Squeezing the life out of the bottom line

Graham - extremely well put. Guess it's that time when we'll start seeing CEOs desperately holding onto their bottom lines, while letting go of their employee and customer bases that produce their profits. You'd think adults would be able to figure out how profits are generated.

Dick

Is Customer Experience Separate From Core Business?

I appreciate your article, Graham, and agree with all your points. One phrase in particular struck my attention: "Businesses should be run with the bigger value equation in mind". Certainly business decisions should always consider impact on customers' experience, and what that means to both short- and long-term bottom line. It's dangerous when managers forget that everything they do affects customer experience and brand equity (i.e. revenue and profit don't happen unless customers make it happen)!

Lynn Hunsaker, www.ClearAction.biz, mentors executives for superior customer profitability by preventing customer hassles and churn.

Having the Insight to Balance Short-Term and Long-Term

Your points are well made, Graham. Even in the worst economy imaginable, not all customers will leave, and not all employees are too costly to retain. The trick is to know which ones.

Better information and insight are always valuable to a business, but even more valuable in a downturn, because in a downturn the difference between knowing and not knowing can literally be the difference between success and failure, as a business.

A smart business will always try to make decisions based on balancing the short-term and long-term value created, and this is especially applicable to customer relationships. Because customers have memories. Maybe it will cost more to serve a customer better today, but will that extra cost pay off later in a more loyal customer, or a referral, for instance? Yes, we have to consider the short-term cost, for sure, but balance is what is needed. A smart business decision-maker won't simply ignore the long-term.

In my view, however, the problem is that most businesses just aren't that smart, and as a result they are never well balanced when it comes to considering the long-term value issues involved in their decisions. On the whole, businesses are far too concerned with short-term value - you might say they are obsessed with it. Then, when a downturn happens and the short-term really IS more important than before, they are at a loss as to what to do. They have no more tools in their toolbox.

You Are So Right

Dick, Lynn

Thanks for your comments. They are much appreciated

Don

I agree with your comments so much. It is not only important, it is critical that companies balance the short with the medium and long-term during a recession. Companies need to understand how the bigger value equation operates over all three time-scales and to respond accordingly now, so that they don't destroy their value creating potential in the more distant future.

It is this obsession with the short-term and in particular with the rounds of knee-jerk cost-cutting going on at the moment that spurred my post in the first place.

In some ways, it reminds me of the early 90s when business process reengineering became all the rage. Companies went through rounds of mass redundancies, particularly of middle managers, all in the name of reengineering. They did cut their costs significantly, but they discovered later that they had also cut their ability to respond to changes in the business environment.

It can happen so easily when you take your eye off the value equation.

Graham Hill
Independent CRM Consultant
Interim CRM Manager