Did Somebody Say Strategy?

Managing in a downturn: EPM to the rescue

It’s official – we’re in an ‘economic downturn,’ a ‘consumer recession,’ a ‘weak market,’ a ‘strong suggestion of a recession.’

And Starbucks is thinking about charging a dollar for a cup of coffee.

The automatic response of most boards, executives, and managers is
1. Cost reduction
2. Cost removal
3. Cost avoidance
4. Cost containment
5. Cost management, and
6. Price reductions!

And while it’s never a bad idea to manage your costs, it’s not a great idea to do it at the expense of the rest of your business. And why do we automatically drop our prices and lay-off staff? Do we know for a fact that these are the most effective decisions to take? All the resources spent on cost focus, means that these things will suffer:

Next in Line for xPM: Sales Performance Management

Yesterday's WSJ (28 January 2008) had a good mini-interview with Ram Charan entitled €"Next in Line for Reinvention: The Art of Selling"€ by Phred Dvorak.

Dr. Charan talks about his new book €œWhat the Customer Wants You to Know: How Everybody Needs to Think Differently About Sales">What the Customer Wants You to Know€ and says that companies need focus on the customer (rather than their product or service’s features & benefits) and change the way they sell.

You have to understand your clients’ business and strategic objectives, he says, in order to work backward and see how your wares can positively impact those objectives. Most sales people show how they will reduce their prospects’ costs, and don’t touch on improving revenues, margin, brand, market-share, cash-flow, etc.

So how would xPM work inside your organization to help manage the soon-to-be-transformed world of sales?

Customer Lifetime Value, Customer Referral Value

Letter to the editor, Harvard Business Review

Dear Sir,

In “How Valuable Is Word of Mouth” (October2007), the authors do an admirable job of quantifying total customer value, but they are missing an important dimension in their Customer Lifetime Value (CLV) and Customer Referral Value (CRV) formulae: value destruction.  Surely we must account for negative customer experiences, customer dissatisfaction, and anti-referrals in the overall impact customer’s have on attracting and capturing new business.