Which is worse?
In health, business and economics the cure can be and often is worse than the ailment.National central banks, governments and lending finance institutions throughout the world are confronting a common threat. Inflation is high and on the rise. In China the rate exceeded 9% per annum for the first four months of the year and India has recorded an 11% increment.
The temptation and, arguably, the most direct and immediate remedial action centres on increasing official interest rates. For some that will figuratively be terminal, in a financial sense.Trading banks in Australia and a limited number of other western societies have taken the lead in recent months by increasing their lending rates, independent of any central bank initiative.National and federal governments have tended to sit on the outer boundaries, fixated by a desire to maintain budget surpluses as a means to retain their credit ratings. There has been a noticeable departure by some state governments in Australia which have gone into deficit to upgrade their depleted infrastructures.
So, a dilemma exists. Should inflation be allowed to persist at levels which are deemed to be unacceptably high or should it be reigned in by increases in official interest rates?
Inflation does impact negatively on most if not all people in a given nation or community.
Over time it does devalue assets, lifestyles, confidence and self image.
Most people can and do endure.
A hike in interest rates during the next few months will herald crisis time for some.
Those whose living costs are currently at the margins will be unable to meet their financial obligations.
Foreclosures on home mortgages and loans will increase, along with bankruptcies, liquidations and business failures. For example, in the United States of America, it is estimated that as many as 2 million foreclosures will be effected this year, primarily because of the sub prime loans crisis.
That represents between 2.2 and 2.7% of all households.
For those not directly affected those are disturbing statistics.
However, for families, couples and individuals who are directly subjected to the realities, a foreclosure is a true tragedy.
The impact is immediate and the financial, familial, social and personal consequences are long lasting.
Among the fallout factors of such a scenario will be an seemingly inevitable decay in self confidence and self worth for many.
Under close scrutiny over the ensuing months will be the philosophies and concepts of the triple bottom line, corporate social responsibility, emotional intelligence, fairness, balance and equity.
Arriving at an appropriate (as distinct from right decision) will not be hard.
However, living with the consequences could be very hard.
Spare a reflective thought for US President Harry S. Truman and the decisions he made in 1945…… then go forward and make some hard decisions.
A TECTONIC SHIFT
There have been significant changes in consumer behaviour and satisfaction.
Price resistance has shifted from the shop floor, point of purchase and the telephone to the advertising media.
Discerning, price sensitive consumers are determining whether to initiate or progress a buying cycle based on their reaction to the advertised price.
With ready access to countless catalogues, websites and mass media advertisements, there is no need to leave home or the office to make an informed decision about product, service and business selection.
What is conspicuously lacking in the current general communication are offers which are exclusive, unique and different.
So, commodisation has now enveloped a lot of advertising which has descended into becoming dull, boring, repetitive and all too predictable; or is it that marketers are expecting too much from their advertising.
Customer service is much the same.
To some considerable extent the degree of customer satisfaction is now determined well before the person to person contact between service providers, customers and clients.
Deficiencies in service expectations currently tend to focus on what the customer expects, what they experience and the degree of variance between the two.
Hence, the measure is internal, if not vertical.
We truly are competing with ourselves, influenced greatly by the expectations we establish and project.
Delivering the promise, consistently, is the key challenge.
In these turbulent, competitive times, it is prudent and appropriate not to “sell out” your core values and sustainable advantages.
The current series of winter sales events throughout Australia are not gaining traction.
The tactics of bigger advertisements, bolder headlines, larger discounts and longer interest-free periods are not generating the hoped for increases in sales, margins or profits.
Perhaps the following text will provide some invaluable insights, a number of challenges and a few answers.
Do share it with those in your network.
Distribute it widely.
SALES? SAVE YOUR MONEY - “Where is everyone?”
That must have been the plaintiff plea of countless Australian retailers and business leaders during the traditional, annual June winter and stock take sale period.
Many retailers opened their doors to empty or near empty pavements.
Television news crews, fulfilling assignments to capture the teeming and surging crowds, returned to their studios in search of file footage from past events.
The nationwide retail sector was having a party, but few were accepting the invitation. Where was Corey when you needed him !!!
