So that was the recession - what's next?

Firstly, may I apologise for my rather prolonged (3 month) and unexplained absence from these columns, but I’ve been rather busy! So what? Well, I have to admit that at the beginning of this year I was having some slight misgivings about leaving a relatively secure job in John Lewis after 28 years and moving into consultancy, the timing of which could not possibly have been worse economically.

However, the last three months have been great with some clients confirming assignments that had been proposed a few months ago and many others entering into tentative discussions about assignments for later this year and next. So the recession is over then? Well, of course not, and I feel desperately sorry for those people who have lost their businesses or jobs in the last year and are still trying to find work. Green shoots then? I don’t really think so, although that may be the case for a very small number of businesses and an even smaller number who have been fortunate enough to have found themselves to be benefitting from the economic downturn.

I think a degree of stability and with that a glimmer of confidence and optimism coupled with thoughtful planning is what I have been experiencing, and to that end I do agree with the thoughts expressed in Lior Arussy’s piece on the post recession customer a couple of weeks ago.

So how should businesses be behaving in this climate? Unless you are a Primark, Lidl or Aldi who must think all their Christmases have come at once, I think stability is the key word and all efforts should be focused on customer loyalty and retention rather than acquisition and growth - at least for the short term. Many of the businesses I have been speaking with recently have a number of key features in common. Many have, sadly, been forced to reduce numbers in order to stay solvent, but having done that in a strategic and timely way have been able to balance their costs with reduced or static revenues and consequently have achieved stability in the downturn. That gives them an enviable platform in which to rebuild, but how they use that platform will be key to their future long term success.

I would like to think that we have all had the opportunity to learn a lesson from this recession, the forces that created it, and have made a positive out of a negative and taken the opportunity to consider how to develop our businesses with sufficient stability to prevent a future recurrence. Sadly that doesn’t seem to be the case for at least two of our banks who only this week have been reported as planning to pay huge bonuses again.

For one, this is on the back of a huge loss and an even bigger bailout from the government earlier this year. The other found funding from the Middle East and has declared a substantial profit, but that is surrounded by rumours of creative accounting and the possibility they will still need government money to ease their toxic debts in the future. Doesn’t sound too stable does it? And the reporting will do little to abate the fears that some of my public sector clients have about huge budget cuts next year to try and fill the hole in the government’s balance sheets. Of course the reporting may be exaggerated and sensationalised as the banks remain a popular target for the media, but even the Chancellor is concerned about their lack of lending to businesses which is stagnating the economy further; so what are they doing with all those billions?

There are signs in other businesses too of lessons that may not have been learnt by this recession. More for less is a common cry from many businesses when they talk about customer service and that is a perfectly achievable and laudable aim if it is carefully thought through and implemented. Many businesses I have worked with recently have taken the opportunity to review their processes to make them easier for the customer and consequently more efficient for the business - more for less - and everyone benefits.

However some businesses seem to focus on the less and don’t seem too concerned with the more for customers. My local supermarket recently introduced self service tills. Now while I miss the lovely lady who was usually found on the ‘ten items or less’ till, even I don’t really need a ‘customer experience’ when I’m buying a bottle of wine on the way home from a day’s work. It was great to start with as the supermarket had positioned a supervisor to oversee customers at the four newly installed self service tills, and with four tills instead of one it was much faster to pay for my bottle of wine and get home to enjoy a glass or two with my wife.

However, within a couple of months when customers had mastered the new technology for themselves, guess what? There’s no longer a supervisor overseeing the operation so I now have to wait for anything up to five minutes for someone to react to the flashing light and permit an age related sale. More for less? Less for less is what they have achieved with the consequence that I now stop at a local off licence where they encourage me to try new wines depending on what we are eating and, perhaps worryingly, they have got to know me and the type of wine I like!

So what? The nation’s biggest supermarket chain has lost a few pounds a week from my wine buying, but multiply that by a year’s consumption and multiply that again by any number of their customers who may feel the same way and they have started to make an (albeit very small) dent in their stability for the future. The lesson? A potentially clever way of achieving more for less has been poorly executed with a consequent loss in revenue and a small local business has benefited; although I pay marginally more for the service. That’s a subject I am feeling increasingly positive about and one I may well return to in the future.

Loyalty vs. acquisition? Some of you may have been amused at my naivety in one of my previous columns in continuing to renew with one motor insurer without checking the competition and I’m very sorry to report that you would have been right to be amused. I had been looking to change my car this year and one of the key factors for me was the cost of insurance. Consequently I used one of the price comparison sites to get a ballpark quote for the cars I was considering, a couple of which were in much higher insurance groups than the car I currently drive. Imagine my surprise when they returned quotes for not much more than I had just paid for my current car! I went on to check my car and then my wife’s and found them both to be significantly cheaper than the premiums I had just paid, albeit that my current insurer was providing the most competitive quotes on the site.

In fairness I contacted my insurer and they refunded the difference on both premiums, but so ended a relationship of trust built up over more than ten years and now reduced to a commodity purchase based on price alone which has and will continue to cost them revenue. That’s a dangerous position for any business to be in with its customers if they want to build any degree of long term stability coming out of this recession both for the business and, just as importantly, for the future security of its employees. At least, for the present, Mr Winner seems to be secure in his advertising revenues!
So my point is? If you are a business that has survived the recession so far, establish a stable platform, look to the long term and ensure your strategy for growth considers the benefits for customers and the business in equal measure. If you are looking for a new employer choose a business that has a long term plan and isn’t governed by short term, potentially unsustainable, greed.

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