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Performance & Growth

You Want My Business? Show Me the Love

Customer-centricity isn’t a nice to have – it’s a must have (and sadly ignored).

Alex de Coning

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One thing that irks me no end is a marketer bandying buzzwords about for no other reason than trying to sound like the smartest person in the room. You have to appreciate the claptrap – making up new words will probably instill the ‘fear of not knowing’ in your audience and, if delivered with enough chutzpah, you may very well seem like the shining beacon that can help an organisation navigate the rocky shoals of customer acquisition.

However, this is not a post that begrudges these kind of marketing tactics, but one that aims to constructively criticise the bastardisation of some of these concepts in the hopes of getting things back on track.

Bastardised buzzwords

A buzzword that has been doing the rounds in the past few years, especially with the advent of ‘new’ media, is ‘customer-centricity’. Initially an ideal, more executives have cottoned on to the term, and in the aim of boosting the bottom-line, have managed to completely illegitimise its initial intentions.

Customer-centricity is not a buzzword, it’s a culture that every part of your organisation has to embrace. Ask yourself: is a CEO’s focus area on the customer or on the KPIs of the business? I understand that as the most senior employee with a fiduciary responsibility to shareholders and the board, keeping an eye on KPIs is essential, but how do you call your business customer-centric if it’s not the CEO’s main responsibility? Nay, priority! The CEO has to ensure that his or her subordinates across the entire business have one specific goal – to satisfy the customer.

Going the extra mile

Here’s a story to explain my meaning: Last year, I attended the TM Forum’s Africa Summit and listened to speakers from across the globe. A talk by chief commercial officer of Kenya Data Networks, Atul Chatervedi, stuck; he recounted a story about an Aiwa outlet in Japan. It was in the late 90s, and his wife sent him on his business trip with clear instructions, “I want a discman.”

Mr Chaturvedi entered the store in downtown Kyoto, bought his wife’s Discman and returned to his hotel. Later that evening, the phone in his room rang – it was the manager of the Aiwa outlet on the line. According to Chaturvedi, the unit he purchased was a demo unit, and Aiwa wanted to swop it out for a new one – the manager called to find out what would be a good time for him to bring the replacement unit.

Now here is what I mean when I say that customer-centricity is a culture, and not just the hollow promise that every second brand would have you believe: The procurement department noticed that the demo unit was not where it should be and asked the sales staff where it could have gone.

The sales staff explained that it had been sold. Considered substandard, the sales department contacted the finance department to find out if they have details for Chaturvedi. Finance contacted HSBC and after the appropriate security protocols were met, Aiwa got the number for Chaturvedi’s wife in India.

They contacted the wife and got the details for the hotel he was staying at, and the manager showed up with the replacement unit, a box of chocolates and a note profusely apologising for the inconvenience caused. As you can imagine, other than spoiling a potential surprise, Aiwa had caused absolutely no inconvenience. Instead, they made a fan for life.

Customers for life

Consumers do not identify with a brand as much as they identify with the product or the service that the brand provides. Having a superior product can’t be considered the only strategic differentiator anymore.

But it seems that so few businesses are really focused on customer acquisitions as opposed to customer retentions, that it’s a rare joy to hear a story about vehicle brand X that collected a customer that broke down on the side of the highway in the rain and gave them a replacement vehicle for the week while their new car is being repaired free of charge.

Sure, I’d be pretty bleak if my new car gave up the ghost within the first few weeks, but I’d always support the brand that treated me with so much reverence. In fact, I’d support the brand that treated my family and friends like that (and my family and friends would do the same).

And there it is: 94% of consumers trust word of mouth, 14% trust advertising. What makes this statistic ridiculous is the amount of marketing budget organisations feel the need to spend when the same budgets could be spent on retentions rather than acquisitions.

A happy customer is an ambassador for your brand – it’s built into us, this sense of community. Take it back to caveman (sorry, caveperson) days. You’d probably get a grunt and a smack from a fellow cavedweller if you tried chomping on some poisonous berries.

Today, if a friend says (s)he’s going to buy a Parker pen, or a Maxwell Williams tea set, or Pirelli tyres, if I have a story to share on why that’s a good/bad idea, you bet I’m going to chime in to save my friend from a potential terrible decision, or reinforce a good one. Think about your own life, what’s more effective, one story from a friend or 12 TV ads, 4 billboards, 3 radio spots and a double page spread in the Sunday Times?

Get everyone involved

So, how customer-centric is your business? If you answered, “We have a Customer Service Department,” then congratulations, you’ve ticked the box for the minimum requirement. Sardonic commentary aside, customer satisfaction is not the responsibility of the Customer Service Department – it’s the responsibility of the top to set the goals and ideals (or mission, vision and values) and inspiring the bottom to follow suit.

