- By Shaun Smith
- Jul 08 2008
Ten ways to beat the recession
Well, it looks like the promised recession is finally upon us: But this is the opportunity to put distance between you and your competitors by improving your customer experience whilst they are busy cutting back. It has been estimated that reducing your customer churn by just 2% has the same impact as reducing your costs by 10% and in tough trading conditions it is even more important.
Look out for these ten pitfalls that trip organizations up when the going gets tough.
1. Believing that delivering your brand does not require the active and continuing involvement of leadership. There is a tendency for organizations to hunker down and this leads to the leaders becoming internally focused. It is even more important for leaders to walk the talk to keep their people motivated and their customers coming back.
2. Delegating responsibility for the customer experience to marketing or HR or Operations. The executive team have to own the customer experience and you cannot afford competing agendas and politics to determine priorities.
3. Segmenting customers by demographics or account size rather than profitability. In tough trading conditions when customers are scarce you want your best customers spending more with you rather than your competitors so focus on real customers not some arcane marketing view of the world.
4. Assuming that you know what targeted customers value. You can’t afford to waste precious resources providing more than customers really want or need so find out and reallocate your resources, differentiating on the things they do want not the things they don’t.
5. Installing a CRM system and believing that it will automatically reduce costs. Now is not the time to spend large sums of money on technology unless you have first designed the experience that it is intended to deliver. Gartner research found that 55% of CRM installations fail to deliver benefits and actually dilute earnings.
6. Creating a loyalty card and assuming it will create customer loyalty. Most loyalty cards are thinly disguised ways of discounting and they simply attract customers wanting a deal. Discounting in a recession is not that smart. Use your loyalty card to get you closer to your best customers and give them benefits that will earn truly their loyalty and protect your margins.
7. Taking the new brand proposition created by your ad agency, communicating this to the employees and expecting that they can or will deliver it. You need to do the reverse: deliver the brand proposition through the employees first, then get the ad agency to communicate it.
8. Buying in the same sales and customer service training package as your competitors. This is simply a waste of money. Improve your employee experience so that you retain more of the people you have already trained then develop your own branded training to take your people’s skills to the next level.
9. Expecting to differentiate through your customer experience when all your measures and reward systems are volume-related. In a soft market you need to get up-stream with your measurement process. So measure the customer experience and customer advocacy. If this improves so will your numbers.
10. Measuring customer satisfaction and believing that it matters. 80% of customers who switch suppliers express satisfaction with the previous supplier. The only thing that matters in a recession is brand loyalty. Measure this instead.