How companies thrive during periods of disruption
Record-breaking stock indexes. Markets plunging in a sell-off. Rising interest rates. Inflationary pressures. New FINRA regulations. Record-setting M&A. Blockchain technology. Robo-advisors. The transfer of wealth to women and millennials.
The disruption is widespread and creating a transformative affect. There are companies that will thrive while others transition into obscurity. Executive teams who know how to identify—and capitalize—on the opportunity disruption presents could find a tipping point to industry leadership, long-term profitability, and client success.
According to new McKinsey & Company research, more than one-third of investment clients are “shoppers,” always looking for a better deal. Periods of disruption create a ripe environment for all clients to rethink—or, at least question—a purchase decision or an investment relationship. In short, don’t give your current clients a reason to leave.
How do the best companies manage disruption?
Companies that succeed during periods of disruption become hyper-focused on strengthening their relationships with their existing clients, while keeping a strategic eye on the future. And here’s the compelling reason why.
Companies generally lose half of their customers every 5 years, half of their employees every 4 years, and half of their investors every year, according to Bain consultant Fred Reicheld. During periods of disruption, these numbers can climb even higher.
Turnover is expensive and stunts company growth between 25-50%. It is likened to attempting to maintain the water level in a tub with the drain stopper removed and the faucet running. It creates a vicious cycle that is unsustainable over the long-term, cutting into profits and accelerating employee turnover.
Why the client turnover? Periods of disruption create anxiety among clients. Anxiety compels them to question their purchase decisions, and they may turn to other providers for an answer. Great executive teams and CMOs not only understand this concept, they obsess over becoming the one authoritative source that will help their clients through troubling times.
Below are several tips to strengthen your client bonds during periods of disruption.
1. Focus on your brand
Your clients want to be with a reputable brand so now is the time to break from the pack and show your industry leadership. Reinforce their buying decision by sharing a point of view that ties the situation and your brand together. Reassure clients of your short-term plans while providing context for how this fits within your long-term value proposition.
To make a significant impact on brand, start with your CEO. PR firm Weber Shandwick found that almost half of a company’s reputation and market value depends on its CEO. This puts a lot of pressure on the chief executive, but also a tremendous opportunity if he or she succeeds.
In all communications, demonstrate confidence by providing a strong, healthy, balanced perspective on the current situation. Regardless of channel, communicate a consistent message.
Keep in mind that quality of product and performance are two key drivers in building brand. Your clients have long memories, so never overpromise, then underdeliver.
2. Strengthen client relationships
Your clients understand that change is inevitable. But to build a stronger relationship, proactivity is key. Proactively provide information about the change, your position and the ‘why’ behind your response.
Then, listen to client concerns. Be accessible. Engage them. And communicate… a lot. Use everything in your marketing communications tool box, including personal visits by your leadership, videos, e-mails, and ad-hoc phone outreach by your client-facing teams.
Timing is critical as well. Increase the impact of your communications by ‘sandwiching’ all client communications. They should occur after your employees are well informed and prepared to answer questions, but before any more public announcements.
3. Provide increased value
While most companies pull back during disruption—reducing headcount, cutting expenses, and failing to communicate—industry leaders plan for these periods and use the time to their advantage, increasing their investment in their clients.
One simple way to add value is to amplify your key areas of differentiation – do more of what makes you different. And then remind clients of this unique value proposition. Your goal during disruptive times should be to give more of yourself, your company resources, and your perspective. If executed with impact, it will pay dividends for years to come.
Putting it all together
Your communications play a critical role in strengthening relationships and deepening client loyalty during periods of disruption. The most effective plans contain the following:
- Proactive outreach. Create pulse checks with your client base. What are their concerns, their worries? Address them, but never overpromise and underdeliver.
- Client focus. ‘Sandwich’ your communications, after your employees but before the general public.
- Integration. Increase the frequency of communication to create calm, and share your perspective using a combination of in-person, webinar, video, social and digital content. Be heavy on the front end, and then create consistent pulses thereafter.
- Consistency. Regardless of channel (including client services, sales, marketing and executives), deliver one consistent message at all times.
- Impact. Provide access to your senior leadership and place them in positions of influence.
- Differentiation. Reinforce your brand. Provide your point of view and relate it back to your brand promises. Reestablish your competitive differentiation.
- Order. Deliver ‘closed loop communications’ that build trust by following a standard path: Here is what we said we would do, here is what we did, and here is what you can expect from us moving forward. It sounds easy but most companies do not fully execute the process. The result can be a missed opportunity.
- Measurement. What are the signs of success? A decreasing need for communications combined with higher loyalty pulse check numbers, and greater retention rates (dollars and clients) will indicate success over time.
Focusing on strengthening client relationships and loyalty at all times will lower your acquisition and operating costs, attract the right customers, increase long-term profitability.