Before I ask you all to hold hands and join me for a chorus of Michael Jackson’s Heal the World I think it’s fair to say that Chaturvedi’s story has me despondent – it makes me wish for a perfect world where every provider had that kind of tact when dealing with customers and that more organisations were focused on people instead of the bottom-line. But I suppose you can’t appreciate a sunny day without a few rainy days. 

Alex de Coning started his career in public relations at Baird’s Renaissance in 2001. He left Baird’s to join the team at Cerebra, a strategic integrated communication agency during the course of 2011. He enjoys writing and received a Pixel at the 2012 Bookmark awards for the editorial he created and disseminated for the launch of G-Connect In-Flight Wi-Fi.

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1 Comment

1 Comment

  1. Voicy

    Feb 15, 2013 at 16:57

    Alex de Coning is also sexiness personified. His writing style, general knowledge and passion for the subject matter stands testament to this. Or maybe it’s just the beard.

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Performance & Growth

Controlling Profit Margins To Build Greater Organisational Wealth

To build organisational wealth, you need to have strong financial management and control. Are you getting the insights you need to properly control your profit margins?

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Organisational wealth is a concept that is based on the premise that businesses can only achieve true wealth once all parts of the organisation are running optimally. It places an emphasis on business systems, internal processes, staff morale, job satisfaction and, of course, financial success.

Having proper control and management of your finances is essential for every growing business. Keeping up with, and staying ahead of, competitors requires more than just a simple accounting system to try control financials. Luckily, modern technology and innovative business management platforms offer practical solutions to give you and your team members up to date information about every part of your business.

This helps businesses better manage cash flow, stock holding, expenses and financial investments for increased control over profit margins as well as continued growth and long-term sustainability.

Here are a few ways in which a good business management system can help you achieve greater profit margins and contribute to building greater organisational wealth.   

Comparing budgets vs actual costs

An integrated system allows different departments to quickly and easily share information on expenses budgeted for and actual payments made. This results in streamlined and seamless project planning and management through automatic distribution of information and project amendments based on accurate information.

Managers can get customised financial reports depending on their requirements and set cash flow alerts as well as expense approvals to ensure that budgets are not exceeded.

Related: 5 Ways To Drive Leads And Double Your Profits

Better buying

With the correct systems in place, your small or medium sized business can manage its entire procurement process systematically. Details of suppliers, requests and responses with cost estimates, purchase orders, returns and outstanding orders can all be recorded, centrally maintained and shared between departments. This will allow you to quickly compare suppliers, negotiate better deals and plan your purchases to maintain and improve profit margins. 

Matching supply and demand

Optimising procurement to expertly match supply and demand can lead to an increase in your business’s profit margins. For many small to medium sized businesses, managing supply and demand cycles can be a time-consuming and complicated task. The good news is that an integrated business system, such as SAP Business One, allows you to get real-time inventory insights and updates.

It also allows you to manage and set up standard and special pricing to cater to seasonal trends, which are also readily available. Over and above that, an integrated system allows business owners to apply volume, cash, and customer discounts and run reports to track the impact these special offers had on overall profit margins. 

Accurate insights to make strategic business decisions

The adage “knowledge is power” is certainly true for businesses – no matter their size. Even in a small business, there is a massive amount of information which can be gathered about your operations within the supply chain and company financials. Having access to accurate information can empower your team members to make more informed decisions.

Related: How You Can Profit From Constrained Consumption

Providing employees with comprehensive information facilitates strategic decision-making, which can lead to optimised stock holding and procurement, meaningful customer relationship management and more successful marketing campaigns. These benefits can contribute to a sustainable growth in profit margins.

An investment in technology may initially seem costly, but when you invest in the right tools and platforms, you will soon start the process of building your organisational wealth through increased profit margins and excellent financial control.

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Performance & Growth

Should You Scale Or Should You Grow? (The 2 Strategies Are Not the Same)

Bigger is not always better.

Pete Canalichio and Mark Di Somma

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For decades, the conventional wisdom in many sectors was that bigger was better. The larger you got, the argument went, the more likely you were to achieve market dominance, supply chain efficiencies and coherencies that you could then carry from developed markets into developing markets. That should lead to happy investors.

Except that, as PwC’s Strategy& discovered, in key sectors like consumer packaged goods there is no direct correlation that can be drawn between being big and achieving higher shareholder returns. That’s a startling conclusion.

