Corporate structure and the customer

I've wrote previously about how your company structure is not necessarily your customer's view of your company, so it comes as no suprise that Steve Hurst, editor at Customer Strategy feels that the silo'd structure of companies are to blame. He's just attended the Technology for Marketing & Advertising show in London and has blogged about:

"..the underlying ‘command and control’ corporate structures that are making it nigh on impossible for organisations to give their customers what they want and when they want it in a consistent manner.... Come on guys this is the 21st century not the 19th."

Strong words?

Well, not really, given that very few companies show a high degree of customer experience maturity, despite customer service making a difference in a recession.

As this economic downturn bites deeper, at what point is it that companies realise that their structure may be the difference between success and failure (and its not the fault of the customer)? Perhaps only the ones that live to tell the tale in the end!

I'm feeling gloomy

Its hardly suprising... given that the UK is the 10th 'most gloomiest' country right now, according to Business Week:
http://images.businessweek.com/ss/09/01/0126_business_expectations/11.htm

However, a small ray of sunshine was demonstrated to me last weekend, when I was spending time with Ian, a friend of mine who runs the Lone Star comedy club in Folkestone Kent (Note: What a wonderful website that is ). His regular monthly comedy night was a complete sell-out and what does he put it down to?

"Its the recession! People are down about the economy and need cheering up"

At least they're not depressed... like the World apparently is:
http://news.bbc.co.uk/1/hi/uk_politics/7869748.stm

Recession - its official

So, the long-awaited UK recession has arrived:
http://news.bbc.co.uk/1/hi/business/7846266.stm

Whilst this is hardly a suprise to anyone (some of us having been saying this for almost a year), its effects will be the topic of dinner party conversation for many months to come.... assuming anyone can afford to host one in 2009.

I feel this BBC chart explains the situation better than words:



This has even been noticed by Google, who's revenue figures have dropped 1% year-on-year and 12% comparing Q4 08 with Q3 08. Google UK's SVP and CFO Patrick Pichette, stated:

"It'd be wrong to say that the dynamics of advertising and spending for products
is not affected by this. The UK is in deep recession"

So how is the Government handling the communication of this information?

Well.. so far I've not seen any official response and the Number 10 Government Website hasn't been updated for 2 days.

I'll leave it to you to decide if its a good idea to let the country suffer whilst the spin doctors take longer than normal to plan the "recovery is on the way" rhetoric....

A year ago

A little off-topic, but here's some sobering statistics (Thanks to Mr M Buck for the information).

Around this time last year RBS paid $100bn for ABN Amro. For this amount today you can buy:

• Citibank $22.5bn
• Morgan Stanley $10.5bn
• Goldman Sachs $21bn
• Merrill Lynch $12.3bn
• Deutsche Bank $13bn
• Barclays $12.7bn

And still have $8bn change...... with which, one would be able to pick up GM, Ford, Chrysler and the Honda F1 Team!

UK Online sales grew 30 percent in December

For those who didn't read the Financial Times front page today, the British Retail Consortium and KPMG have released December's trading figures and its not good news. This report is headlined the "WORST DECEMBER IN SURVEY’S HISTORY" (since 1994) and says that UK retail sales values fell 3.3% on a like-for-like basis.
Note:
I'm always a little suspect of retail figures that compare sales from the same stores over two years, as no major retailer I know has exactly the same stores from one year to the next.

Although "The shift in consumer spending is that they are spending less" (no prizes to KPMG for that startling piece of insight), there are some things that are bucking this trend. In fact, the same report states that sales of "Non-Food Non-Store" sales, in other words those transactions which take place over the internet (or via mail order & telesales) were up by 30%.

As I have mentioned in my post back in September, this isn't online's recession yet.


http://www.internetretailing.net/news/online-sales-grew-30-in-december-says-brc

Customer Experience in a Recession

Two consecutive quarters of negative growth in the UK economy means we are officially in a recession (even though most sensibe people been saying that for almost a year).

Note:
A recession it may be, but its not technically a 'depression'. I think the best desciption of both has to be Ronald Regan from his 1980 presidential nominee speech:

"A recession is when your neighbor loses his job. A depression is when you lose yours. And recovery is when Jimmy Carter loses his."

Economists now generally agree that the downturn will last at least about two years. First becoming worst in 2009, it will eventually tail off around 2011.

To so this, they will consider a number of questions:

1. How can you gain competitive advantage/market share without significant expenditure?
2. Can you restrict your customer strategies, especially if there is not tangible/obvious Return on Investment (ROI)?
3. At what point do you forget the ‘customer experience’ and cut costs?
4. If customers are increasing their usage of different channels (e.g. mobile, internet/media devices, etc.) how do you faciliate these on the same/less budget?

However, as an example of corporate Darwinian theory, the best business will survive in these conditions. Those that do survive will have learnt to be flexible & lean, but should be ideally placed to take advantage of the economy when it eventually returns to full-health.

Managing customer expectations in a downturn

If you're in the business of serving customers, you can see the story unfolding before you.

