Customer Engagement - the Only Answer in Tough Times
In tough trading times keeping valuable customers is the key to long term success. When customers are engaged with your company then, not only do they stay with you but they actively promote your company to others. This article uses examples to show why this is true and leads on to what you can do about it to ensure your survival and success.
"Customer Engagement is the only answer to what?" - is a reasonable question. Let me try to respond.
If 2008 were typical of recent years British business would be on track to lose, and need to replace at considerable cost, 25 per cent of their customers. This year is not, however, a typical year. For most businesses the outcome will be worse.
The IMF has today cut the forecast of economic growth in the UK to 1.4 percent, very considerably below the forecast of Her Majesty's Treasury and not the first - or probably the last - decline in confidence. The simple fact is that we may well already be in recession. It is only the formal definition and bureaucratic inefficiency that delays our awareness of where we stand - or fall.
As investment and budgets are cut, new or replacement business will be increasingly difficult to find. You must have a clear and effective strategy in place to keep your best customers and bring new, but worthwhile customers to your door. That strategy can only be one of Customer Engagement for a number of reasons.
But what has this to do with the price of fish?
Which customers migrate?
Northern Rock has lost customers as they have lost almost £600 million in the latest quarter. They attempted, apparently with some success, to accelerate repayments of part of the loan of "last resort" owed to the Bank of England and the British taxpayer. So to answer my own question which customers have gone elsewhere?
The answer is obvious - those few that during a credit crunch are sufficiently valuable to be able to negotiate a better deal from another lender. In short the best and only customers that can provide the bank with necessary working capital and profit are walking out of the door. Meanwhile Northern Rock is multiplying teams to focus on repossessions. Leaving aside the ethical question of whether it is appropriate for a bank to use taxpayers' money to be make taxpayers homeless, recent research from the USA suggests that the best that banks are able to wring out of repossessions is 50 cents on the dollar.
As a business Northern Rock is between the proverbial two hard places. They have a duty to repay the massive loan to the British taxpayer. And as they repay the cash drain on their dwindling resources is depriving them of the money that might - with a following wind - have enabled more intelligent trading and a slow recovery.
He says that we will get our £3 billion back when the "bank is sold". It proved impossible to sell while Mr. Darling dithered over nationalisation and the full ghastly truth had yet to come to light. What hope is there of a sale when the bulk of worthwhile customers has gone elsewhere and all that is left is a rump of those that have borrowed more than they can repay and a housing stock that, partly due to Mr. Darling's present inactivity, is losing value daily? As he hints that he will be "doing something" to inject a little action into the housing market those few buyers that might have kept things turning over are sitting on their hands awaiting government handouts and I for one cannot blame them. I know however - as a lifelong Labour voter - who I blame.
Royal Bank of Scotland
Mistakes have undoubtedly been made, but there are crucial differences. RBS is a massive bank with the strength to recover. Most of their losses result from one off charges as, for example, in respect of the questionable acquisition of ABN Amro.
They have talented people and have gone to some lengths to attract more. There is no reason for their highly profitable corporate customers to go elsewhere. In short, unlike Northern Rock, the Royal Bank of Scotland has every opportunity to avoid customer churn, build a strategy of Customer Engagement, retain their key investors and continue to prosper - without I hope - the support of politicians.
The simple fact is that in business you are on our own. You can expect little or no help from elsewhere. If help is attempted by politicians, much of it will do more harm than good. You cannot afford to sit, hands over eyes and brain in neutral as you wait for the danger to pass.
The prof's views are strictly his own and do not reflect those of Triple IC Limited, (www.tripleic.com), the university or any other organisation. The point remains, however, what are you doing to build customer engagement, the sole key to prosperity in hard times?
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ABOUT THE AUTHOR
Professor Tom Lambert possesses an unusual and valuable mix of trained psychologist, researcher and businessman. He has applied his skills to examining the way companies interact with their customers. His result, the Lambert Protocol, is the only true way to measure your current level of Customer Engagement and also the way to identify how you move forward with “Action this Day”. Meet Tom & the team at http://www.tripleic.com