Updated: May 9, 2020
Over the months ahead, the economic impacts of Covid-19 will see even the least cost-conscious of organisations reviewing their expenditure. And they’ll be doing so with a keener eye than ever.
This is good diligence - at the time of writing, we are approaching a point where some Covid related restrictions are starting to lift. However, we are all working towards a future that is, at best, unclear.
The confidence of our would-be buyers is also exceptionally low. NAB’s Monthly Business Survey for March reported business confidence at an all-time low of -66 index points. Even if Covid restrictions do continue to drop away, a full and fast rebound in trading conditions is highly unlikely. Indeed, the outlook suggests that trade may become harder, before it becomes easier. All in all, it's a challenging picture for B2B operators.
For those in B2C, the ANZ-Roy Morgan Consumer Confidence Index offered some good news last week, reporting a fourth consecutive improvement in the weekly consumer index score. Nonetheless, that improvement – to a result of 85 – is a rebound from March’s 30-year low of 65.3. To put both numbers into simple context, the average monthly result since 1990 is 113.
There isn’t any organisation out there who doesn’t already know that a fall in customer confidence is usually followed by a pull, of some description, on their expenditure brake. Numbers of the gravity above, and early economic data from February and March, tell us that the road ahead will likely involve a pull on that brake which is both significant and prolonged.
This brings us to the jarring realisation that we need to fight harder than ever for the dollars our customers do spend, to ensure they spend them with us!
To economise or invest?
With a conservative spending customer in mind, decisions around economising and investing both involve risks and opportunities that are more acute than usual.
When economising, we need to remember the increased scrutiny with which customers will view every potential investment. In turn, we need to ensure that savings we may choose to make in the running of our organisations don’t impact on the customers’ perception of the value we can bring. For example, a slightly lower cost raw material may be an easy call when holding the short-term P&L lens. But if customers notice the reduced quality in the finished product, we risk losing their business.
With that same customer in mind, organisations able to invest in improving their offering - even modestly - have the chance to strengthen existing relationships, as well as acquiring new customers who are seeking more value for their dollar. Even in these most testing of times, opportunities await.
The realities of business
There is absolutely no doubt that most organisations are going through a period of needing to make complex and relatively rapid decisions. Making these decisions with a clear sense of the impact on your customer value proposition is fundamental to trading successfully in the short term, whilst maintaining a solid platform from which to build towards 2021.
So, economise. But economise with the thought of customer value front and centre.
If you’re in a position to invest, now is a time when well-chosen improvements can differentiate your organisation and see fortunate truly favour the brave.
And, as we consider the notion of confidence, if there’s one thing we should all remain confident in, it’s the knowledge that value will always win out.
Optimising your value equation
Taking inspiration from Chan Kim & Renée Mauborgne in their global bestseller Blue Ocean Strategy, consider the following to help ensure you optimise customer value;
1. Economise. What factors do we believe we can safely reduce well below our industry’s standard, without impacting our value proposition?
2. Rationalise. What factors have our industry long competed on, which we believe we can eliminate completely from our organisation?
3. Invest & Focus. What factors can we increase quality around, raising well above our industry’s standard to deliver greater customer value?
4. Stand out. Does the current situation provide us with an opportunity to create new points of differentiation, that our industry has never offered?
If you think it's time to address your organisation's marketing performance, drop one of our partners a line today. Lisa.firstname.lastname@example.org or email@example.com.