Accelerating Through Uncertainty: #1 - Are You Ready?
As good as your business model may be today, it cannot and will not survive forever.
- Harvard Business Review
“All major economic indicators are predicting a recession by the end of the year.”
“Chaos - that’s how we characterize our industry right now”
“How do consumers feel today? Uncertain.”
Uncertainty is Here
In the thousands of conversations we’re having with customers, the feeling is clear – people are unsure about what’s going to happen. And with good reason because the signals are confusing:
60% of CEOs and 40% of economists are predicting a recession by the end of 2022
Consumer confidence is at an all-time low
Layoffs are happening nationwide
Mortgage rates are pricing many buyers out of the housing market
But…
Unemployment is almost at an all-time low, and
Recent data indicates median home price growth is holding steady for a third straight week
We know that uncertainty is toxic for business. So, the big question is – do you, as a business leader, have the revenue strategy you need to accelerate through uncertainty? Or will you be left behind?
As the father of business management, Peter Drucker says, “what is measured is managed.” Your revenue strategy should be at the top of the list of measurement priorities. In reality, many executive leaders rely much too heavily on their instincts instead of measurement – especially in times of chaos.
Our Role As Leaders - Making Confident Decisions for Growth
So, as business leaders, what are we supposed to do? At PATH, we certainly have a bias because we know the power of standing on the shoulders of statistical giants. We use advanced analyses to sift through the uncertainty and chaos and tell you, with confidence, what exactly matters to your customers, employees, and the market.
It boils down to this: We as business leaders can do better. There are plenty of companies that will outperform the market, even during a recession. To execute well and ignore the allure of gut instinct only, you must have the right data to make the big decisions required.
Talk to your stakeholders - your customers, employees, suppliers. Ask them what matters and what's most valuable.
Customer focus defines business: “I know who my customers are and who they could be, but who should my customers be?” I’m paraphrasing Steve Blank, but you get the gist - No business pivot survives first contact with the market.
The relentless pursuit of the right consumers at Amazon: We’ve all heard about Amazon and how customer-focused it is. I encourage you to go back and listen again – Jeff Bezos has always been very clear about how consumer-focused he is. Though Amazon serves four different customers (sellers, enterprises (cloud services), content providers, and consumers), the whole business model is designed to serve the consumer even to the detriment of its other customers. This crystal-clear focus allowed Amazon the space to completely and overwhelmingly satisfy customers and provide innovations like Prime, and so many more, that drive some of the most loyal customers we see. The value in the business is built with the consumer in mind and that singular focus gives the space for innovation to arise. The proof is there: a focus on what your customer wants defines your business.
Prioritize exactly where you need to focus from your stakeholders’ perspective - what's flexible, what is non-negotiable and what can be cut. As leaders, it’s our responsibility to make hard decisions when cuts need to happen. This isn’t always a bad thing. Focus can free you up to create excellence, which is one of the best ways to keep customers close in times of uncertainty.
The power of saying no: If you go in clear about who you serve and what they want, your decision-making is focused and powerful. One of our clients, a $60 million, 70-year-old, full-service third party logistics company, needed to validate and revitalize their revenue model to drive growth and reduce costs. They used data to create a stronger view of their best customers and were able to say “no” to the businesses that didn’t fit that profile. The outcome? They reduced their customer list by 60% and customer service headcount by 50% while growing revenue and maintaining EBITA.
“But I know my customers”: 100% of the companies we work with say they know and understand their customers but would be happy to do better. 100% of companies we work with hold at least one view about their customers that today is categorically wrong.
Show your customers you’re listening and implement or your competitors will. Are you interested in outperforming the S&P 500 by up to 1800%? Implement your customer’s feedback. Agility will define competitive advantage for the foreseeable future and that requires listening, piloting improvements, learning like crazy and doing it all over again. The American Customer Satisfaction Index has been proving for 15 years that customer-focused companies continuously beat their competitors. If you don’t implement it, someone else will.
Let the Customer Speak for Themselves: Our client, a $750 million manufacturer, has partnered with us for over 15 years to drive growth through customer feedback. We send them 100s of client testimonials every year and many of them look like this:
“There was a time when I was looking for someone else to use because I felt that [Company X] didn’t value us as a customer. The last time I participated in this Customer Feedback process, I told [Company X] all about my issues. Ever since then, they’ve really stepped up their game and done well. I wasn’t sure they’d do anything with my feedback, but I haven’t had any issues with them since… I’m pleased with their progress and am committed to staying with them. If I took this survey a year ago, I’d have given them a zero.”
Our competitive advantage relies on our ability to learn more about customers and turn it into action faster than the changing market tides. We use a combination of tools – most importantly the right data - to validate our revenue model and consistently deliver what our customers want. Through this, businesses can beat the competition and decisively accelerate through the recession by providing the most value to the right people.