Guest appearances on “Big Brother” were doing little or nothing to the ratings or the bottom line.
Some legal practitioners have made money.
They provided the consulting advice that a sale is an “invitation to treat”, as distinct from an” invitation to a treat!”
Consumer indifferences to the sales was palpable.
Sales event fatigue was evident everywhere.
Moreover, consumers have become sensitive to the reality that there is no or little financial disincentive when they did not respond to a particular sale.
There was the common attitude that there was always tomorrow, next week or next month, when the same retail outlet, its competitors or substitutes would most probably be conducting a promotion or similar event with equally attractive offers.
The figurative muscle-power and deep pockets of major national retail chains were funding bigger advertisements with bolder headlines, offers of up to 50% off recommended retail prices and the availability of five year interest free loans. It was all to little or no avail.
Comparative same period sales receipts were down or at best, flat. Given average and typical retail price increases during the preceding 12 months of between 6% and 10%, that suggests unit sales were consistently in decline.
There was little difference in industrial sales and with business-to-business transactions. “End-of-financial year” and “stocktaking sales”, or in essence “clearings” were generally met with stonewall resistance from corporate clients.
They too have become financially prudent, lowering inventories and being immune to the temptations of discount prices.
The just-in-time philosophy is a lot like that!
The time is nigh for investment in the training of people and upgrading (in some instances, the introduction) of efficient database management and customer relationship management (CRM) systems.
Really knowing, connecting with and giving commitment to existing prospective and past customers and clients are collectively the most efficient, effective and immediate means to increase immediately revenues, margins, profits and customer satisfaction. It is never too late.
Relevance of a business, its people, products and services is enhanced from a better understanding of the lifestyles, business circumstances, aspirations and individual needs of consumers, companies, departments and networks.
Such calls for action beg the question, why wasn’t it done before?
For some, it was.
It is they who are enjoying better, more stable and in isolated instances, significant increases in demand, sales and profits.
A central issue in addressing the evolving and enveloping marketplace is time.
Some will contend it is too late.
Others will suggest that it will take time.
More will state that the current priorities of accelerating cash flows and increasing available cash leaves little time, money or resources to address these propositions.
Each may contain an element of truth.
However, Albert Einstein would contend that time is relative.
If no action is taken now, just how much time is left …. to take remedial action or……period.
It’s time to marshal one’s resources.
Energy, creativity, product and customer knowledge, positive thought and actively taking assertive initiatives counts for a lot in these times.
THINGS TO AVOID
A herd mentality is something to avoid at most times, particularly now.
The booking of and payment for bigger advertisements (regardless of the media) with bolder headlines and more financially attractive offers will not necessarily be appropriate or prudent.
DON’T DO IT ALONE
Regardless of size or capabilities, the best prospects for success are with the collegiate and strategic partnership initiatives involving suppliers, distributors, associates and customers, together with purchasing, marketing and neighbourhood networks.
Common bonds typically provide common platforms for joint and multiple positive flow on effects.
Understandably, concerns pervade the business, economic and personal landscapes.
There is a reluctance to outlay anything at this time without some measure of surety of a positive and relatively short term return.
Considerable cerebral energy will be expended in determining what new and innovative things can be undertaken to have impact and to provide “value-add”.
Spare a thought then for a little contrarian thinking.
Sideline for a moment contemplation about what new and more can be done.
Attention on what one should and can stop doing…. NOW, is one avenue for freeing up things and channelling available resources to high return activities.
This should be a process undertaken at the margin.
For many people their typical week involves up to 30% of time being involved and indulged in things that show little or no economic advantage.
No matter how pleasurable, perhaps these things can be deleted or, at best, put on hold.
More available time provides the scope to contact, walk among and engage existing and prospective customers and clients. The rewards can be immense.
Barry Urquhart, Managing Director of Marketing Focus, Perth lectured full time for 5 years at the Curtin University of Technology in Western Australia. He regularly consults to entities, large and small on management, corporate culture and organisation effective issues.
Barry is an internationally recognised conference keynote speaker, author and business analyst.
TEL: 61 8 9257 1777