At the heart of some of Australia’s biggest brands, lies a small business. How did these small companies create such big names? Here are their secrets to growing brand and sales, without expanding the business.
Roger Masters, Capilano Honey managing director, thinks of Capilano as a medium business with a lot of smaller businesses hanging off. Why? Because the well-known honey that we see on supermarket shelves is actually made from the supplies of more than 500 Australian beekeepers.
So how did this honey packer become so well known? It wasn’t by expanding their physical presence.
“The brand developed as we progressed nationally and acquired other brands,” says Dr Ben McKee, Capilano Honey Limited group operations manager.
The consolidation process is eased with local packing facilities, the company’s Brisbane factory was rebuilt for high-speed bulk and retail packing. But while the technology moves fast, the process of growing a brand can actually be quite slow, says McKee. It has taken Capilano since 1953, when brothers Tim and Bert Smith first began packing and selling their Capilano brand of honey, to reach this point.
However, it eventually became essential to support the constant brand growth and Capilano turned to print and television media to run a national campaign. While the campaign has helped maintain the brand, it isn’t everything.
“The primary strength of Capilano is the way we responded to consumer demands to improve delivery systems for honey and limit the ‘stickiness’ factor, ” says McKee, giving this as the reason behind Capilano’s PET squeeze bottles.
Being a small business has obviously been a plus for Capilano, but remaining small wasn’t planned from the start, admits McKee. “The business was set up on a cooperative basis. We have always been conscious of retaining a low cost base while having the capacity to respond to fluctuations in seasonal crop deliveries.” Careful planning has meant that the company has been able to work through some of their biggest seasonal challenges and they’ve even managed to get through the drought without too many hitches.
Other benefits of remaining an SME are clear as well. “The smaller business is able to respond quicker and easier to the structural changes that have taken place in the honey market in recent times,” says McKee, referring the emergence of private label competitors and a resulting shift in profits.
One of the business’ greatest weapons, keeping them profitable against private competitors, has been their strong brand. “The big brand has helped us defend our position in a domestic retail market with a greater presence of private label offerings that are commonly at a reduced price to a premium product such as Capilano.”
Controlled Brand Growth
So those are the key reasons for keeping the business small, but what’s Capilano’s secret to expanding its brand and sales? “Brands require commitment if they’re to grow and be maintained,” says McKee. “Building a brand is a long-term proposition.” Capilano chalks its success up to consistently delivering a product consumers want, the way they want it.
While being a small business can be beneficial, it does also come with some drawbacks, namely the limitations of human resources, says McKee. “It’s important for management to prioritise and identify the tasks that are going to have the greatest impact and not endeavour to achieve everything. We concentrate on our strengths and turn to outside professionals as required for short-term support.”
There are other small businesses that find Capilano’s big brand rather sweet too, especially in the long term. “Being a supplier to Capilano gives our business a regular cash flow,” says one beekeeper, who has had a honey supply agreement with Capilano for 22 years. “When the general public ask where we sell our honey, and we say Capilano, they immediately recognise the brand.”
Becoming a supplier for a business with a big brand was part of this beekeeper’s plan from the get-go. “The demand for their product is there, which in turn means they sell more honey than other brands. To sum it up, it brings stability to our business.”
Most online businesses, compared to a bricks and mortar business like Capilano, have had much less time to develop their brands, but this doesn’t mean that their brands aren’t just as big.
In the last three years Deals Direct, the online retailer, has become a household name and has consecutively won the Hitwise award for Australia’s number one online department store. Their controlled growth was planned from day one.
“We have grown our team from two to 80 people, but it’s been very solid, organic growth,” says Paul Greenberg, Deals Direct co-founder, explaining that he and business partner Mike Rosenbaum learnt a lot from the tech wreck. “We’re not doing a dot com–growing quickly, just taking on a lot of people and going crazy. We approach business in a fairly traditional way in terms of growth.”
Because of their approach the business has grown about 70 percent in the last year, and Greenberg expects to finish the financial year with a $50-60 million turnover, which he hopes to double the year after. Still, they are a small business, and intend to stay so for some time.
