioned market segmentation system, he is surely to be failed, for he exceeds the normal workflow. Disappointed as he is, it would be highly probable that he feels himself nothing special to the translation company, and there does not exist a special connection between him and the company he has always expected. This uncomfortable feeling may end up with his decrease in loyalty to the company and finally decline in revenue he may have brought to it.
Besides the unhappy respond from the client, the product-oriented system may subtly influence our market strategies as well. Because in the “field-specific segmenting system”, our clients differ from each other only in one aspect, the particular documents of they entrust us with. Except from this point, they all look exactly the same and would be treated exactly the same. That is to say, whether the customer is Microsoft or a small software producer, to us, they are the same. Correspondingly, when we want to introduce ourselves to a specific company, stimulating their use of our services, we would always attach more importance to our productivity, especially what we have translated in that very field, believing that if we are an expert, there is no reason that they would not be attracted. However, we forget the most important thing at the moment, the real decisive factor which is closely related to decision of the target client—the need of the clients, their first concern when looking for a translation company as a vendor and who our customer is. A vendor failing to meet requirements of the clients is sure to be failed by the client.
With negative effect to both workflow management and market strategies, the traditional product-centered market segmentation thus should not be promoted in today’s market. New classification of the clients needs to be introduced to the management system of translation companies. .
II. CLIENT OPTIMIZATION BASED ON PROFITABILITY
Every firm is established to make profits. Though we are constantly talking about the “every client is important to us” thing, we can not deny the fact that there are some customers who bring to our company much more profits than some others doing. Virtually all firms are aware at some level that their clients differ in profitability, in particular, that a minority of the customers accounts for the highest proportion of sales or profits. This phenomenon was noticed and proposed by Pareto in his 80/20 Principle in 1906. It is said that 20 percent of something always are responsible for 80 percent of the results. The few in number brings significant change in the results. The key theme of the 80/20 Principle applied to business is how to create the greatest value and generate most money with the least expenditure of assets and efforts. Although some people may view the 80/20 Principle as too snobbish, it does reveal the fact that it is the winning of the most profitable clients that a company can benefit. Thus, identifying these groups is crucial in a successful management of a company.
In one of the marketing bibles called “Service Marketing: Integrating Customer Focus across the Firm”, a four-tier system of client cataloguing is presented. In this customer pyramid, profitability rather than usage or field defines all levels. Clients are thus divided into four levels, identifying as “the platinum tier”, “the gold tier”, “the iron tier” and “the lead tier”. If we borrow the concept and apply it to translation companies, “platinum client” refers to our most profitable customers. These clients are heavy user of our services, are not overly sensitive towards raised price and are willing to give new offerings to us. Apart from that, they are committed customer of our company who are quite accustomed to our workflow and do not want to change for other vendors. Clients on the gold tier differ from the platinum ones in that their profitability levels are not as high and they may not be as loyal. The gold customer may be heavy users as well, but may minimize risk by working at the same time with other vendors rather than just with us. Besides, they care about money, and want price discounts every time an order is offered. The iron customer’s purchase capability may only be sufficient for basic running of our company. But their spending levels, loyalty and profitability are not substantial enough for special treatment. They are usually referred to as “small client”. The last group which lies in the bottom of the pyramid is the lead client camp. This tier consists of customers who are costing the company money. On top of that, they always demand more attention than they are due given their spending and profitability. Sometimes, they are trouble–makers, complaining about services provided by us, forging bad images of our company and breaking our market.
In this pyramid, the higher the profitability one client brings, the higher this client would be put and he or she would be highly targeted. For years, examples of effective use of the customer pyramid approach exist and function in a number of business context. Our job is to find those on the top of the pyramid and maintain them as our target clients.
III. CLIENT DEVELOPMENT AND OPTIMIZATION
“It is the first step that costs most” proves well that to gain new customer, promoting our services to the potential clients probably is the most difficult thing for a translation company. No one can escape marketing as long as you are doing business. If you are running a restaurant, it is easy to find your target clients. People eat everyday, and you can almost make sure that everyone out there is your potential client. The only thing you have to take care of is advertising yourself to every passer-by and you will get a chance of winning your first clients.
However, the translation market is quite a different thing. Those who need translation service surely are big in number, but to some degree hide from us. The word “hide” does not mean those clients do it intentionally, it may only be that they do not know how to and where to find a professional translation company if they need help. In this case, if we, like what the food industry does, reaches everyone we see as a potential client, forcing into their mind our services when they do not really want to be interrupted, it is quite likely that an uncomfortable feeling would be aroused and even if someday the client needs translation services, he or she would rather choose someone else than you.
