Raise the focus during a downturn..
Nimish V. Dwivedi
The recession is already upon us. Take a look at all predictions and emerging ways to manage this downturn. The essence of the inputs provided stays the same. Manage costs extremely well and make the marketing budgets work harder by finding relevant media opportunities. Look at innovative ways to drive growth through new segments and new products. Marketing budgets are already being sliced, diced and overanalysed.
The aspect of cost management has manifestations across the entire organisation. The focus on managing costs of raw materials, inventory and process improvement will continue. Additionally, companies are trying to cut manpower across the board besides moving towards more technology-driven and less human-based cost saving approaches.
This rationalisation of manpower and focus on cost management can have severe repercussions on the overall standing of the organisation across all its metrics, from top line growth to profitability and market share.
Let us consider some of our own common experiences while dealing with organisations in various sectors.
You walk into an electronics store to evaluate different kinds of refrigerators and buy one that best suits your needs. First, compared to the number of prospective buyers in the store, there are not enough store assistants as the company has streamlined on this cost. When you finally get the attention of the store assistant, the person is a novice who does not have enough knowledge about all the refrigerator brands and their benefits. Armed with that limited knowledge the person does not even try to find out the size of your home, the size of your family and the price range, besides any other specific needs that you are looking at. You have to make all the choices and decisions practically on your own without a fair sense of whether your selection actually meets your needs.
Take a sports store as another example. The display is excellent and the retail environment has a terrific look and feel. You walk in to try and find running shoes that suit your running style. The shop assistant is a part-timer hired at a low salary for the company to save costs. The person does not even know the difference between trail running and normal running besides having no idea about whether your running style demands more cushioning or stability. You end up making your own choice which may be sub-optimal and results in either foot injuries or back problems later.
Let’s also look at large format supermarkets. FMCG companies keep launching variants of their core products to attract different segments. You are perplexed whether the conditioner variant mentioned will help to straighten frizzy hair while retaining hair colour. The information on the packaging is indicative but not elaborate. You try to seek help. Except the crowded cash counters and the attendants who replenish empty store shelves, there is no one around. The cash counter attendants know nothing and are too busy managing the crowds checking out. Having purchased the product anyways, you call their toll free number. You are guided to an outsourced remote call centre where the only advice provided to your question is an e-mail id where you can send your query and wait for the company to respond.
These common examples, which all of us have experienced in different forms and magnitude during various shopping experiences, form the backbone of what is called the ‘Customer Interaction Model.’
The right resource at the right place
The Customer Interaction Model begins with an end-to-end mapping of how the brand interfaces with the customer at various customer touch points such as different forms of retail outlets, call centres and Web sites.
Management of the Customer Interaction Model entails deployment of the right level of resources at each of these touch points. These resources should be knowledgeable and available to provide customers all relevant inputs about the solution which a brand provides to address each customer’s specific needs. As the examples above illustrate this, the Customer Interaction Model can be used across categories from services to consumer durables to fast moving consumer goods.
It is critical for organisations to commence understanding this Customer Interaction Model for their products and services and to intensively focus on this aspect. As the recession deepens, customers will become Extreme Value Seekers. They will want to know and consider everything about the product in advance before shelling out their money and making a purchase. And brands or companies which are able to clearly and simply explain to customers how their products meet the specifically stated needs of customers will gain market share while brands which do not do this explicitly will end up losing share.
The technology revolution is another reason for companies to commence intensively mapping and driving their Customer Interaction Models. At one end, technological advances are happening at a rapid pace and many of these are really stupendous. At the other end, most customers are very basic users when it comes to technology and need products and services simplified. They also need very clear answers to their basic questions.
A brand may have some fantastic features but if these are not elaborated upon properly at the retail outlet, those features will not provide any distinct advantage to the brand. Imagine a technology feature that allows for sharper rendering of images in digital cameras automatically with every click. While being customer friendly, if the sales person at the retail outlet cannot explain this feature simply, then the product development edge and the brand’s ability to command a premium for this feature is lost.
The pressure on costs is another compelling reason why companies need to map and manage their Customer Interaction Models. Companies may end up cutting back on sales and service staff or providing insufficient training inputs to their sales and service staff or even hiring sub-optimal sales and service staff due to cost pressures, thereby having a huge adverse impact on their Customer Interaction Model. Even prior to the recession, the quality of sales and service staff in different categories has had huge room for improvement. Organisations will need to ensure that these staff can genuinely understand customer needs, provide the right solutions, clearly explain product benefits and guide customers towards prompt redress of any issues and complaints.
Imagine walking into an electronics store to buy a laptop. You are greeted by an assistant immediately. She understands your budget, your computer usage needs, and your maintenance requirements and suggests two models. Then she explains the salient differences between these two models. You make your choice. She even provides a financing plan based on the upfront payment and the installment that you can afford. She explains the effective interest rate charged. She also provides an extended service and maintenance warranty. Finally she offers to get the laptop delivered; the operating system installed and offers to provide training on the operating system.
Naturally your choice is made easily. Such a shop assistant will not be a low cost resource and besides qualifications will also need loads of product training. But the benefit of these costs in terms of sales generated per resource will be huge. Companies need to be careful in not taking cost-cutting approaches for such resources but actually investing in them during a downturn.
What’s Apple chewing on?
A company which has already been doing this is Apple. Apple has stacked up huge resources at the point where customers interact and engage with Apple’s innovative and advanced technology products. At the Apple Stores, rather than salespeople peddling Apple products there are immensely unique concepts which have been implemented. For example, there is a Concierge to meet and greet customers and understand their requirements. There are Specialists who conduct free workshops on Apple’s hardware and software products. There is a Genius Bar where customers can interact with Apple Certified ‘Geniuses’ to diagnose issues related to their Apple software or hardware. These Geniuses also suggest repair and replacement alternatives.
Apple has put the same level of focus on its Customer Interaction Model as it has on its product thereby imparting a whole new dimension to how the brand interfaces with its customers.
High-end cosmetics companies have also been stacking up resources using their customer interaction models, as much as they have been investing in product development and above-the-line brand building. They have invested in shop-in-shop formats within multi-brand department stores equipped with trained beauticians who can check skin tones, explain the benefits of the variants and even show how to use certain products.
While innovations and new product development are good measures to counter a recession, they also have a development cycle. Companies need to continue investing in above-the-line brand building and focusing on their core brand values. Additionally, an approach of understanding how the brand and product interact with customers at various other interaction points and then stacking up adequate resources to optimise these opportunities needs to be pursued. This will enable companies to clearly communicate product benefits or convert customers and provide efficiencies while enabling them to gain share from the Extreme Value Seekers that customers are bound to become during these recessionary times.
(The writer is based in Hong Kong and works at an international bank.)