Five Things Every Organization Should Be Focused on in These Uncertain Times


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“The economy, stupid” was a phrase coined by George Carville, campaign strategist to Bill Clinton, during the ’92 US presidential election. This was one of three messages he would reiterate to campaign workers and Clinton himself to make sure they were focused in their messaging to voters and the media. The other two were “Change vs. more of the same” and “Don’t forget health care.” In this time of uncertainty as business leaders we too need to simplify our focus. At the end of the day its “the customers, stupid.” Without customers you do not have a business. So, while many businesses are cutting budgets or delaying new expenditures, I’m here to tell you that now is not the time to stop investing in your customer base. Rather, you need to make informed strategic decisions on where to invest and where to trim costs. Here are 5 things to help you do just that.

  1. Customer Value. Do you understand current, expected and potential value of your individual customers? You need this insight in order to make informed investment decisions. If you don’t already have visibility into this, start creating it now! In truth, the perfect data set doesn’t exist to calculate each of these precisely and no one can accurately predict the future. Certain assumptions and exceptions will need to be made but making decisions without some assessment of customer value in these times is not only unacceptable but also dangerous to the long-term prosperity of your business.
  2. Customer Churn. Can you afford to lose your most valuable customers? Of course not. You cannot afford to lose these customers during normal times let alone times like these. We should all know by now that its significantly more expensive to acquire a customer than to retain one. That said, your focus should be on you most valuable customers and using a predictive model to identify those most at risk. This will allow you to reduce your overall retention budget while ensuring that you achieve the highest ROI. Again, if you do not have a fully operational customer churn model, start creating one now!
  3. Customer Upsell. We are not the only ones faced with uncertainty. Your customers are feeling this too. As result, the vast majority are likely not looking to upgrade their products or services. So now more than ever you need to be highly targeted with your upsell promotions. Read – opportunity to reduce costs. How can you do this while still delivering a positive Return on Marketing Investment (ROMI)? You guess it, a customer upsell model. Combining a model that predicts the likelihood of individual customers to be in the market for an upgrade along with your potential value model will help you to identify the select set of customers to target. Typically, we might recommend targeting the top 2 or 3 deciles in an upsell model. However, given the current environment selecting just the top decile you are much more likely to have a positive ROMI by being more selective.
  4. Customer Cross-sell. Your customers are also looking for opportunities to consolidate, simplify and save. As a result, this may be a great time to put more resources and emphasis into your cross-sell efforts. That said, you still want to be judicious with your spending and resources. You want to target customers that are most likely to be spending across your categories and who are in-market for either adding to their spending or switching brands. This will require an understanding of potential value (customers wallet) across your relevant categories of spend as well as a model to predict which of these customers are likely to be in-market. Combining both models will ensure you are spending your resources where opportunity exists.
  5. Customer Acquisition. Cut back on your acquisition spend as prospective customers will be looking to cut their costs as well and the opportunity to acquire new customers will be muted. That said you will not want to cease all acquisition efforts but be highly selective on where and who you spend your dollars on. You need to be focused on prospects that look like your high value customers and who are most likely to respond/be in market for your products and services. In this case a combination of a high value customer look-a-like model and a conversion propensity model should be applied. This will improve your conversion rates and significantly boost your ROMI. This will more than justify retaining some budget for new customer acquisition. Additionally, we’ve seen ad spend (demand) dropping recently, a sign many companies have pulled back on their spending. What happens when demand drops? Prices will come down to spur demand. So, in addition to improving your conversion rates, your ROMI will also benefit by a likely decrease in ad costs. It’s a win win.

Your customers are the most important asset your company has. They should garner the vast majority of your attention as an organization in normal times. During times of economic uncertainty your focus on them should increase exponentially. While budgets are likely cut or at a minimum frozen, you need to leverage customer value and predictive model insights to make sure you are making the right investments in your customer base. If you do this, you will not only survive the current downturn, but you will retain and grow the right share of your market and come out of this downturn with a more profitable customer base and company. “It’s the customers, stupid.”

John Strabley
An experienced consultant and entrepreneur, John Strabley shares his progressive skills with clients as a Chief Strategist at Optumine. His clients have included Disney, ESPN, Verizon, Roche, USPS, Motorola, John Deere, Sotheby's, British Airways, SAP, AstraZeneca, Nielsen, Citrix, Wyeth and AARP.


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