March 23, 2009

BE DiFFERENT Practice #1 - Renew your Organization

BE DiFFERENT Practice #1 - Strategic Renewal

Pause, take a deep breath, reflect and renew your business strategy.

The fact of the matter is that your declining performance is NOT due to the recession. Rather, it is due to the fact that your current strategy doesn’t work in an environment that is characterized by a reduction in consumer demand, greater competitive intensity, new competitors entering your market, much more discerning and fickle customers and more excruciating price sensitivity.

The recession isn’t the cause of your performance decline:  your strategy is flawed because it doesn’t work in the new environment with new pressures and challenges. You need to renew it so that it is relevant in recessionary times.

The process is quite straightforward, and involves answering four questions:

1. HOW BIG do you want to be?
2. WHO do you want to SERVE?
3. HOW do you intend to compete and WIN?
4. WHAT is your STRATEGIC GAME PLAN?

HOW BIG?
As context for this, the BE DiFFERENT strategic renewal process starts out with determining your financial goals. Most strategies have the financial results developed at the end of the process and generally get modified as the CFO decides they simply aren’t aggressive enough. As a result, higher numbers are driven out of the tabled strategy rather than adjusting it to deliver stronger financial results.

This is a huge mistake. Assuming that the assumptions behind the plan are reasonable and acceptable, forcing more aggressive numbers from a strategy without increasing strategic risk is a fool’s game. The expected higher performance numbers will not happen.

So declare right up front the financials you want, and be realistic to reflect the recessionary forces at play. I am not suggesting that you roll over and drop your expectations to near zero levels. I am suggesting, however, that a contraction in the economy will reduce the growth of the market, increase the number of competitors, erode customer loyalty and enhance customers’ sensitivity to the price of a good or service. You may decide, for example, to reduce your 12-month sales growth expectations of 25% in a market growing at 20% (implying that you intend to gain market share on your competitors) to 5% if the market growth flat lines, more competitors enter your market from the higher boutique segments.

WHO to SERVE?
The second step in the BE DiFFERENT strategic renewal process is to reassess the customers you have chosen to serve. Examine the customer groups that you currently do business with. Given the new recessionary market realities, can they deliver to your new financial expectations? Are their market characteristics appropriate to give you the revised growth you want? Apart from demand factors, what about the competitive environment - is it intense or are there opportunities to enhance your market position?

Carefully evaluate your options and choose the customer segment that can deliver you the growth you need as well as leverage the competencies of your organization.

One final point: Be prepared to dump the customers that are no longer part of your strategic focus. Keeping them will only drain your resources and waste your time with no economic return.

HOW to WIN?
In my experience, the third step is the most critical in re-vectoring your strategic direction. This is where you decide how to differentiate yourself from the mosaic of new competitors you are facing and beat them handily.

Engage your team in what I refer to as creating your only statement. The only statement reads: ‘We are the only ones that…’ This is the ultimate manifestation of a unique competitive position in the marketplace.

This is not a task for the faint-of-heart. It is difficult to do and involves looking at every nook and cranny in your organization for opportunities to separate yourselves from the pack - brand, service, product, product support, and how you leverage technology are some examples of where you can look to create your only statement.

WHAT is your STRATEGIC GAME PLAN?
The final step in the strategic renewal process is to integrate the answers to the previous three questions into a seamless Strategic Game Plan. Here’s an example: ‘We will grow our top line sales revenue by 3% over the next 12 months by focusing our scarce resources on the retired couples segment of the greater Seattle market. We will compete and win by providing personalized transportation services to assist them in getting around the city.’

There it is. Crisp. Simple. Clean. And it can be used very effectively to communicate your renewed direction internally and to your investors if required.

Stay tuned for more. Cheers, Roy Osing

Blogs in the BE DiFFERENT Practice Series: 
Introduction
Practice #1 - Renew your Strategy
Practices #2, #3 and #4 - Focus, Modify Business Processes and Cut the Crap
Practices #5 and #6 - Be Anal about Execution and Set Cost Objectives
Practices #7 and #8 - Plan on the Run and Customerize your Marketing
Practices #9 and #10 - Dazzle your Customers and Sell Intimate Relationships

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Posted 3.23.09 at 05:10 pm by Roy Osing | Permalink | Comments (0)

March 13, 2009

CIBC De-dazzling Part 2

Bill, from CIBC customer relations called me a couple of days ago regarding my concerns. You see I had sent a copy of the blog I posted to my account manager who then made head office in Toronto aware of what was going on. Upon reflection Bill was a ‘rule pusher’ who was empowered to do nothing in terms of solving my problem.

