Wednesday, 3 June 2009

Invest in your customers to succeed through the hard times

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According to an article published on, these days even bullish financial pundits agree that consumers and businesses alike will be giving their wallets a rest for months to come. And though the belt-tightening is understandable, this extended recovery will pose a challenge for many small businesses.

Of course, small businesses have survived economic downturns before. In fact, a period of economic decline can be a powerful opportunity for companies that have the leadership and fortitude to spend wisely when revenue is down. Executives who seize this time to drive improvement could find themselves in an excellent position when more robust economic conditions return.

Ultimately the difference between thriving and merely surviving will come down to strategic technology buys that:

improve customer service
preserve capital
put the administrative burden on the vendor
favour reliable vendors

Put service first

"Small businesses have one enormous advantage: When it comes to customer service they can really turn on a dime," says Rick Moran, vice president of small business solutions marketing at Cisco. "They're not bound by the layers of practice and procedure that sometimes hamper larger organizations."

Indeed, more and more companies are learning that cutting back on customer service erodes both brand value and word-of-mouth referral business.

In a February 2009 report on customer service, BusinessWeek found that companies with the best customer service rankings in 2008 didn't rest on their laurels. Instead they improved their customer service over the last year, while those with the worst customer service records simply got worse over the same time period. As BusinessWeek associate editor Jena McGregor pointed out, "The best companies, those that put customer service first, are trying to invest more right now and are trying to avoid cutting back."

Prioritize Loyal Customers

One of the most straightforward ways to boost customer service is to improve your phone system. Long hold times, dropped or disconnected calls, or failure to return calls is one of the surest ways to let your customer know that you don't value them.

"For many customers, your phone is essentially your front door - especially for repeat customers," says Kroma Chief Executive Officer Chris Tillett. Kroma, an Orlando, Fla.-based cosmetics company, uses Cisco Smart Business Communications System to make sure loyal customers receive call priority over unrecognized numbers.

"Small businesses have one enormous advantage: When it comes to customer service they can really turn on a dime."

- Rick Moran, vice president of small business solutions marketing, Cisco

"We have clients that go back 9 or 10 years," says Tillett. "They're the ones who made us who we are."

Kroma also takes advantage of another customer-focused Unified Communications feature: automatic forwarding of voice mail to email. Phone messages are recorded as audio files and employees are able to view and play those messages, wherever they are. And if employees are unable to respond quickly, they can forward the message to an associate as easily as forwarding any email message. "Quick response equals happy customers," notes Tillett.

Preserve Operating Capital

The ongoing credit crisis makes it difficult for small businesses to access external financing sources. And when credit is scarce, cash is king.

Cisco's Moran says addressing this dilemma with flexible financing options is part of the plan to make Cisco a perfect fit for the small business market. "This makes it easy for small businesses to save their capital by using our capital," he says.

"Everything comes down to a monthly payment for me," says Jonathan Peck, a founding partner at Peck & Tuneski, a New London, Conn.-based law firm with 13 employees. Other technology companies steered Peck toward a third-party leasing agent for financing arrangements. "Those leasing agents have to make a return, and my monthly payment would have reflected that," he says. Direct financing through Cisco Capital meant less money going out the door each month.

It also meant he was able to buy a better quality solution, explains Peck. "Other vendors were offering us what was probably an inferior product for a little cheaper. But any potential cost savings we could have realized was matched - and exceeded - by financing the whole thing using Cisco Capital," he says.

For Tillett, the flexibility of Cisco Capital financing was particularly attractive: "Depending on how our finances go, I can either accelerate the entire cost of it as a tax write-off this year or pay it over five years. I'm not paying a ridiculous rate and I didn't have to use my own cash."

Look for Efficiencies

According to 2009 article by PriceWaterhouseCoopers, companies would also do well to assess their operations in search of new efficiencies that can free up cash.

That process led Tillett to adopt Cisco WebEx to shorten the sales cycle and create a personable and cost-effective way of following up on sales leads. Between high-gloss brochures and makeup samples, Kroma could easily spend $70 to follow up on a lead - without even knowing the extent of the customer's interest.

By creating an online presentation and inviting potential customers to learn about the company using WebEx, Kroma not only saves money but also takes advantage of an opportunity to make a personal impression as well.

Say "No" to Administration and Installation

With cash and human resources tight, it should come as no surprise that the opportunity to acquire software, such as Cisco WebEx, with no big up-front investment of capital and minimal administrative overhead is an idea that's catching on fast.

Peck's law firm uses a service-based model for spam filtering. The service routes incoming email to a third-party for removal of spam and malware before returning it for delivery to the recipients. Peck pays a simple monthly fee and he doesn't have to pay someone with security expertise to configure and monitor the filters.

"It's an incremental cost that a small business can afford, rather than the outlandish initial investment in order to get the same capability in-house," says Peck.

This flexible, low-commitment method of "renting" software is a big part of Cisco's small business software strategy. "Our company sells things by the minute or by the month and you don't have to buy any equipment," says Moran. "Just input your Visa card and you're in business."

Choose Reliability

When resources are constrained, people become risk averse. For better or worse, this "flight to quality" means that a reliable brand name has cachet.

"I may spend a few hundred more now but if it lasts for five or six years and gives me rock-solid performance, then the expense was worth it," says Tillett.

"Small businesses can often be prudent in the wrong places," adds Moran. Buying a little quality can help stretch the capabilities of your staff and allow you to spend more time where it matters: with your customers.

"These changes in technology can help us survive until 2013, if necessary," says Tillett. "If things turn around sooner, we're going to be thriving. Either way, I feel like we're well-positioned to weather whatever comes our way."