Focusing on the right strategies to improve growth

Media Release – 18th Oct 2010

Focusing on the right strategies to improve business growth and profitability…….

Short term strategies to try and meet monthly KPIs are severely affecting the longer term performance of many businesses.

This approach according to Ray Sleeman & Chris Bell New Zealand’s leading customer experience advisors and developers of a tool designed to measure the impact of non financial business drivers, fails to recognise that these have a significant impact on business growth and profitability.

Customer loyalty is on the decline, New Zealand’s productivity is near the bottom of the OECD rankings, customer word of mouth has become more powerful than any other form of advertising driven by the internet and social media. Due to increasing commoditisation business is finding it increasingly difficult to develop a sustainable competitive advantage.

All this according to Bell & Sleeman is driving an increasing focus on price with the resulting negative impact on margins and profitability.

If businesses started to capture numbers on the impact of these vital areas of business performance (customer loyalty, employee disengagement, cost of staff turnover, negative word of mouth), Bell & Sleeman believe there would be a much greater focus on improving these areas. This would result in the development of strategies designed to build a more holistic approach to improving business growth and profitability.

The examples below illustrate the importance of focusing on non financial drivers for business success.

The value of customer loyalty
50% of satisfied customers and 25% of very satisfied customers are doing business with a competitor

The value of positive word of mouth
83% will act on a recommendation before any other form of advertising
Loyal customers are 50% more likely to recommend than satisfied customers

The damage of negative word of mouth
Businesses that have not met customer expectations will tell on average 8-10 other people - Colmar Brunton
It takes 5 positive experiences to counter 1 poor customer experiences – Colmar Brunton

The value of capitalising on your creativity
The most important leadership quality was “creativity” - survey by IBMs Institute of Business Value 2010
Higher engagement &productivity

The value of increased employee engagement
Top trend- employee/employer relationship changing to a partnership
Acquiring and keeping key talent a priority
People have become the primary source of competitive advantage
80% of market value today comes from the intangible
You can copy products & services but you can’t copy people
High engagement = high growth
Less absenteeism
Less errors/mistakes
Higher sales goals

The savings from low staff turnover
Separation costs
Replacement costs
Training costs
Lost productivity costs

Towers Perrin published research –
Income improved 19.2% from high engagement
Income declined 32.7% from low engagement - over same sales period

Increased engagement = high customer satisfaction
Attracts and retains high performers

The value of a sustainable competitive advantage
Competitors don’t have it
Competitors don’t know how to get it
An investment to develop it/not a cost
Good marketing investment
Customers do the work for you
Continual development

ENDS

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