Customer Recession Management: Sell Smart not Hard
Several decades ago Lord Robins, of Jaguar Inc., said that the fundamental aim of a business is to make money out of satisfying customers. This only resonated the importance of the three questions for any business to ask itself: ‘What is our business?’; ‘Who is our customer?’; ‘What does the customer consider valuable?’
If the aim of a business it to make and keep customers, which is the only way it can make any money, then marketing is about knowing and understanding the customers well enough so that the product or service fits them. The product would then sell itself.
An academic practitioner once gave me an interesting perspective by describing markets as being “problems in need of a solution”. Upon scrutiny, this does make sense. If there is a problem, everyone will look for solutions and will reach their pockets to fix things. If there is no problem you need to sell hard.
So we have a business, we have our customer and yes we have sold a product. That just isn’t enough. Competition sprouts today like weeds around a cash crop. Continued success of a business is not just about developing products but developing products that customers need – and this is only understood by building a successful relationship with customers to understand their demographics, needs and values.
That is what customer relationship management is about: relationships. These relationships are what will help business in the long run.
2008 presented a New Year’s gift to one and all; globally even. We have started to use the ‘R’ word for just about anything from a running nose to a pitiful quarterly result, and as a result, marketing budgets are the first to reach the chopping block. This might be a huge mistake. CRM (Customer Recession Management) is a function of marketing which, in times of an economic downturn, is perhaps the most important thing one should be doing. When the times are good, no one really listens customers. Now that the money is not easy to come by, suddenly businesses are looking around empty shop floors and claiming that the recession took away their customers. Recession does not make money disappear; it makes its holders a little more wary about where they want to put it. People are still buying products and services that are solving their problems. If they aren’t coming to you, perhaps you don’t have what they ‘need’ or they have gone off to your competitor.
Vilfredo Pareto, sometime in the late 1800s , established that 80 per cent of the land in Italy was owned by 20 per cent of the people. This socio-economic ‘law’ soon gained a universal scope and began to be called Pareto Law. Put in a simple form it states that 80 per cent of the effect is achieved with 20 per cent of the means. And it does take 80 per cent of means to achieve the remaining 20 per cent of effects.
This law has been associated with marketing for quite some time and has unfortunately been the epitaph on true CRM initiatives. Although all customers are equally important, it is not easy to understand and maintain relationships with one and all. You could focus your maximum energy on the top 20 per cent who contribute to the 80 per cent of your revenues.
CRM has mostly been confused with a technological perspective. This is a mistake. Technology should only be a tool along with valuable human resources to gain insight into the behavior and value of customers.
The call of the times is not to sell hard but to sell smart. Easier said than done I reckon. But perhaps some steps can be taken along these lines. Such steps need not be conclusive but are meant to be a spark to initiate a thinking process:
1. Develop retention programs for the most valuable customers: The first step would obviously be to identify them and to indentify triggers that may change their needs and perspectives. Then on, programs have to be developed to cater for their needs and improve retentions.
2. Develop effective prospect management processes: Acquisition of new customers is an expensive process and hence an effective prospect management process will aid improved conversion and acquisition of new customers. This could be as simple as defining workflows for lead management and monitoring it.
3. Technology as an enabler: Identify and implement effective and innovative solutions that can reduce lifecycles and means to reach out to customers. Automating fulfillment processes as well saving on paper, storage and logistics costs across the supply chain.
4. Implement Project management tools and techniques: Manage unique product or service development with a definite start and end time with effective project management methodologies.
5. Automate as many processes as possible to reduce time to market. This has a direct effect of resource management and cost optimisation. Gone are the days of cost overruns when the results are seldom guaranteed.
6. Increase accountability: Marketing now has to be more accountable with regards to planning, budgeting and invariably spending. Processes have to be put in place for monitoring and alerting enhancing fund allocations within the organisation.
Remember this is just a start. Markets will bounce back up. The question is not just about survival during tough times. Once the tough times are a matter of the past, you shouldn’t find yourself back in time. Anything implemented and defined now will only aid the future.
The author is a director at i-Learn Ltd, a company specialising in management consultancy, vocational training and personal development. firstname.lastname@example.org