Mid-sized Canadian company hedges bets by opening U.S. office

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The series: We look at decision makers among Canada’s mid-sized companies who took successful action in a competitive global digital economy.

Canada’s Bond Brand Loyalty began as a subsidiary of St. Louis-based Maritz Motivation Solutions.

But with a chance to carry out a management buyout of the business in 2015, Bob Macdonald, president and chief executive officer of Bond Brand Loyalty, jumped at the chance.

“We bought a business from the United States and it’s completely Canadian owned, Canadian run and operated,” says Mr. Macdonald, who was born in New York and held dual citizenship until three years ago.

As a customer experience and engagement agency, Bond runs both formal and informal loyalty programs for its clients, roughly 75 per cent of which are in Canada, mainly in the automotive, banking and retail sectors. But it knows full well that Canada’s loyalty reach pales in comparison with that of the United States.

Canadians hold an average of 13.3 loyalty memberships per household, with a total of 175 million memberships across the country, according to loyalty publisher Colloquy’s 2017 Loyalty Census survey. By contrast, the same survey showed 3.8 billion such memberships in the United States.

One of the advantages of being based in Canada, according to Mr. Macdonald, is that it affords the opportunity to work with some global brands on a smaller scale. The likes of Ford Canada or Honda Canada have head offices here, for instance, but they aren’t as big as they are in the United States, so it allows Bond the chance to try new things with loyalty programs or using new technology to connect with customers before scaling those programs into bigger markets south of the border.

“We find Canada to be a fabulous innovation area simply because of that,” he says. “You’re able to cover more ground with a client need than is possible within these gargantuan organizations in the U.S.”

And while many industries are waiting to see exactly how business will be affected by the replacement of the North American free-trade agreement with the United States-Mexico-Canada Agreement, if ratified, Mr. Macdonald says that, as a company that offers a service rather than a product, he is not overly concerned.

But he is sensing a change in attitude.

“I feel like I might be picking up more of a Buy American sensibility in the U.S. than I did before, which isn’t really a direct consequence of the legal document, but it is a byproduct of a change in sentiment,” he says.

With that in mind, along with U.S. President Donald Trump’s stated aim to reshore American companies, and to strengthen its relationships with its automotive clients in particular, Bond is in the process of opening up a 10-person office in Detroit.

The decision relates to being closer to decision makers as American companies reconsider their presence in Canada, Mr. Macdonald says.

“It’s actually closer to where some of the decisions are being made for some of the car companies,” he says.

With the potential for more American companies to pull back, or at least treat Canada as a “branch office location,” Mr. Macdonald says Bond needs to consider its strategy, all the while catering to its substantial Canadian business.

“We diversify out of Canada, so this office in Detroit would be part of that – to make sure we’re prepared for other head offices departing, that we still have influence at the new head office,” he says.

Lorna Wright, executive director of the centre for global enterprise at the Schulich School of Business at York University in Toronto, says that with so much business being done over the internet, oftentimes people will say it doesn’t really matter where a company is based.

However, given the current nationalistic climate in the United States, being able to point to an office there can be helpful.

“They can say they are spending money within America and the money’s not going out [of the country],” she says. “The whole ‘Buy America’ [slogan], it applies to services as well as goods.”

While Dr. Wright suggests that opening an office in the U.S. is probably one of the best ways for any Canadian company to attract more clients, she does caution restraint for any business looking to spread its footprint there.

“Get yourself established somewhere first, learn the ground rules, learn what it takes and then see whether you need another office,” she says.

For many service industries, for example, she says that it is not always necessary to pursue geographical closeness to clients, and having one outlet might suffice.

But for those businesses that do decide they need multiple locations, she says it is important to realize that operating a business in Detroit, for example, is very different than running an office out of Los Angeles.

“There isn’t just one business culture,” Ms. Wright says. “It differs by region, so if you’re operating in the Northeast, that’s quite different than operating in the south, in Texas, for example, or out on the West Coast.”

The current climate of uncertainty is not an ideal environment for a Canadian company looking to build its presence in the United States. The best course of action, according to Dr. Wright, is for a company not to overextend itself and to stay flexible. “Right now things are in turmoil,” she says.

In addition to political volatility, there are economic conditions to consider, as well. “The U.S. economy seems to be doing well at the moment, but is that just a short-term thing?

“If I was a company that had just set something up, I think I would want to stick with just what I’ve got at the moment and see what’s going to happen.”