In the past three global recessions, nearly a fifth of companies didn’t survive. Of those that did, 80% hadn’t regained their pre-recession growth rates for sales and profits three years later. Over two-thirds of CFOs and 59% of economists believe a recession will hit by 2020. CEOs should be worried.
In turmoil, however, lies opportunity. During the last slowdown, 20% of companies in the bottom quartile leapfrogged to the top by recession’s end. They did so not by falling into a cost-cutting trap like others, but by increasing productivity before the downturn hit.
Better customer experience (CX) will not only help your business weather the coming recession, it will help put you in a position to excel. Here are five ways to make it happen.
1. Anchor your company with a customer-focused North Star
In the fog of recession, business leaders must remember to keep their eyes trained on delivering value to customers — rather than getting lost in the weeds simply trying to survive. After all, chances are your customers are hurting just as much as you are. Doing things differently to help those customers and win their trust in this time presents a significant opportunity.
Ensure your North Star is steeped in a human-focus that has a purpose greater than simply staying alive or beating the other firm. Central to Warby Parker's purpose, for instance, is the belief that “everyone has the right to see.” That is a powerful motivator to weather a downturn and stay focused.
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2. Get closer to your customers — with new organizational frameworks and data-driven insights
Before your customers begin leaving amid a downturn, strengthen your customer insights capabilities. These insights shouldn’t just draw on standard operational data (i.e. metrics of past transaction activity) or simple demographics, but instead on experiential data that tells you why people behave the ways they do.
This should help you understand how important you are in their lives, as well as how effective you are at helping them do the work for which they’ve hired your firm to help. Use tools like Clayton Christiansen’s “jobs to be done” framework, which helps firms identify ways to become indispensable in customers’ lives — even in a downturn.
3. Relentlessly cut what doesn’t matter to customers
This means you’ve got to take a walk in their shoes, using methods like journey mapping to understand what’s important. Remember that simplifying the lives of your customers will simplify your organization as well, allowing you to cut internal inefficiencies and redundant processes.
For instance, one healthcare provider, after shadowing patients from admission to discharge, realized that many of its internal activities centered around “justifying patient stays” rather than moving patients through the system effectively to provide efficient, quality care. By redesigning the system around patient needs, the provider reduced direct costs by an average of 20% to 25%, improved nurse productivity by 11%, and improved patient satisfaction by nearly 30 points.
Related Article: Why Customer Focus Eludes So Many Brands
4. Re-deploy employees to maximize value to the customer
Companies that thrive through recessions fight the urge to let people go to cut costs. Instead they look for opportunities to automate tedious work with technology and reskill employees for more rewarding work that drives customer success.
Case in point: During the 2000 recession, Office Depot cut 6% of its workforce while Staples increased theirs by 10%, primarily to support the high-end categories and services it introduced. The reorientation around these offerings — personalized printing, business, tech services — ultimately worked to serve their customers better. In the three years following that recession, Staples was, on average, 30% more profitable than Office Depot.
Remember, too, that many of these changes can be made ahead of the recession, while there is still room in the budget. Now is the time to invest in automation and train employees in areas that have a direct correlation to customer experience, be it Voice of the Customer technologies, journey mapping or customer sentiment analytics.
Related Article: Use Design Thinking to Put Yourself in Your Customers' Shoes
5. Keep customers at the center of M&A activities
Successful firms often turn to M&A as opportunities come available or prices tank. In doing so, however, it’s vital that the synergies in the investment thesis aren’t just about cost-savings, but rather how to reroute gains to customers — who will stay around longer and have a higher lifetime value.
In a recent banking-industry merger, for instance, a large national institution acquired a smaller regional competitor. Though the smaller bank’s customers were known to value their community-focused experiences with the brand, the integration plan involved shifting all their processes and customer touchpoints to the larger bank’s model. What could’ve been disastrous was avoided by undertaking concentrated research early on in the process — research aimed at understanding what was important to customers and how certain changes would look and feel to them. This allowed the bank to prepare tailored communications and better prepare customer-facing employees for the coming shift.
Amid an economic downturn, even some of the best companies are quick to focus their energy on cutting costs instead of taking steps to improve customer experience prior to a downturn — and thereby gain efficiencies and cost savings, while retaining loyalty and revenue.
During the 2001 slowdown, for instance, Dell’s executives favored cost reduction tactics over enhancing customers’ experiences with phone agents. Five years later, the company still hadn’t made up its loss in market share, and was still forced to transfer nearly 45% of all customer calls.
During the next recession, this doesn’t have to be your company’s fate. You can emerge victorious — as long as you begin taking specific, measured actions now, so when the downturn comes, you’ll be ready.
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