Li makes his staff stand and deliver
SmarTone's upstanding people boost bottom line
SmarTone-Vodafone chief executive Douglas Li has forged a career in Hong Kong's competitive cellular market by making his sales people get off their backsides - literally.
Mr Li, 53, says SmarTone was the first mobile phone company to take staff from behind their desks and make them stand up to serve customers. While staff may not thank him for their sore feet, that personal touch appears to have worked.
SmarTone-Vodafone, Hong Kong's No3 mobile operator by sales, is ahead of many of its competitors by encouraging users to spend more on 3G services such as mobile internet browsing. The company's full year profit more than doubled on increased sales to 3G users.
Mr Li took an unusual route to the world of telecommunications. He graduated in pharmacology from the University of London and is a chartered accountant by profession.
The founding chief executive of SmarTone from 1992 until 1996, he left to join a private equity firm before rejoining again, again as chief executive in 2001.
Q. Your major at university was pharmacology. This does not seem too related to the business world?
A. I don't think education should have a direct relationship with a career. University education offered me a good opportunity to train my mind, to teach me to ask the right questions and find out the answers.
After I graduated, I got an offer to be an investment banker and then joined Sun Hung Kai Properties as a member of the group's corporate finance team for new business development. At that time, the company was studying the possibility of bidding for a 2G mobile licence. I was an outsider and that forced me to study and to learn more.
Q. Why did you leave SmarTone and then come back again?
A. I wasn't fired but looking for further career development. At that time, one of my friends was working in private equity and asked me to join him to look for new business opportunities in Asia.
If I had stayed at SmarTone, I would still be a Hong Kong-based executive and lacked the chance to look beyond the city. I decided to accept my friend's offer. Of course, it was a totally different experience for me. I acted as an investor studying various firms and didn't need to be involved in day-to-day operations.
Q. Do you want SmarTone to be Hong Kong's biggest mobile phone company?
A. We are not chasing a number. If we want that, we can do it any time by pouring large sums of money to attract new customers. What does it mean to be the biggest player, if it results in a huge loss as we subsidise low spending users? We have a stable number of high spending users, who contribute much more than those low-spending customers.
Q. What has been the reason behind your recent success?
A. We are the only operator in Hong Kong that does not appoint dealers or resellers. This gives us full control over our selling efforts to ensure quality. As we need to sell more non-voice services, like multimedia and data services. It would be useless to let agents sell our services.
Q. What was your role in preparing the company for the 3G era?
A. I encouraged our staff to understand the rationale behind what we were doing. With our new shop design two years ago, we set up mock outlets as a demonstration of a real frontline operation. I wanted my staff to know more about the reason, the concept and the rationale behind every step of serving our customers.
Q. What was the most aggressive change in the company as part of your 3G strategy?
A. We were the first to require staff to stand in shops to serve our customers, rather than sitting behind counters. The traditional counter design separated them from customers and this built a barrier, making it difficult to sell. Our people need to stand, just like other staff in the retail industry, to promote our phones and new services. Of course, they complained so we provided comfortable shoes for frontline staff and also extended their rest periods.
Q. As you are not a veteran retailer, where did you get your ideas from? Do you copy them from overseas?
A. Our whole [retail] concept was developed by me. My focus is to build an unbeatable customer experience.
As we need to sell new services, we revised our customer 'touch points'. These new initiatives, together with our branding, all pushed our customers to spend more.
After we re-designed our outlets, our revenue continued to grow and proves that our direction is correct.
Q. Are you afraid that your successful formula will be copied?
A. It is very difficult for competitors to copy. New ideas will come to me even when I am in the shower or dreaming. We're evolving.
Some of our frontline sales staff are being headhunted by rivals but sales are only part of our success. They are supported by our core strategy, the working environment and management structure. If they didn't have such back up, they wouldn't be successful.
I may be a tough CEO but our direction is clear - to offer unbeatable customer experience.
As our frontline staff all stand up now, they are on show to serve customers, not just sitting there and wait for new business.
Q. SmarTone partnered with United Kingdom operator Vodafone in 2004. What is the reason for SmarTone joining hands with Vodafone?
A. Vodafone is a multinational corporation and we can learn from them. We can also contribute our experience to them as we are smaller and flexible in responding to markets.
We have benefited from Vodafone mostly with handset purchases and the sharing of best practices.
Q. Do you think the local mobile market is saturated?
A. Growth is a difficult task for us unless there is new technology. The 3G mobile network offers us a new window to explore more business opportunities. As we are upgrading our 3.5G mobile network, we can offer massive data-consuming applications such as video streaming.
Q. Are you technology savvy?
A. I need to know what the business is and have an intellectual curiosity. When I use my mobile phone for internet browsing and find the service is much faster than before, I will call a colleague to see what they did to improve the network quality.
Q. What is the future of 3G?
A. 3G penetration is not bad when you compare it with the previous generation of mobile service. Global penetration is 40 per cent and it only took three to four years to reach that. For 2G it was much longer.
In Hong Kong, 3G penetration reached 37 per cent earlier this year. As a mobile operator, we need to do more to push that up. We now have around 240,000 3G customers, accounting for 30 per cent of our postpaid mobile phone customers.
Our competitors are giving away free 3G handsets to attract new users, even if the customers aren't sure what 3G is. We want our 3G users to enjoy new services, not just have a beautiful handset used for talking.
Q. What do you enjoy doing in your spare time?
A. I love shopping around Mong Kok, Tsim Sha Tsui and Causeway Bay to see what the trends are.
I also enjoy relaxing with my personal hi-fi system. When I am listening to the music, it is quite a good time to catch up with daily business. I have spent a lot of money establishing the system and it's one of my hobbies.
I spent my first salary from a holiday job buying my first hi-fi system. I love music and a good hi-fi helps me to know more about it. I like jazz, classical and rock music. It is quite similar to my job at SmarTone - I want a better effect from my hi-fi just like I request my staff to provide better service for our customers.