22
Jun

What are the main KPIs that your CEO is looking at? How is your performance evaluated? What variables do you take into account when making decisions? Is it ROI, profitability, market share or customer satisfaction? Sure that you will eventually be considering all of them, but which is really driving your company?

Whenever I open or enter a discussion about how to manage your business, I find people reminding me about the importance of cost optimization, lean management, low risk decisions, quick ROI, efficiency as a main criteria and so on. The situation, they state, is tough and our management should react in accordance. No time for big investments, no way you will bet on long term investments and of course, make yourself sure you will not go for “qualitative staff” with questionable return such as branding and customer satisfaction. What is key is surviving and not taking care of customers. If  you want to take care of your customers, if you want to adapt to them, they claim, then make sure you become an efficiency machine that is able to deliver stripped down versions at low cost. Customers are definitively looking for low prices and you have to be prepared! This is the only way, they insist.

Most of you trying to do business will be suffering something similar. Your companies are likely to be struggling to deal with the new competitive and economic scenario. Pressure is increasing and increasing and short term results are requested from all of us.

As I have been writing over the past months, I do think that in critical times is very relevant to go back to basics and start working from them. Peter Drucker used to say that an organization was created to satisfy a need, and that should be our starting point: What kind of need do we satisfy? What has changed in our customers and how should we adapt ourselves to them? How can we get the most and best out of them in the long term? How can we maximise our customer equity value in a profitable way?

Basic questions like the ones posed will bring the right responses. Of course that there we are facing a downsizing of our markets + a necessity to become more efficient. It would be nonsense to deny it, but so it would be to forget that in the end of the day we have customers to deal with in the long term. Customers that have values and needs, customers that give us a hard time because they are facing a hard time too, customers that are nevertheless happy to keep on dealing with us if we go hand in hand with them.

There is not an easy solution and strategy. Our organization will have to learn to be efficient, to look for new ways of doing business, to introduce cost cutting and lean management, while offering to our customers the value and propositions they deserve.

Thus, it is time to get all our Departments working together to cope with such a challenge. No time for finance people; no time for marketers. The time to become a profitable customer centric organization has come.

THINK DIFFERENT!!!

Ignacio Gafo

Comments

Juan Gregg June 23, 2009 - 3:40 am

In my personal experience financial KPI’s related to effectiveness are a must these days, these measures ensure the short term survivor of a company. In the other hand, marketing KPI’s are the source of sustainable growth and time persistence.

So, both points of view and goals are needed and more than ever a reason to be.

Tamer Abdul Kader June 25, 2009 - 12:18 am

I would like to share some thoughts struck me while reading this wonderful blog, I think we may be facing a change of the marketing strategies across many sectors and may be in the majority of countries worldwide. The changing behavior and preferences of customers will change the narratives of many industries. I think substantial change may occur in positioning and pricing strategies.

I’m wondering about innovation and creation of new products which may be in some cases motivated by the premium positioning and maximized profits. Are we going to forgo opportunities for innovation while looking for short term goals?

My second question will be, during previous years, why many executives didn’t try to reduce costs substantially as what is taking place currently in many organizations?

[...] Efficiency and ROI seem to mandate any marketing decision to be [...]

[...] time ago I alerted about this sort of management approaches, that are actually becoming more common than we think: Management approaches that basically push [...]

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