The year 2020 keeps on proving that the way things were done is not going to be the way things are done moving forward.
Covid-19 has created any number of opportunities for our business community to have a hard look at the ways business models and customer channels are maintained and grown.
This period of change is continuing apace, and the need to continually adapt to build the new normal in business is more pronounced than it has been in several years.
In these periods of change, getting the basics right is fundamental.
A significant focus in doing the basics correctly has rightly been concentrated on developing and maintaining customers, a focus on the demand-side of the business. This requires a strong understanding of your customer and what they need, and how your business delivers this is vital to ensure cashflow is maintained.
This is termed top-line focus, and it pivots on increasing sales and revenue for your business. Through this enhanced change process, we are seeing new engagement models and ways of delivering this value.
The most pronounced of these is the stronger utilisation of digital channels to deliver "direct to consumer", removing the middlemen from your value chain and supporting stronger margin realisation for your business.
If you want to deliver well in this environment of stronger customer orientation, there are two key areas to focus on to provide greater strength in your business.
The first is to ensure your product or service delivers what your customer needs, and the second is to make sure they repeat purchase as a loyal customer. In marketing terms, these two aspects are measured by "cost of customer acquisition – COCA" and "lifetime value – LTV". Understanding both terms, and how your business measures and monitors these metrics, is extremely important.
To understand COCA, a good tool to support this approach is to look over the key touch-points customers have with you, and how much it costs your business to support these activities. Using the buyer adoption process model – which transitions the customer steps from awareness of your business through to confirmation as a customer – you can develop more sophistication in your processes to attract and convert new customers.
The modelling of these steps will support how you present your business and reduce the transaction costs of getting new business.
Doing this well, and having customers making the buy-decision, is the first and most expensive step. The saying goes that you will receive 80 per cent of your business from 20 per cent of your customers.
These 20 per cent of customers are typically advocates or evangelists for your offering and support your sales processes through strong word of mouth. Keeping customers is the key to a successful business.
How many of these customers do you have and how are you supporting them to espouse your businesses value to others?
Being able to quantify your customer base and segment them will allow you to understand the LTV of the customers of your business.
This is essential for the targeting of activities and use of the appropriate tools to support ongoing engagement. It supports focus in what you are offering and allows for development and measurement of sales activities.
It will also support budgeting activity to provide stronger cashflow and performance modelling, allowing for greater focus and understanding of the value you have and can create in your business.
Most businesses do not have vast amounts of money to spend on promotional activities to build awareness, so being smart at how you transact when customers reach out to you is crucial.
This focus on internal marketing is important for creating sales and goes well beyond how good your product or service is. It requires a strong, evolving understanding of customer process and the expectations that you have set in the minds of your customers.
• Joseph Stuart is an accredited economic developer, learning facilitator for Economic Development New Zealand, and general manager of Business Innovation and Growth at Northland Inc, the regional economic development agency.