In the translation field, to be known to clients, as far as I am concerned, it would be a better choice if a company can build one’s own image, which means to have a special brand that identifies the company from a group of others and guarantees the quality of the products. In this way, it is the customer who will find you. What is more is that Attracting the clients by establishing and building oneself not only saves time and costs but is also quite good for the company itself.
For those who have already used the services, as mentioned above, we put them into different layers and provide services accordingly. For example, the top clients will have their own individual account representative who know their requirements well, who can flexibly handle their entrusted documents, who can help arranging the documents to better translation groups, and whom they can personally contact if there is any emergency. Meanwhile, for the less profitable ones, they are probably served by different account representatives depending on who is available when the clients visit. And there are less flexibility concerning their entrusted documents based on volume of their orders. However, even a client is listed in an iron tier at the beginning stage, it is quite possible that in the future, he or she would move to the top of the pyramid and become one of the platinum customers. Since none of the clients would appreciate being categorized into a less desirable segment. So it is very important that the firms communicate with the customers so that they understand the level of services they can expect and what they need to do or pay to receive faster and more professional service. The customers may not be happy to find that they are not treated like others but at least they could understand that they are actually fairly treated. It is their choice to change the purchase behavior or to remain in the level they are in. On our side, by doing so, we subtly nurture our clients, leading their way to higher levels of the pyramid. We turn the first strangers to acquaintances, then our friends and finally our partners. If we are partners with our clients, it means we are part of their everyday work and they could not manage without us. Such bonds will never be separated. And this bond is what we should try our best to establish.
IV. RETENTION STRATEGIES
There are several retention strategies we can employ in establishing a partner bond with our most wanted customers.
The first one is customization bond, which refers to providing the clients with tailored services to fit their individual needs through little effort on their part. For example, when we are entrusted by a customer and later find that he has made similar documents translated in our company before. If at this time, we can remind him of the previous documents and send it to the translation group as an important reference, it not only save time but also reduce the cost. Because of the reason, the customer could also save his expenses. Under such circumstances, we provide the client with a continuous service, and it is quite likely in the future he would still come to us at least for that particular type of documents.
The second comes the financial bond. The platinum clients and the lead ones, no matter how much they could differ from each other, there is one thing they are in common—they are all price sensitive, just having different degrees. It is a way to show genuineness if the translation company can offer lower prices for large volume purchases or for customers who have been with the firm for a long time. Apart from that, for the most loyal customers, an assurance of stable prices (regardless of the change in prices in the official version) should be given.
Next is social bond, which has more things to do with personal relationship rather than working schedules. Everyone has a friend or two he or she would like to turn to if put in trouble. The customer is in the same situation. If every time the customer demands a translation in limited time, and the firm is capable to help, a friendship and appreciation towards the translation company would be gradually formed and the customer is willing to invest in and give new offers again and again as a paying back.
The last but not least in significance is structural bond. This kind of bond between customer and the vendor which reflects the spirit of “customer-oriented” services is created by proving services to the client that are frequently designed right into the service delivery system and which can help the customer to be more productive. For most of the times, the 20 percent most profitable customers that we live on do not really care about money, all they want is a fast translation of their document with sufficient quality. Even if sometimes it looks like a mission impossible, the first and only thing we should do is tying to tackle the problem, doing whatever we can to finish the task. It is only in this way that the customer will heavily rely on us and the ideal partnership will be established.
V. THE CUSTOMER IS NOT ALWAYS RIGHT
A lot has been said concerning how to maintain the relationship between our customers and ourselves. However, a company can not target its services to all customers. There are always some segments in the group that are more appropriate to us than others. And it would not be beneficial to either the company or the customer for keeping a relationship in which none of the two sides can meet the requirements from the other party. For few of the clients who are always asking more attention than they due according to their payment and profitability, who are hard to deal with, or who are not profitable in the long-run, the company could say no and end the relationship between.
The growing translation market calls for a scientific client relationship management. Client optimization based on profitability is one of the good ways we can try. Once the four-tier-system has been established for categorizing customers, the multiple levels can be identified, motivated, served and expected to deliver differential levels of profit. The firm in turn improves the opportunities for profit when they increase shares of purchases by customers who either have a great need for the service or show the greatest loyalty to a single provider. By strengthening relationship with the loyal customers, increasing sales with existing customers and increasing the profitability on each sale opportunities, the firm thereby increases its revenue.