BY Temiloluwa Sobowale
It is no news that the Coronavirus pandemic is making the world economy go through one of the most challenging times in History and many industries have been affected with many more to be affected as predicted by economists and global experts.
Fear has become the currency of the day, that shouldn’t be your approach to this predictions.
We have seen various visualisation on the situation (explanatory analytics)and then moved to predictive analytics(telling us what might happen in the future with what is happening now),but the impact of the prediction on your business will still be dependent on the decision you make or not make now on your business (Causal analytics),so while the predictions are out there, fear will cloud your decision making capabilities and you can make poor judgments, which will lead to crises for your organization(the crises will be based on your decision not the predictions),so Fear is not a currency to spend now.
PLAN! PLAN!! PLAN!!!
Here are a few tips on what you can do now to reduce the impact on your business
Break your plan into 3, Best case (if current situation remains the same as you projected for the year) Expected case (If prediction happens how do you survive) Worse case (if things got worse than predicted),with this in mind you can scale your business down appropriately to fit current realities with this suggestions below
1)Let-go of Negative customers, Yes we all customers but not all of them are positive i.e the cost to serve them is higher than the revenue from them. You will say but I hope that in the future I can increase pocket share from them and they become profitable. NO! they can only be profitable if you are still in business in a few years, so make hard decision to let them go, and stop dragging down margins you are earning from other profitable customers.
Before you make a decision to let-go, you need to do proper analytics to determine profitability of each customer, truth is some customers bring in a lot of money (revenue) but are difficult to satisfy (cost to serve), but some spend less but they never call or disturb you, don’t look at revenues per customer, look at margin per customer, then do profiling for the customers using various variables so that you can easily identify customers like that across your business and let them go. Letting go might mean reducing cost to serve, you can confine them to customer service level 1 meaning they only get only email responses(instead of level 3 they are on before, where they call contact center free, have dedicated account managers, and also have email access).
2)Look at your PRODUCTS, What is your return per product?, and don’t get emotional about this, that you spend so much time developing and marketing a product ,does not mean the customers will use it and it will become profitable, so look critically at products that are delivering your margins, and focus on them moving money to grow their share of market in your industry, increasing your margin per product and reducing your loss per product, use deep analytics to identify profitable products that customers are willing to pay for. In looking at products, look at attributes that customers really care about and build them into your product, you need some level of analytics to bring precision into what attributes to remove(wasting money and low use rate)and what attributes to scale(doing well and can be done bigger).This is no time for much futuristic plan, you need to survive this time before you can even have a future, but be sure you are removing the non-essential, time and money wasting attributes from your product portfolio.
3) Look at Your HUMAN RESOURCES, using HR analytics to know who is delivering returns to your business and who is not (regardless of level), focus your retaining people with the greatest returns.
You can decide to pay higher per KPI delivery instead paying per hour, this will help tie activities to results and you will get a better optimized Human capacity use.
4) Look at your Industry, which of your products has the most opportunity to increase market share, then focus to drive this for increased market share and revenue. Remember if customers buying power goes down by 50per cent, industry spending is down 50per cent too, hence if you can increase your market share on a products by 50per cent, when industry is down 50per cent you will be down by just 25per cent, putting you in a better shape than the average competition in the market, this will put you at an advantage in the coming months.
5) Look at your marketing spending, don’t just cut it down, use analytics to pinpoint the most important channels that achieve your desired goals, then increase budget on those channels (Since they deliver better results) while cutting down on others to reduce your spend in this time, your reduction should also be based on highest return per channel to lowest return per channel. Please don’t assume here, find out from research and analytics, which of this is more effective and then sort and cut.
Like I said before you need 3 strategies, here is an example based on the write up above
1) Keep my plan as is because prediction didn’t wasn’t as bad as projected (Best case)
2)Reduce Negative customers by 50per cent,non-performing products by 50per cent,un-utilised product value/attributes by 50per cent,non-performing Human resource by 50per cent, industry market share increment by 50per cent, marketing spending not delivering ROI, a 50per cent budget cut(Expected case)
3)Reduce Negative customers by 90per cent,non performing products by 80per cent,un-utilised product value/attributes by 90per cent,non performing human resource by 85per cent, industry market share increment by 85per cent, marketing Spending not delivering ROI,an 85per cent budget cut.
Do simulation exercises with your team on virtual work/working, plan for the worst but hope for the best.
Please plan for the predictions, panic and fear only deliver poor results ALWAYS!!
All the best in your planning.
–––Sobowale, a Kellogg Alumni, is an executive scholar in Sales and Marketing, co-founder of www.brandmanager.ng and CEO of Intelligent Interactive Limited, a brand Marketing and digital analytics company in Nigeria.