There is an old saying that “When the Going Gets Tough the Tough Get Going” and experience has shown that the most successful organisations and individuals are those that recognise the risks and react most quickly to the changes in the environment. Those that hold off and hope for the best are usually those that come off worst.
So is customer service an area where performance can be allowed to decline if it saves on costs?
A survey by Accenture showed that only 3% of organisations thought customer service was somewhat less important during a downturn and only 4% thought it not at all important to invest in in service and support activities during a downturn. (http://www.rcc.gov.pt/SiteCollectionDocuments/Accenture_CSS_Survey_v03_online.pdf)
So what happens during a downturn?
The causes of an economic downturn can be varied and complex but in simple terms can be the result of a significant change in a combination of supply side factors where increase in materials costs drive up prices and create lower demand or by demand side factors that reduce money supply and restrict credit and thereby also contribute to demand. So the result is customers with less to spend, whether business-to-business or business-to-consumer the effect is similar. Customers become more sensitive to supplier performance in terms of the loyalty fundamentals i.e. brand, price , quality and the service experience and have a higher propensity to change supplier if these are not delivered.
So the service experience is important and as it is necessary to respond quickly what should be done?
1. Understand. The first thing is for the leaders of the organisation to calculate the potential size and scope of the risks and to model the effect of various revenue and profit downturns on the performance of the business. Remember to follow the money, the end consumer is the only source of revenue so understanding how it gets from their wallet into the business bank account is vital.
2. Review the supply chain. Is the ability of the business to a greater or lesser degree dependant on the performance of one or more suppliers? Are all the suppliers in a position to weather the storm or could they use some advice or should alternatives be sourced? In the same way can the performance of your distributors (your primary customers) have a negative impact on getting your products or service to the end consumer? Are there any conditions in your purchase or supply contracts capable of being reviewed to protect your position? Can you help any suppliers or distributors to be more professional? Understanding how the supply chain affects your customer journey maps is never more important than in a recession.
3. Invest in customer frontline and support staff skills. With customer sensitivity to failure at a high level and a world of alternative suppliers at their fingertips via the internet a recession is not the time to weaken the frontline. Keep telephone responses up to standard and maintain complaint resolution as a critical performance indicator. Skill development also builds staff loyalty and confidence.
4. Examine key processes. Can they be made even quicker and easier for your customers to trade with you? Is the business operating as slickly and effectively as it can? Can technology help? Are competitors more effective?
5. Take the Free-bies. Engage the staff in performance improvement brainstorming – Its free! Take the waste out of your sales and service processes – Its free! Encourage critical creative thinking at every level, those closest to the customers know what the issues are – Find out –Its free! Consolidate premises to reduce overheads – Its free! Don’t wait for a crisis to force change sort out the issues early.
6. If you have to downsize think carefully. Is it better to reduce the number of customer experience management team or the size of the accounts department? If the CEM team is reduced and the customers leave, there will be no need for an accounts department but if the customers remain loyal there will be plenty of time to count the money later.
7. Know where to focus scarce resources. Analyse the customer base and segment the customers to understand who are the most important customers in terms of revenue (cash flow), profit (investment and growth) and frequency of purchase (continuity). They are the jewels of the organisation so keep them safe.
8. Ramp up on loyalty rewards. Many organisations have loyalty programmes where the fiscal value of the reward is far outweighed by its psychological value to the customers so such programmes may present a very cost effective option for retaining the most valuable customers.
9. Kill the sad cycle. The risk is great in a recession. What is the point of delivering a poor customer experience, losing customers, investing even more in sales to replace lost customers (if you can in a downturn) and then delivering poor service to them and thereby repeating the same sad cycle.
10. Don’t make “Don’t Care” a reason for going out of business.
A downturn will create a fault line between those that survive and those that suffer, where do you want to be?
If you do not know how or what to do to address service experience issues why not seek expert advice?
