3 Digital Ways to Become Recession-Proof and Secure Good Results
av Vincent Onderdelinden, på April 7, 2020 11:00:00 AM CEST
In this first edition of our Topics in Turbulent Times series, we’ll be starting at the very top of the organisation. We’re obviously talking about CEOs, Managing Directors, Entrepreneurs and anyone else who’s ultimately responsible for running the business. What are their main concerns? And what role can digitalisation play in their business strategies, when the economy is taking hits and we're living in times of uncertainty?
Although each will have their own burdens to carry, we do see specific trends in what the typical CEO is most concerned with right now:
- Given today’s global economic turmoil - and perhaps even a recession - how can we stay in business and how do we ensure we’re still getting our work done with less resources?
- How can we avoid being disrupted and out-competed by new digital business models or more digitally-savvy competitors?
- What should we do to adopt the right digital technologies ourselves, and how do we even keep up with all the digital progress going on around us?
- How do we stay relevant to our customers, and how do we manage their rapidly changing demands and expectations?
These worries are valid. Economies are changing, are not necessarily for the better. Digital disruptions have probably brought us as many challenges as it did opportunities. Keeping in mind the business leader’s ultimate goals to drive sustainable growth, increase profits, and grow shareholder value, we feel there are a few key digitalisation initiatives worth exploring urgently. Regardless of industry or situation, every CEO could take at least one (or more) of these three actions to help their business survive - and perhaps even thrive - at times when the economy looks bleak!
1. Invest in automation across the board
More automation results in less manual work, per definition. Automation will help companies trim down on fat, collect more performance data to make even better decisions, and drive more predictable business outcomes. It's basically what is needed in turbulent times.
Next to that, although the human factor is and will remain key in any business (for the foreseeable future at least), automation does certainly have the potential to increase overall productivity and output. We’re not just talking about the obvious manufacturing lines. With the right digital technologies, any and all departments can improve their throughput, quality, predictability, and consistency at reduced human labour costs. Here are just a few examples amongst the many that could spring to the CEOs mind, which would result in better business continuity right away:
Human Resource Automation
Although HR is obviously a people-minded organisation, HR automation would definitely have a justifiable purpose. Especially in the more traditional companies, a lot can be said in favour of reducing time spent on manual tasks, so they can spend more time on attracting and developing the best talent:
Marketing & Sales Automation
Every single minute wasted on manual tasks, is a minute not spent on conversing with and selling to customers. Most marketing and sales organisations have the potential to become much more relevant to their customer base, and double their output with the same amount of people, just by designing the right digital go-to-market strategies and using the right technologies:
Customer Service Automation
Churn is a silent killer. Bad, slow and unhelpful customer service plays a big role there. Companies with less churn have to acquire fewer new customers to sustain their growth. Existing customers are also about 25X less expensive to sell to than new customers. It is essential that your customer service team has the time and resources to prevent customers from walking away from your business:
- Help customers help themselves
- Understand what customers think and feel
- Delight customers in need of help
In general, automation helps to reduce costs, improve predictability and productivity, and avoid unnecessary human errors. It is exactly what many will businesses will need, across the board, to survive in more uncertain times like these!
2. Invest in digital business models
Banking. Hotels. Transportation. Movies & TV. Music.
Modern customers are simply looking for the best value propositions. We've all seen how digitalisation has been ruthless towards former incumbents. The list of disrupted industries is growing at an unprecedented rate. New players come up with smarter, more relevant, and more profitable digital business models every day. Even if rivals don't come up with completely new business models to replace the old ones, then they're still doing everything they can to attract and retain more of your customers, and their playing field is largely digital.
Bad news for those who merely preserve: the more digitally savvy CEOs usually win.
Digital progress has completely shifted power to those who can make digitalisation work in their favour, rather than against them. The key question therefore becomes if and how your company could benefit from a digital business model. What about any of the examples below?
- Online Marketplaces
- Sharing over Owning
- Open Source
Especially in turbulent times, the Subscriptions model can really help to ensure a company's continuity. Memberships or monthly subscriptions provide your customers with continuously recurring value, which they do not want to miss out on. That loyalty makes your business sticky and reduces the chance of losing customers. Subsequently, well-functioning subscription-based business models make businesses more resilient in challenging times.
How CEOs could think about applying the Subscriptions model:
- Membership access to block desirable products from non-members and create scarcity
- Membership levels to motivate customers to keep coming back time after time
- Membership convenience to reduce time spent on obtaining your or rival products
- Membership variety to expose more products to already engaged customers
- Membership benefits to receive significant added value over non-members, such as:
- Unlimited service access
- Special membership treatments or events
- Special discounts for frequent visitors
Simple example: a hairdresser offering a monthly subscription could include unlimited haircuts (membership benefits), a few high-quality hair product testers (membership variety), and priority seats to avoid waiting times (membership convenience). In return, she would get a predictable monthly recurring revenue stream, more loyal customers, and perhaps even a few more high-margin hair product sales. Since the average customer wouldn't starting coming in for a hair cut twice as often all of a sudden, her costs wouldn't increase. Business continuity 101.
Of course, we're not saying CEOs should completely overhaul their current business models overnight. However, they should probably also not fail to act all together. Start by asking if you should be moving towards a digital business model in the first place. Not every business will lend itself for digital business models, but traditional thinking and mere lack of creativity are limiting the potential of many more!
One thing is clear: CEOs have to understand where their buyers are, what it is they need, and how they want to buy. Digital business models lend themselves perfectly for answering and capitalising on those existential questions.
Inspired? Interested to understand what else YOU could do to ensure the continuity of your company? If you want to learn more about adding a digital business model to your existing business, just click on the button below:
3. Obsess over customer-centricity
The most successful businesses are run by CEOs who are obsessed about adding more and more value to their customers' lives. Leaders like Steve Jobs, Jeff Bezos and Richard Branson are experts at getting to know their customers to the very core. Once they truly understand what makes their buyers tick, they design a measurable strategy to market, sell and retain customers effectively.
There's no question that the best CEOs are extremely involved and invested in customer-centricity. They have the ability to understand their customers' thinking patterns, problems, desires and needs. CEOs like that will do everything in their power to make sure the wider organisation sells in the way their customers want to buy.
So what can CEOs do to promote an obsession with customer-centricity?
- Invest time in truly understanding your customers => Here's how you do that
- Build great products that solve an actual problem => Understand your buyers' pain points first
- Market with your customers' interests at heart => Educate buyers on how to solve their problems
- Sell in the way your customers would like to buy => Add value before you extract value
- Try to understand what your customers think and feel => Collect and action customer feedback
Every one of these five mindsets - because that's what they are - will be much easier to execute in a digital work environment, i.e. companies with sufficient digital leadership and digital capabilities.
Investing in different facets of digital is probably one of the smartest things any CEO can do right now. It will result in:
- A more automated, leaner, smarter and more productive organisation
- A better, data-driven understanding of how to add value to your customers' lives
- The ability to get ahead of disruptions by digital business models and more digitally-savvy rivals
If sustainable growth and shareholder value are two of your most important goals, aren't those three outcomes basically most of what any CEO needs?
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