• The economic crunch is here
• Company revenues decline
• You get told to reduce service levels
• You reduce staff and/or cut the hours of cover
• There's a dilution in the customer experience
• This causes an erosion in customer loyalty

So tricky days ahead then as we welcome the ever-decreasing cycle of recession-based customer services.

But this need-not be the outcome, as a recent McKinsey article highlights. This report covers the possibility of finding your customer 'Break Points' and carefully tracking this to avoid a complete drop in customer satisfaction.

One alternative to this is managing your customers down to lower cost-to-serve channels such as online, without a drop in quality of service. As I mentioned in a previous post, this can also be difficulty to pull-off correctly, but then this is a recesssion... and you don't just judge the person during the good times do you?

Customer Service makes a difference in crunch times

As my old Economics teacher used to say "in a perfect market, all prices are known and the market finds its equilibrium quickly". And thanks to all sorts of online innovations (e.g comparision sites) the price of similar products (e.g. groceries) and services (e.g. insurnace) becomes increasingly easy to compare. These items therefore get increasingly competitive (e.g. near enough the same everywhere).

Therefore, assuming the quality remains constant, the only real competitive edge comes in the delivery and support of the item. In other words, the service provided, either during the transaction or afterward, becomes the difference.

This is especially true online, where customers think they get a lesser service compared to in-store. This is proven in a recent survey, where eight out of ten consumers believed they get better customer service in-store, rather than on the internet or over the telephone. What's even more surprising (especially in these more-frugal times of a recession) is that 73.4% say they are prepared to pay more for a product if they receive a better service in-store.

Tim Ogle, CEO at Retail Eyes , who did the survey is quoted as saying:

The public has spoken - even when their pockets are stretched in times of financial adversity like now, they are prepared to pay for quality of service.

UK retailers face tough time

Recently I was appalled to find out that there is an insolvency specialist who has compiled a list of 323 retailers it thinks stand a 70% or greater chance of going under by the New Year.

The idea is that banks will continue to finance retailers over the coming Christmas period, when a lot of retailers make a significant proportion of their money, This will be in the hope that this revenue is enough to keep them afloat.

The role of companies like Begbies Traynor is to rescue companies about to go under. Its therefore good business for corporate insolvency specialists to identify those who are not doing good business (think of this as the equivalent of a corporate dead pool)

Mark Fry of Begbies Traynor said:

"There is every chance we will witness a rash of retail failures at the start of 2009"

Gulp!

Online UK adverising set to grow despite economy woes

I've previously covered the expectation of an forthoming UK recession (or a "contraction in the economy" if you're a politician) and now its looks like its actually here.

I don't think there's any doubt that the overall ad market will be affected by the financial crisis. Indeed Guy Phillipson, CEO of the U.K. division of the Internet Adverting Bureau has said:

"Online is not immune from the economic downturn, but while other sectors see
falls in expenditure the Internet is still experiencing an incredible increase
and is propping up the entire advertising market."

But indicators are that online advertising spending should continue to rise. Indeed some organisations (e.g. eMarketer) are even predicting its double-digit growth through to 2010.

The Credit Card is 50 today

On September 18 1958, Bank of America officially launched its first credit cards in Fresno California. These BankAmericards (now known by their more popular brand name of 'Visa') propelled us into the consumer economy by giving normal people instant access to finances they didn't actually have.

And now sitting on the edge of a global recession, promoted in-part by reckless consumer spending, you have to wonder with hindsight.... was it really such a good idea?

More doom & gloom?

Here in the UK, we're hearing daily news reports of a forthcoming recession. For the second year running the summer was a wet wash-out and even winning lots of medals at the Olympics in China didn't raise spirits back home for long. So, what's in store for online?

Well, suprisingly its not all bad news, as UK ecommerce is still bucking the downward trend.

According to eMarketer's latest report 'UK B2C E-Commerce:Continued Growth in Tricky Times' 2008 will see an increase of over 28% on 2007 for online sales.





This figure, including online ticketing and digital downloads, is an amazing feat considering the decline in fortunes of High Street stores right now, for example:

• Woolworths £20m loss this year, potentially seeing the beginning of the end for this 99 year old
• Next's Spring/Summer sale volume being 20% down on 2007
• John Lewis, Argos & Homebase are all feeling the pinch

And what's more, predictions are that eCommerce will continue to have significant growth, with the same eMarketer report stating:

online sales will hit £94.2 billion ($169.6 billion) by 2012, although the
annual growth rate will drop below 10%

One thing's for sure... this isn't the online marketplace's recession right now!

Here comes the recession!

"Panic, cut all budgets and definately stop spending money on that Internet thing"

In the past, the first budget in a recession to be cut was the PR & Marketing spend. That was in a time where marketing was an art form, where there were no measurable results and marketing budgets were assigned on a 'me too' basis, not ROI.

Now, companies know which half of their marketing spend is worthwhile. Lord Lever is turning in his grave and the science of marketing is established.

So why are company bosses still looking to cut these budgets?

I'm also not the only who thinks this is madness?http://www.forrester.com/Research/Document/Excerpt/0,7211,45128,00.html

Happy Valentines!