The price of fuel has soared in the UK leading to a tank of petrol costing $200 for the first time. Meanwhile in the US, the inflation figures came in higher than predicted.
I recently popped into the supermarket to do a quick bit of shopping and bought a ‘meal deal’ of a main course, a side dish, a dessert, and a bottle of wine. That cost $24.
The most recent time I bought it, the price was $14. That’s a 71 per cent increase in a few weeks. I suspect you are noticing similar rises in the things you buy.
Economists will debate whether the world is in recession. Technically, we may not be. But everyone is feeling the pinch. With inflation expected shortly to hit 10 per cent and with wage rises running at an average increase of 4 per cent, everyone is worse off now than they were a year ago.
This means we change our behaviour as consumers. Indeed, psychologists investigating the ‘Eisenhower Recession’ of 1958 first demonstrated that.
They showed that consumer optimism weakens because of what businesses do. In other words, as businesses become less active due to economic pressures, it signals to consumers that they too - should reduce their spending.
Perfect storm
Businesses do less, people stop spending, companies therefore don’t have enough income and must do even less, leading to further consumer inhibition. Consumers are not spending as normal because businesses have created a psychological environment that suggests spending is not a good idea.areas and free lunch cafeterias.
However, research in Portugal showed that customers want to spend. They are just seeking what the researchers said was ‘economic level-headedness’.
That suggests your customers are looking to you for leadership when financial times are hard. The research shows that people continue to buy through tough economic times and therefore, they want your business to carry on selling.
Cutting back in times of economic chaos, therefore, is likely to make it tougher on your business, not easier. As you cut back, your customers will see that as a signal that they too should do the same. That’s
the last thing you want!
Solutions
The puzzle is how do you signal to your customers that all is well when it isn’t?
One answer is to look at your own processes and save money with improved productivity. I was recently with a client running a workshop and it became evident that this award-winning, business was inefficient in some of its online processes.
We discussed several ways it could reduce the time it took them to do various web-based activities. The solutions will reduce their costs significantly which means they don’t have to cut back.
The chances are your business could make similar improvements to internal processes to dramatically improve productivity, saving time and reducing costs.
Browser and email notifications drag you away from work. Switching them off will save you an hour each day. What size is your computer screen? Do you have two monitors? People with two large monitors are around 42 per cent more productive than people who use a single, standard computer screen.
Technology as the answer
There is so much that businesses could do to use technology to improve productivity without spending any money. In turn, this productivity gain will reduce costs due to increased efficiency.
That means that you don’t have to make cutbacks. And that means your customers will not get a signal they should stop spending with you.
According to an article in the Harvard Business Review, companies that thrive during difficult economic times are the ones that invest in technology. Also, the article shows that companies that plan ahead for economic difficulties are the ones that do well.
This suggests if you plan now to use technology wisely, you can survive the problems that lay ahead. Leave the economic chaos to others.
With a level head and more productive use of technology, you can continue to benefit from customers who will be willing to do business with you. And that also means the $200 tank of petrol will not be such a problem for you!
Food for thought
A few weeks ago, I received an offer from my bank that seemed worthwhile. It was for cashback rewards on my card. I hardly ever spend with the card, but it seemed a good idea to use it for gaining discounts.
So, I went online to apply for the addition to my card. All I had to do was go to the relevant web page, enter my card details, and I would be registered.
However, the website had other ideas. I entered the card number, and then I got a message saying, “verifying with the bank”. That message sat there for several minutes. So, I tried again, with the same result. Handily, though, there was a “contact us” button in case anything went wrong. I pressed that button, filled in the form and waited for a response.
Two days later, the bank replied, saying that they could not deal with my query, so please could I write to them at “the following address”.
Yes, you read that right. I am on a website, having an issue with one of the pages, and the owner of that site wants me to write to them using old-fashioned ‘snail mail’
I replied to the email saying that there was no need to waste anyone’s time with a letter. All they needed to do, I said, was to read the email and fix the web page.
Four days later, a letter arrived in the post for me, which looked official. I opened it to discover a letter from the bank saying they had received my email and were “looking into it” and would reply (by letter) within 21 days.
Questions raised
So, my first question is, which century does the bank think this is? But my second query is, what makes them think that a customer who sends an email wants a reply by printed letter?
This is an indication of an utterly nonsensical method of business operations, considerably increasing their costs while simultaneously reducing customer satisfaction. Furthermore, it is a complete and total lack of understanding of their customers.
But why should I be surprised? You wouldn’t have been if you had read the latest report from LinkedIn on the “State of Sales”. This shows that 60 per cent of businesses genuinely believe they “focus on the customer”.
However, according to the same study, only 24 per cent of customers think that businesses actually focus on them. In other words, even though most businesses believe they understand their customers, most of their target audience does not agree.
If anything, the data shows that it is far worse than many businesses might think. Almost eight out of 10 customers feel their needs are being ignored.
The majority of businesses are poorly serving their customers! So, even though you are convinced you understand your customers, the evidence points in the other direction. The chances are you are not serving your customers as well as you could because you do not understand them as well as you should.
Get with the times!
According to insights from the University of Pennsylvania, part of the reason we find ourselves in this predicament is that businesses are still stuck in old ways.
Rather like my bank using ‘snail mail’ in this digital age, many businesses appear to focus on older concepts. The insight suggests, for instance, that ‘lifetime customer value’ is outdated. That’s because these days the similarities between individual customers are less.
People expect a greater degree of individualisation that suits specific circumstances. I was lecturing first-year business students the other day, making the point that businesses do not spend enough money on customer research.
As I demonstrated to the students many businesses appear happy with ‘just enough’ data. Meanwhile, Amazon, Google, and so on collect every last ounce of information about you they can legally achieve. In one week, Amazon will have learned more about me than my bank has in the past 43 years that I’ve had a credit card.
The fact that online businesses can target our individual and changing behaviours week-by-week means that we are all getting used to much more personalised levels of service. We can only hope to match that with far greater attention to extensive customer research.
The evidence is clear. Most businesses, possibly including yours, are doing woefully little in getting to grips with understanding their customers.
If you don’t want to do the research, though, do let me know, and I’ll pass on your details to my bank - as I am sure they have plenty of quill pens that you will like.