Early in my career, I was a manager in hospitality, and an area manager who was a real mentor said to me, “Steve, things are really a lot more simple than you think, in a pub you need 3 things. Hot food, cold beer and smiling faces.” Now we can debate that location may help and a price point that’s suitable, but I took the core of that advice and really do try to keep things simple wherever possible. Ask anyone who has ever worked with me how often I say “Stop trying to make it complicated!”
So a few years later, a Sales Director who again was a real mentor, said to me “Steve, businesses are really only trying to do 3 things. Gain new customers, keep existing customers and control costs.” That really resonated with me, not because it is in the same format, but because actually it makes sense. You may focus on different ones at different times, so when pushing to add new customers, you will lessen your cost control for instance.
So keeping this very simple mantra in mind, I’ve been thinking a lot about COVID-19, especially in my new role within a small business. We were just in the position of doing the above, pushing for growth, and so we were looking at hiring some more staff, which would in turn increase costs. Now obviously with COVID-19, we need to be careful how quickly we proceed, as the market takes time to adjust to the new normal. Now don’t get me wrong, this doesn’t mean it’s a period where no business will focus on growth, if anything many businesses will be fighting all the harder, reducing prices to win more business.
This has an impact on customer retention, as more people will be fighting to win your customers from you, meaning you may have to reduce their prices in line. So you’re fighting harder to win business than ever before to create some level of growth, you’re having to fight even harder to retain customers and those customers themselves are looking at their own challenges, likely seeing a shrink in demand and therefore may be lowering their order values from you.
So where will businesses have to focus? We’ll all be receiving (or sending) emails about cost control if we’ve not already. Cost control will allow us to reduce prices for customers in order to retain them and reduce our offered pricing for prospects in order to gain new logos. It will allow us to put our money where it really matters, on paying our staff and making sure they are secure in this time of uncertainty. I know this is far harder in businesses like hospitality, and I hope the Government comes up with even more clever stuff to help people in challenging situations.
Yesterday, my colleague James Mitchell wrote a piece on what you can do while you’re doing social distancing, I think this piece is something to consider alongside that. How can we creatively manage costs, work out what have been the nice-to-haves in business? Have we really optimised everything as much as we can?
For my part, I know we’ve been really looking at our spend both at home and at work, and I will certainly offer people any advice I can (or ask my wife on your behalf if you want a better answer). The only thing I can really give decent advice is on cloud costs and transformation, so if you have any questions on that, feel free to ask. Very happy to offer some free advice to anyone looking at cutting costs to help protect jobs.