This is the Time to Enhance Customer Relationships

The economy is lousy. There is no sector that has not been impacted by the recession. Most companies are going into retrenchment, cutting costs, pulling in and going into survival mode. While cost containment is the right business strategy for the current economy, the companies that will be the big losers will be those who also withdraw from customer engagement.

The problem that I have always had with company strategy during bad economic times is that the business model gets run by accountants. They look for ways to shore up the books and the way they are taught to do it is by cutting costs. But, to paraprase Henry Mintzberg, a professor of management at McGill University, "how did we ever come to believe that managing money is the way to manage a business?"

The way to manage a business is to manage relationships with employees and customers and to leveage those to create financial rewards. Managing money as the primary focus puts relationships secondary when they should be primary. Financial rewards are a proxy for doing things right.

This is a good time for companies to take a brand inventory and to get rid of those brands that no longer are performing and cannot be rejuvenated; and it is a good time to pay close attention to customers and to retaining the best customers the organization has. It costs little money to focus on customer relationships, yet so many companies feel that customer involvement is a cost rather than an investment. There are a few companies in this bad economy that are building stronger relationships with customers. They will be the big winners when the economy turns up again.

What does this have to do with the brand inventory? For many companies, branding occurs in customer relationships, where the real differentiation for them happens. For others, who are cost efficiency leaders, customer relationships may have less importance, but by increasing their focus on customers, they can take a dual strategy that further erodes the market of competitors who might have been higher priced and need to retrench even more in tough times. Every company should be looking at the real points of differentiation they have had and could still have.

There was an excellent article in Harvard Business Review by Johnson, Christensen and Klagmann on how to rejuvenate a business model. They note that there are four key issues: a customer value proposition, a profit model, core competencies and business processes. We should be looking at both our product and corporate brands to determine if they need to be rejuvenated, along with the overall business model of the enterprise. As Philip Kotler notes, we need to be engaged in three areas: value management, brand management and customer management. For anyone involved in or responsible for relationships--whether they be in corporate communications, marketing or general management--it is time that they refocus on customers and not allow themselves to pull away from them.