As the global economy is slowly picking up, companies large and small are facing a similar challenge: growth. Following years of aggressive lay offs and cost cutting, companies are now seeking new growth vehicles in the form of innovations and new sales revenues. The only source of new revenues is the customer. The problem is that the customer was very much out of focus during the crusade to slash costs.
In their pursuit of new ways of generating revenues and expanding their business, companies are facing two crucial obstacles; the acceleration of product commoditisation and the erosion of its critical assets, employees, and customer trust. It is their ability to effectively and quickly deal with those challenges that will allow them to lift themselves from bean counters to growth possibilities.
Assuming that in difficult economies price is the only game in town, many companies simply defaulted to a price war; lowering their prices to accommodate the competitive landscape. By doing so they only fuelled the price wars even more, guaranteeing even further price declines. To afford this strategy they ventured into massive lay offs and severe costs cutting measures that left their workforce struggling to survive while being thinly spread over growing number of tasks.
Focusing on price and cost cutting, competing companies managed to turn their products into a copy cat of each other. Products lost their edge and competitive differentiation and they untimely delivered blindly similar value propositions. The emergence and success of private labels or store labels is one of many proofs of the inability of the major bands to produce differentiated, premium commanding product.
Without innovation and new offerings, growth will not be achieved. Customers will not be willing to pay more for the same old products. Combined with increasing boredom and a higher threshold for loyalty, customers will defect at much higher rates and at much greater pace to any new entrants who will promise to bring something new and exciting to their lives. The problem is that innovation comes from two main sources: employees and customers. Employees who are constantly seeking new ways to please and surprise the customers, and customers who are wiling to try new things and occasionally even provide an insight or idea for a new product.
To activate this innovation process, companies need to tap into their most important asset, trust. It is their trust with employees that leads to employees commitment, risk taking and innovation. It is the willingness to try harder and often go above and beyond that leads to breakthrough products.
No 9-5 jobs ever produced such activity and results. But following years of insecurity, work overload, and being taken for granted, employees are not even close to delivering that commitment.
Companies took their employees for granted in the past few years, loading them with the work of their laid-off counterparts and expected them to smile and say thank you. Well they did, publicly, but only completed the minimum tasks needed to survive in their own cubicle.
There is an erosion of employeecompany trust. Reversing the trend will not be done within a fiscal quarter. Unlike cost-cutting measures which can be commanded overnight in a memo, bringing people to their innovation and caring zone, is a much harder and longer process.
Following the 1990s era of human capital with all companies pledging commitment to employees real value to the corporations, the last few years provided a harsh wake up call of what companies really think about their employees. The relationship defaulted back to its pre 1990s levels creating a greater level of disappointment among employees and decreasing loyalty and commitment level in the process.
At the other end of the stakeholder spectrum, a similar process can be discovered. Customer satisfaction is reaching new lows and service levels are at their worst. In their pursuit of cost cutting, companies are seeking any way to increase efficiency at the expense of quality of relationships. In the era of cost -cutting, customers suffered as well.
Service and product quality dropped while companies introduced a whole host of self-service options which are all geared to make customers service themselves without any incentive to compensate for the shift in the relationship.
What ever made companies think they can make the customer work harder for his service and products and then be happier about it? In addition, new and unclear charges started to appear in our statements to provide new revenue streams to companies, without providing any new service to customers. Features or services that once were part of the overall product, are now being charged separately. Again, the touch of an inhuman, cost cutting system, took customers for granted and decided to milk them for all they are worth.
The accelerated commoditisation of products and services combined with the increasing erosion in customers and employees trust are major obstacles to the growth of any company. Ignoring them will be a mistake.
Addressing the later problem is key to solving the former one. It is only by putting in place a strategy to rebuild trust among employees and customers that we can create a fertile soil in which to grow new differentiated, premium commanding products.
So where do we go from here? Lets start with the basics. Relationships consist of conversations and exchanges. First companies and customers conduct conversations and then an exchange of products and money takes place.
The more conversations you have the more exchanges will occur. The longer the conversation, the longer the relationship. One can not live without the other. One can not minimize one while maximising the other.
If you seek to increase and rebuild your customer trust, you must start by conducting a conversation. I am not referring to the traditional loud one way conversation, A.K.A. advertising. I am referring to a mutually respected one. Start at your contact center. Stop measuring every second of every call and try to allow some room for quality conversations with your customers.
Here are some sure-fire strategies for conversations that are geared to rebuilding trust and drive growth:
Listen to Learn – Expand customer knowledge by collecting more information about each and every one of your customers. This information, such as life events and personal references, can assist you in tailoring offerings to each customer and providing some new cross-sell and up-sell opportunities for you. The more you listen, the more likely you are to make the right offer that will result with a sale.
Probe for more Ask: What else do you need? What else can we do for you? Substitute yes or no questions with open ended questions that can result with new business opportunities. Build solutions around those requirements to build more innovative and customer-focused solutions that are more likely to deliver greater growth results.
Solicit Innovation – Seek advice about the next best thing. Ask your customers to describe how they are using the products; in what environments, under what conditions? Seek to understand how the product can be improved or changed altogether to fit their evolving needs or create a stronger, more memorable experience. It is the strong memorable experiences that command premiums through its unique value proposition. They are the anti-commoditisation silver bullet.
Test New Ideas Got idea? Talk to customers. Sometimes they may nix it and you will still go ahead with it, as many successful new innovations have proven. But often customers will have improvement suggestions. They will provide a different, customer-focused perspective on the new idea.
Manage Customer Insight – Beyond analysing customer insight and fitting it into bar and pie charts, start addressing the qualitative nature of your customer insights. Mange them internally and follow through on them. Show customers you truly care about their issues and do not forget to get back to them with the results update.
All these strategies may seem common sense but in fact they are counter intuitive to the costs-cutting program you ran over the past few years. Talking to customers cost money and the trend has been towards minimising costs. These strategies require longer discussion time with customers.
They require openness when the customer is ready to talk and not only when you have questions. These strategies also require taking real actions and not just dismissing it quickly and moving to the next call. Ultimately it requires focus on the customer not product margins.
For those who are counting on technology as a source of growth, you must remember that technology is merely a tool. Without peoples acceptance and adaptations it will not take off. There are sufficient proofs for promising, yet unsuccessful technologies in our history. So we are back to people as the growth engine.
Applying these strategies will send a clear message to your employees about what is important in the company and complementing that with trust building measures with employees is the first step toward innovation and growth.
If you are seeking growth in business, there is only one source; your people. Employees and customers. And the path to them is going through mutually respected conversations and interactions.
Lior Arussy is the president of Strativity Group, Inc. and the author of The Experience! (CMPBooks 2002) He can be reached at [email protected]
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