THE POWER OF PR™ with Danae Jones
It is very easy to switch to a cost cutting mentality to increase profit margins and stem the cash losses in a business during an economic downturn, but when you start slashing from the line items that actually assist in generating revenue for your business, it is a slippery slop that I strongly advise against. We must think much longer term as business owners in tough economic times with every decision we make. And if you, or those around you see Marketing and Public Relations as an unessential cost to your business, then I stand before you to challenge that thought process.
Those who look at the long game and value customer retention are always the biggest winners as the economy rebounds and not only does history tell us this, evidence proves it. And many local business success stories are living testaments to this. But don’t just take my word for it, let me share with you some other expert insights.
According to a research paper out of the United States, Prospering in Tough Economic Times through Loyal Customers published in the International Journal of Management and Economics, a focus on customer loyalty and retention through strategic public relations techniques is critical to long term business survival.
The research paper sites that “it takes exceptional management mettle and long‑term clear‑sightedness to avoid this common managerial reaction which can lead to counterproductive and sometimes disastrous results for the company’s future. In severe economic downturns, only a few business leaders have the courage and wisdom to invest in customer loyalty to increase profits instead of reactively cutting costs to try to maintain falling profit margins.”
Based on quantitative and qualitative research, the study findings identify and explain key customer loyalty measures, including: customisation for customers, communication interactivity, nurturing of customers, commitment to customers, customer sharing networks, customer focused product assortments, facile exchanges and customer engagement. There are three key points in the research I would like to share with you:
1. Investing in Customer Loyalty
“Following the dotcom bubble in 2000, most companies focused on the short‑run by hunkering down, reducing their spending, and trying to find as many ways as possible to reduce costs. Under the leadership of CEO Steve Jobs, however, Apple ramped up research and development to develop ground breaking new products like the iPhone, iPod, iTunes, and iPad, while also spinning out uniquely designed, more reliable computer desktop and laptops, and building off‑line Apple retail stores. Jobs was an exceptional business leader – one who kept his focus on the long‑run by developing great products and supe‑ rior customer service that delighted customers while more traditional CEOs focused on cost‑cutting and maintaining short‑run profits during tough economic times. Largely due to the visionary genius and contrarian strategies employed by Jobs during an economic downturn, Apple became the most valuable company in the world, with its stock rising to more than half a trillion dollars.” [Goldman and Cowley, 2012].
2. Why is Customer Loyalty So Important?
“One of the most fundamental tenets of savvy business management is to attract and retain profitable loyal customers. Compared to average customers, loyal customers buy more, are less costly to serve because they are higher up on the learning curve with your company, more willing to go upscale and pay premium prices, more receptive to buying brand extensions and new products, more forgiving when problems occur, most likely to refer other people to your business, more resistant to competitors’ offers, and the highest contributors to your company’s bottom‑line profits. Profits can be increased by either reducing costs or by increasing revenues, and loyal customer can do both for your business.”
3. Tracking Customer Loyalty Measures
“Progressive company managers will conduct research to accurately measure, benchmark, and regularly compare their performances on key customer loyalty measures with each of their different customer groups versus past performances, managerial goals, and the relative performances of major competitors. By keeping track of how they are doing in terms of critical customer loyalty measures, companies can obtain insights and early warnings that will allow them to adjust their customer relationship strategies and tactics to retain their profitable loyal customers. Companies that are most successful in achieving high customer loyalty levels in the fierce domestic and global competition ahead should prosper.”
So who are some of the global business success stories who have implemented this methodology and thrived?
Netflix
Lego
Mailchimp
Apple
You might think, well they are much bigger businesses than mine, how could I possibly have the capacity to do what they did? Well let me give you some local examples to bring it back to FNQ:
Totally Workwear Cairns
Skyrail
CAPTA Group
Norlift
CityLife Magazine
Tea Lily Fashion Boutique
These are just a handful of businesses who’ve all well and truly punched through the 20 and 25 year milestones in business and still lived to fight another day. So go and talk to them, support their businesses and see what it is that they have done to ride the economic waves over the years. I think you’ll find that looking after their customers has always been their main focus.
As we enter unchartered waters in these COVID times, I challenge you when you make every business decision, that you always have the customer at the forefront of your mind and consider, not only, how will this affect me and my business … but how will this affect my customers?
Sources:
[Prospering in Tough Economic Times through Loyal Customers, 2020]
[Goldman and Cowley, 2012]