Thrive in a downturn with effective targeting
Don't view the economic climate as a challenge - view it as an opportunity! Graham Jarvis explains how investment in staff and customers can allow firms to thrive in a downturn - but that they must first re-assess operational and customer-focused targets to fully reap the benefits.
By Graham Jarvis
An economic downturn is an opportunity to gain a competitive advantage. Some companies will certainly have to close their doors; but with more focused targeting, meaningful employee performance and customer-related targets, and the will to innovate, it’s possible to thrive in such a climate as this. How? Companies need to ramp up their marketing, and invest in key resources like their staff and their customers. Marketing isn’t just about huge CRM systems and data – it’s about people, and in a downturn they behave differently.
Ashley Semmens, WCL
“A downturn is a time when tight performance management becomes critical, and targeting is even more important during this period – it provides an opportunity for more clarity and a prioritisation of effort,” says Ashley Semmens – a director of WCL.
An assessment of how performance is measured and employees and customers are managed is crucial to this process, particularly because employees can become demotivated. Some will leave – usually the best ones – and often to be hired by competitors who take advantage of their invaluable skills and customer knowledge.
Alison Bond of The Halo Works suggests: "It is crucial to measure in the right space because organisations can follow the direction of their measures - measure transactionally and you add to your costs and often your staff's stress levels; measure the benefits you deliver, and everything gets better. The most cheerful and loyal staff are those who feel enabled to make a difference. If you measure in the benefits space then you will make that difference easier to achieve and your customers will benefit too."
Customers might on the other hand take the opportunity to reconsider their options. Price and service differentials become more of an issue, determining whether a customer defects to a competitor or remains loyal. They might also turn to products and services that they wouldn’t have previously considered during the good economic times. Not every market falls into a recession, and there are still plenty of profitable opportunities out there. Not everyone is suffering.
Even so, it’s a time for considering change. Time to assess how the company’s performance is measured, and to re-assess operational and customer-focused targets. Optimum performance can only be achieved by measuring the right things, and investing in the right resources at the right time.
“The key point is to stick to what you are good at, but target better and spend more on promotion,” adds Dr Paul Baines – director, MSc in strategic marketing at the Cranfield School of Management. There’s no room for a scattergun approach when times are tough, because it won’t improve the performance of the business. That will come from standing out, being different from the rest.
This includes focusing on the customers you really want to have (e.g. your most profitable customers), and maintaining the quality of your existing customer-base. This is a traditional customer relationship management view, but it shouldn’t be forgotten that there may be some new business opportunities out there. So customer and marketing research, as well as an analysis of your existing segmentation strategies, are vital tools for gaining an understanding of how the business needs to adapt to the new market environment. Not all of the answers can be found in your database.
Keep it simple
By considering what their customers’ needs and expectations really are, firms will be able to create more focused and effective sales, marketing and operational strategies. These can then be measured against attainable objectives and targets. Ones that will motivate customer-facing staff, creating in turn more fulfilled, profitable and loyal customers. The trouble is that companies often make life more complicated for themselves than it needs to be, and try to measure absolutely everything they can.
This occurs because “there is a blurring of lines between measures and targets,” says John Curtis, managing director of people management and leadership consultancy MC2. He adds: “What should become measures of business performance often become targets.”
John Curtis, MC2
An example of this, he explains, is a call centre with “an average call handling time of 240 seconds, which is correctly used for capacity planning but then becomes a target for operatives to meet.” This leads to calls being finished very quickly. Subsequently service levels drop. These are then recorded and used to reduce head count, deteriorating the quality of service even further. Not good news, particularly in a downturn when customer complaints often increase, and quality or poor service sifts out the wheat from the chaff.
Besides that, this confusion and its impact on the customer, is not likely to either engender brand loyalty or increase a company’s profitability. Employees won’t like it too. Using targets and metrics in the wrong way can demotivate both staff and customers. Call volumes, for example, are another target you’ll often find in a call centre, but when they are measured against a service level agreement, they can be used more like a baton than a means of ensuring the delivery of quality service. The customer ends up being pushed off the line, only to have to call back again to have his or her query resolved. This equals an unhappy customer.
“A target in itself isn’t motivating; they are about numbers and not people, but your staff will be motivated by the role they’re playing, the responsibilities they have, and by the individual difference they make to the company,” says Mark Stuart - the head of research at the Chartered Institute of Marketing.
Employees are likely to be motivated if they feel they are doing a good job, and in a customer-facing role that includes making sure customers are satisfied. Happy staff create happy customers, and therefore it’s important to understand and measure the value of customer-employee interactions. This will highlight any needs for team or individual training, and enable real conversations to occur which in turn can develop customer insight while improving service levels.
Onwards not backwards
Demotivating targets are often created by an organisation’s culture and its perceived view of how it should use targets. This is because the focus is on a ‘playing to win’ or ‘playing not to lose’ scenario. Companies and staff that play to win see each customer interaction and point of contact as an opportunity to help customers and make a difference to them. Those that play not to lose ensure that the target is met, which leads to pressurised selling and negates the needs of the customer. So ideally staff should be measured on how they fulfil customer needs, and targets shouldn’t be set in such a way that they distort the purpose of the company’s very existence, i.e. to serve the customer.
Professor Merlin Stone believes that targets should be set with “strong incentives for good performance, and there should be clarity about the consequences of meeting the targets or failing to meet them.” Does this mean that staff should be chastised for not meeting a target they have been set? Maybe not, because the target might either be unrealistic and in need of being reviewed, or the teams and individual staff members might have issues that a team leader needs to address.
The disciplinary route should be the last resort, simply because it can also have a demotivating impact on other members of staff. Training might actually be the answer, as might a change in strategy to reflect the evolving dynamics of the external environment.
Consult and communicate
So how should targets be set? Beth Rogers, a senior lecturer at Portsmouth Business School, says targets should be set as a result of “a widespread consultation with employees rather than financial analysts, because everyone knows how important it is to keep their jobs, and creating the right climate for each individual and their teams will help.”
By being open and honest about them there’s more of a chance for everyone to understand them, including why they are important. This process should involve gaining feedback from staff about how the targets either impact on or are likely to affect the customer. If a target creates adverse staff behaviour, then it’s not likely to do the company’s business performance any favours. That includes, stretching salespeople’s targets in a “plunging market, which does not mean you will win new projects,” she explains.
Beth Rogers, Portsmouth Business School
Instead it’s an imperative to help the customer to adjust to the new climate, and to any changes that are afoot. In a key account scenario it could also involve helping customers to survive the downturn, because without them a company cannot exist. Targets should neither overstretch staff nor customers, and the staff and organisational performance bar shouldn’t be set too low.
Customers will welcome and recognise improvements that make a difference to how their needs are fulfilled. This is a constant process, entailing regular monitoring. But this doesn’t mean that targets should be increased in the mid-year period for the sake of it, particularly as companies rarely reduce them.
The other target-setting issue, which is far removed from measuring customer satisfaction and fulfilment, occurs when a manager wants to make a name for him or herself. “What they do is increase the targets of those he or she is responsible for, making a greater total than their targets, and this affects their trust in the manager,” explains John Curtis. Effectively this creates a misalignment with the business plan, and again it defeats the purpose of the targets.
Instead of doing this, managers should show that they value their staff for their achievements, rewarding them for performing well in a way that means something to each individual. Customers will notice the difference between a motivated employee, and one that doesn’t feel engaged or appreciated. That’s simply because confident customer-facing staff create your company’s success, measured against meaningful business and performance targets.