“The business is growing quicker than our team because of automated processes and procedures that we continue to evolve and put in place,” says Greenberg. Informally, the Deals Direct slogan is ‘automate or perish’. “Essentially this war cry recognises that to achieve scale in e-commerce, you need fully automated processes and procedures.”
A prominent feature of the website which supports the brand is a frequently updated questions and answers page. This means every likely question is already answered and staff doesn’t have to repeat themselves for each customer inquiry.
However, the majority of automation takes place in the distribution centre, which uses a wireless warehouse management system and the best available mechanical machinery to automatically wrap everything down to parcels—freeing Greenberg to grow the brand. “People have said, ‘you can’t scale if you’re running a warehouse. If you pack 5,000 you need so many people, if you pack 10,000 you need double that amount’. I disagree. We’re evolving from very clever automation processes, so we definitely are enjoying scale.”
But again, it has taken Greenberg time to reach this point. “I’m 48 and so I’ve run quite a few businesses before, and I’ve certainly made mistakes, as I think we all do, but I do understand the concept of running a scalable but stable business.”
So what have the benefits of his approach been? “The benefits of scale are that you can grow the business without growing the fixed and variable cost. The benefits accrue at the bottom line, so if you can get more out of the same structures and systems then it’s straight to the bottom line.” To continue growing the Deals Direct brand, a large portion of this additional profit is invested back into the business for further research and development.
For Deals Direct, remaining small has meant leaping hurdles with relative ease. “We’re nimble, we can make decisions quickly,” he says. “In a big company you’ve got more resources, but there are also limitations around how quickly you move. And, as they say in the new economy, it’s not the big eating the small, it’s the fast eating the slow, and we’re very excited about that concept.” Though the right decisions do still need to be made at the right times.
One of these decisions is turning to staff for their opinion about the business and its brand. “No one in this company is just a number, we’ve all got an ongoing part to play in the success of Deals Direct. A lot of innovation has come from within, and ironically not just from the technology people within the business but from the pickers and packers in distribution centres.”
Believing in Einstein’s view that ‘imagination is more important that knowledge’, Greenberg and Rosenbaum encourage staff to step away from their desks each day and consider possible business ideas. The best suggestion is rewarded with team acknowledgement and a cash bonus at the monthly team lunch.
“Literally every month there are very, very powerful suggestions. Some of them may seem like small links in the chain, but they’re all terrific value.” After all, employees are likely to have their finger on the pulse of customer wants and needs.
For small businesses interested in creating a big brand, Greenberg recommends reading up on other successful businesses, networking, and applying for awards. “I think the application process is important, perhaps more important than the award itself—you question your business through these application procedures. I would encourage small businesses not to give up.”
Finally, Greenberg mentions the importance of patience. “We’ve learnt over the years, especially in the fast-paced world of e-commerce, that this is not a sprint, it’s a marathon, and that does require a different approach. Entrepreneurs who are in it for the quick win or the quick dollar are going to be disappointed. Building a brand is a gradual process–it’s like moving a mountain shovel by shovel, but it’s a very enjoyable journey.”
* Capilano is one of the largest honey packers in the world, with the capacity to process and pack around 25,000 tonnes of honey each year—that’s approximately 10 Olympic-sized swimming pools.
* Deals Direct currently has 400,000 customers and around one million unique visitors per month.
A Sense for Branding
There is more to a brand than just physical appearance. Touch, taste, smell, sight and sound are all the makings of a successful brand, according to a Millward Brown global survey.
“The research cemented our understanding of the role of senses in creating brand loyalty, confirming that the brands with sensory depth were particularly strong,” says Nigel Hollis, Millward Brown chief global analyst.
“The more closely all sensory touch points—sight, sound, touch, feel, smell—are integrated into a cohesive whole, the far better chance the brand has of breaking through,” says Martin Lindstrom, author of Brand Sense. “Something revolutionary is needed to help brands stand out from the pack, something more than creating a new blitz of advertising and promotion.”
So how can sensory awareness build your brand? Lindstrom suggests incorporating scent–the sense responsible for generating more than three-quarters of emotions, but this is just a start.
*Brand Sense is published by Kogan Page Limited (RRP: $49.95).