There may be a number of reasons for that: Media fragmentation has made it harder and harder to get “big” messages out to a mass audience in the ways that companies could when channels were far more limited; the competitive advantage gap between large companies and smaller participants has closed because small companies have learned how to perform well; and, ironically, innovation has in many ways defeated the need for scale because global networks have changed how big individual companies need to be in order to achieve the presence that they would once have had to grow themselves.

Related: 6 Rules Euphoria Telecom Followed For High-Growth Success

So, how should companies decide whether they need to get bigger? Should they even bother? For many, the decision to remain artisan or to work within defined boundaries is an absolutely valid strategy; it enables them to define what matters to them, and to work within those parameters. But, for those companies that do decide to increase their presence, here are some key factors to consider.

Define your goal, and make decisions from there

The decision as to whether to grow or scale comes down to the definition of success that you have set for yourselves in your strategy.

As Jeremy Melis, UPS’s marketing director for small businesses, told The Balance, “The goal isn’t necessarily the speed of domestic or international growth.The goal is to best position your business to achieve what you’ve defined as success. That could be revenue growth, geographic expansion, a community of loyal customers or a better quality of life for yourself and your employees.”

As in all aspects of strategy, the key concern is why, not what or how. Growth or scaling should be the means, not the end. Your goal should be deciding what you are committed to achieving.

Growth and scaling are different things

A key issue is that growth and expansion are too easily confused. Business coach Mihir Thaker makes the excellent point in an article on the site Business Business Business that, “Growth is all about adding percentages here and there around the business …. Growth is normally a factor of turnover …. Scaling is different.

It’s a process driven approach to growth. No longer is the business concerned with growth for growth’s sake, but only with growth which can be managed.”

So, in seeking to scale a business for example, you are looking to change not just the pace and scope of growth but also the manner in which that acceleration takes place. Growth and scale demand different management styles and therefore different types of leadership, while the pace at which expansion takes place also requires careful judgment.

Expand too fast, and the business risks becoming over-extended; expand too slow and the company risks stalling as others react and/or the business cannot keep pace with demand.

And because scale demands a different set of actions than growth, it follows that it springs from a different mindset. One of the key questions that is asked too seldom is: “Does our company have that mindset?” If not, it may be better, and more profitable, to focus on growth.

To scale the business, first scale the culture

Companies that are serious about scaling their presence must understand that their ability to do so hinges on their ability to shift and coordinate new thinking internally at the same time as they look for opportunities and new customer relationships externally. The temptation is to focus only on the latter – to see a shift in scale as achieving a greater footprint through growth, acquisition and/or diversification.

In point of fact, in order to deliver on that, the business itself must change mindset. As McKinsey has noted, in order to achieve a change of scale at requisite speed, particularly in a digital setting, an organisation today needs to start by realigning its technology infrastructure to handle the new levels of customer interactions that will come.

It will also need to invite new people into the business to make the new scaled process work better, develop new ways to ship faster and more diversely and reset its success metrics so that it can accurately gauge performance against its highest strategic goal and act/react accordingly.

Should you scale?

What questions should you ask yourself to determine if you should scale or grow? We have developed a model that helps companies figure out what they should do in order to meet their objectives. This model, called The LASSO Model, addresses a brand’s optimal expandability.

Nearly all the businesses we spoke to in the course of developing our model commented that the decision to pursue scale was about much more than aspiration. It was a conscious decision to achieve critical weight in the markets that they were focused on because otherwise they risked being unable to achieve their goals.

Related: Elon Musk’s Formula For Successfully Growing Companies Faster

That’s particularly true in sectors like consumer packaged goods, media and entertainment, where the pursuit of scale can become an end in itself.

Companies that are fueling their growth through venture capital, for example, will sometimes set their sights on being a particular size at which they are deemed to have succeeded in their quest to expand. In media, the goal for many is to make it to the R100-plus million revenue mark because that is deemed to be a benchmark for a scaled media presence.

If that’s the metric that is expected of you, then that will be the key measure you focus on. Many will get stuck at around R50 million or lower, unable to grow a unique audience, achieve consistent engagement, differentiate themselves against others and over multiple platforms, and improve their margins.

Size alone is probably not enough

That leads to the final factor. Strong businesses depend on more than one thing to protect themselves against competitors. We liken this to a Rubik’s Cube. What makes the Cube hard to solve is that the puzzle does not exist in one dimension, but rather in three.

Equally, businesses that have ambitious expansion plans need to look for ways to build in other aspects of competitiveness beyond just size itself. Indeed, wherever possible, they need to use scale to reinforce and strengthen those other elements that make up their value proposition, so that the bigger they become, the more competitive they are.