Bill introduced himself and then went on for at least 5 minutes (‘script from above’ I suspect) explaining to me why they were adopting the policy they had. It went something like this:
- they acknowledged that it was a bit unusual to increase Personal Line of Credit (PLC) interest rates at a time when the bank rate was going down (so I should feel better about it with this logic?)
- they were treating all of their clients the same way (so I should be comforted that I am being treated like all other PLC clients regardless of their value?)
- all of the other banks were taking similar action (so I really don’t have another alternative)
- my concern has been escalated to their executive for review (so I should be comforted by the fact that the decision will be made miles and miles away from the frontline?)

The bottom line was that this call was more about telling me why they were implementing this policy and less about acknowledging my value to CIBC, caring that I had an issue with them, listening to my concerns, empathizing with me and honestly caring enough to find a solution to my problem. I would classify the call with Bill as a BE DiFFERENT de-dazzling moment of truth; I felt more frustrated after the call than before.

This was a good example of how NOT to handle a complaint call. If all you are going to do is spout company policy to your client (see Section Four of my book on Serving Customers) save your breath. You will only annoy them further and reduce their loyalty. In fact Bill’s call reminded me that I didn’t get a personal call from anyone on this; a computer generated message was all that I was worth.

Stay tuned for the executive response. Cheers, Roy Osing

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Posted 3.13.09 at 10:13 pm by Roy Osing | Permalink | Comments (0)

March 7, 2009

CIBC De-dazzling Customers

A few days ago I received a notification from CIBC in Toronto that the interest rate on my personal line of credit (PLC) was being increased by 1% point. The reason they cited: ‘This change is a result of global credit market conditions that have increased costs associated with lending products.’

This is a great example of what NOT to do! First of all, I suspect that this notification went out to all individuals with PLC’s with no consideration given to the value of the targeted client. In my case, I have been with CIBC for a very long time and have purchased a variety of their financial products including mortages, mortgage insurance, investment services and more than one PLC. I have always made my payments on time and have generated interest revenue for them in the six figure range. The lifetime value of Roy, to CIBC, is very high, and In this particular case I am being branded as a client who is causing ‘increased costs associated with lending products’.

What a crock! High value clients actually provide a disproportionate recovery of CIBC costs due to the level of interest revenue they produce, the continuity of that interest revenue stream over time, and the solid accounts receivable performance the company realizes. We are NOT the cost causers and should NOT be the ones paying the increased costs!

Bottom line: they don’t know who their high value clients are or they don’t have a BE DiFFERENT strategy to treat us differently than their other client groups. In light of their behavior, I am forced to conclude that this is simply a blatant money grab for CIBC intended to help offset the operating cost challenges dealt to them in the economic downturn.

Now is not the time to take action that will annoy clients (particularly high value ones) and force them to consider competitive alternatives. Now is the time for businesses to invest in preserving client relationships and building loyalty. Now is the time for selective relationship investments in client groups that create margins that will sustain extra loyalty building treatment.

CIBC is dreaming in the shade if they believe the PLC rate hike will produce positive benefits for them in the long run; short term irrational pricing decisions rarely do. Lets hope they come to their senses and back off the loyalty destroying path they are on. I have made my opinions known to them. Stay tuned for their reply. Cheers, Roy Osing

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Posted 3.7.09 at 09:27 am by Roy Osing | Permalink | Comments (0)

March 3, 2009

BE DiFFERENT Branding

Late last year, Future Brand, a company out of New York consulted with a number of business and vacation travellers to understand which countries they visited, why they had visited them and whether or not they would recommend them to their friends and family. The results from this survey were then used to create a ‘Country Brand Index’, a measure of how various countries ranked in terms of how they created a positive public image.

The interesting thing to me is that some countries are actually getting into the Holistic Offer BE DiFFERENT by creating packages of value as the country’s brand rather that talking about
the individual features the country offers (things like specific cities, cultural events, famous personalities and so on). For example, Japan positions itself as an exotic destination, the United Kingdom focuses on its cultural and historical dimensions and France loads its brand with emotion around its beauty, quality o life and romance.

Canada ranked #2 in the report and the very positive perception of people surveyed emphasized our country’s natural beauty and friendliness.

The impressive result in my view, however, was not the fact that Australia was ranked #1 on its brand, but the way they did it. Australia understand the power of BE DiFFERENT. They had the opportunity to incorporate the many things they have going for them such as the Great Barrier Reef, the desert lands and Sydney harbor itself. But they didn’t. Instead they focused on the notion that there is something ‘different’ about Australia which I find alluring and a compelling reason to explore the possibilities the country offers.

What a great position! They are essentially saying ‘Why go to a place that is boring, predictable and humdrum (my adjectives only) when you can go to Australia where everything is a bit ‘different’?

A brilliant example of BE DiFFERENT, and cudos to the marketing guys that put the strategy together. Cheers, Roy Osing

Posted 3.3.09 at 08:24 am by Roy Osing | Permalink | Comments (0)