Recession, What Recession?

Recession, What Recession?

On average, Customer-Centric Organizations have grown 30% since 2008.  An obvious question is “Why”.  Let us cite five reasons:

1)      Customer-Centric Organizations have built an infrastructure, which is nimble and responsive to market conditions. Their reliance on predicative leading indicators provides insight into economic changes before competitors and they were prepared to strategically respond. Their market knowledge and predicative leading indicators also reveals and prioritizes where opportunities are when conditions change.  They know what and where margins are so they can trim with a scalpel instead of an axe.  Because of employee alignment and engagement, the entire organization moves together in response to changes.  And, employees increase efforts opposed to disconnected, unengaged organizations where responding to economic change is like trying to herd cats, more time consuming, and employees become more depressed and demoralized.  Leadership also involves employees in decisions and then steps up to support them once decisions are made, which increases commitment and motivation.

2)      Customer-Centric Organizations are the supplier of choice.  Hence, customers will pull back volume from other suppliers first and then from a customer-centric supplier as a last resort.  Their loyalty is greater to the customer-centric supplier.

3)      Customer-Centric Organizations realize that their loyal customers contribute little to top line growth.  Since loyal customers are already loyal, they buy most of their items from the customer-centric supplier so there is little room for increased spending.  On the other hand, disloyal prospective customers are more likely to switch from current suppliers.  A good example is Starbucks where half of their customers buy only 40% of their coffee from Starbucks — they get the rest from places like Dunkin’ Donuts and McDonald’s.  Why would Starbuck’s concentrate on the customers that already buy 90% of their coffee purchases from them?  Loyal customers contribute to the bottom-line but do little for the top.

4)      Customer-Centric Organizations get more aggressive when competitors pull back. They realize that the best time to grab market share is when competitors have their guard down.  Competitors pulling back on resources and capabilities, open doors which were once closed tight to alternative products and new suppliers.  Buyers also have more time to meet with suppliers when things slow down and are available for deeper due diligence and relationships.

5)      Customer-Centric organizations have a sales function that gets more done in less time. Previous process improvements have freed up sales to be more efficient and effective.   In these organizations, the marketing function contributes more than 50% of the deals in the sales pipeline, which provides more bandwidth to sales to concentrate on getting deals done that have a high probability of close. CRM databases are scored so opportunities are easy to find and forecasts are more accurate.  These organizations know exactly what and how much activity it takes at each step of the process to achieve goals and can respond quickly when ratios change. 

While these are just a few of the reasons why Customer-Centric Organizations can continue to grow through a recession, they provide insight into why they operate differently and achieve better results than most organizations.  Did you know only 5% of all organizations are truly customer-centric?  How about you? 

Contact us to benchmark your progress and prioritize opportunities to improve.

Posted in Recession

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