Related: Levergy Founders Tell You How To Scale Quickly – And Intelligently

Many of the companies we spoke to in the course of our research found this the most difficult part of their expansion planning – thinking of scale as a competitive factor that wouldn’t just strengthen their market presence but also raise the barriers to entry for copycats and enable them to profitably leverage and capitalise on what really drew customers to them.

Growth and scaling are different approaches and neither one is “better” than the other. Each has its strengths and weaknesses. Each works better in some sectors than others. Each has its own dynamics and makes its own demands. What’s important for entrepreneurs with ambitious agendas is that they understand why they have chosen one approach over the other, how they have organized their infrastructure and culture to make it happen, and where they will integrate growth or scale with other competitive factors to make it harder for others to emulate their success.

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Company Posts

How TomTom Telematics Can Keep Your Business Moving Forward

Successful businesses need to find ways to improve their margins while still delivering excellent and efficient customer service. VDM’s CEO, Deon van der Merwe, explains why this wouldn’t be possible in his business without TomTom Telematics’ solutions.

TomTom Telematics

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When TomTom Telematics entered the South African market in 2010, the local team took a deep dive into the different industry verticals they were servicing.

The more they got to know their customers, the more they realised a different solution was needed to address local conditions, and a subscription model was introduced whereby customers didn’t need to invest a large capital outlay into TomTom Telematics’ technology, but would receive the tech and software, including installation, at no extra cost, in exchange for a monthly subscription fee.

This model gives SMEs affordable access to TomTom Telematics’ solutions, but it’s had another benefit as well: As TomTom Telematics introduces new innovations, existing customers can benefit — without the costs associated with replacing all of their existing technology themselves.

An indispensable tool

For a transport and logistics business like VDM Group, which has more than 160 vehicles on the road, this means they have access to incredible new offerings, without needing to replace their TomTom units themselves.

“TomTom plays a critical role in our business,” says Deon van der Merwe, CEO of VDM Group. “It’s an indispensable tool in ensuring quality customer feedback and the management of KPIs for all supply chain stakeholders.

“Earlier this year, TomTom Telematics launched their New WEBFLEET product. We were very satisfied with what we had, and yet they still approached us and offered to replace all our existing units with new tablets, and they’re covering the installation costs,” explains Deon.

Related: Driving Your Business Growth Towards More Customers

“New WEBFLEET is the result of TomTom innovating their product based on customer feedback from around the world, and the local team wanted to ensure we had access to the additional functionality and innovations that had been introduced.”

Seamless integration with your network

According to Deon, the new TomTom PRO 8275 units seamlessly integrate VDM’s fleet scheduling software with information they extract from TomTom, including individual vehicles’ standing time and arrival notifications.

“The software from TomTom is open API, which means that all our various applications can communicate and interact with each other,” he explains. “From a productivity perspective, we no longer need to manually capture any trip information.

In addition, we have every conceivable piece of data available that will assist us to run a leaner, more cost-effective fleet, enabling us to ensure that we are delivering on all our KPIs — particularly with regards to meeting our customers’ needs.”

Related: Changing The Shape Of What’s Possible

VDM is a large transport business, but Deon believes the benefits for SMEs are as great, if not more so. “Many SMEs don’t have the back-office support that we do. The ability to capture and use this information without a team of admin specialists at your disposal is a huge competitive advantage for smaller businesses,” he says.

Offering you the competitive edge

VDM offers a specialised logistics service that creates custom-made options for clients. In order to ensure the most optimal and cost-effective solutions, while still ensuring top quality delivery, they need to consider special and complex individual customer requirements, from the point of origin to the point of destination, before finalising a customer-specific solution.

“We take into account a host of factors, including inventory carrying costs, volume requirements, product specific factors and route to market,” explains Deon.

“Road transport significantly impacts total supply chain costs, and if not managed properly, can have a severe impact on the sustainability of any particular channel. We try and manage this risk by continuously improving our service through innovative logistical solutions, the use of advanced technology, vertical integration and a team of passionate and talented experts.

TomTom assists in creating differentiators

“This focus has helped us to develop a market offering that includes dedicated and completely flexible inter-modal solutions, which is a big differentiator for us. TomTom Telematics plays a key role in our total productivity, helping us measure the performance of road transport across our supply chain.”

Deon believes that what you don’t measure you won’t know.

“TomTom provides updated fleet statistics that allow us to constantly benchmark our fleet against pre-defined route surveys and, in so doing, enables massive savings in fuel and total turnaround time.

Communicating via the WEBFLEET platform also helps us save time and creates a formal trail of correspondence with our drivers. I don’t believe it’s possible to successfully run a business like ours without a solution like this.”

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