"What we've got here is failure to communicate." This memorable line, spoken by actor Strother Martin to Paul Newman in the film Cool Hand Luke, offers a lesson for executives confronting today's uncertain economic climate. Times are tough, and the times demand action. What the times don't demand is silence.
Though cutting costs is high on every CEO's agenda these days, it's rarely a simple exercise.
The global recession is certainly upon us, and this harsh reality has been coloring the activities and outlook of marketers that range from ASDA to Zenith. Recession-driven fears are now affecting company plans and consumer decisions in every corner of the world; no country or company, it seems, is immune from the pressures of this recession.
The questions on every business executive's mind aren't so much "What's happening?" or "What does it mean?" Rather, the daunting dilemma revolves around "What's in store for the future?" and "How do we best confront it?" In this area, the jury is decidedly out.
For many marketers, the simplest answer -- regardless of the question -- seems to be competing on price. Though cutting costs is high on every CEO's agenda these days, it's rarely a simple or easy exercise. As stated in earlier Gallup Management Journal articles, every cut represents a potential shock to the customer relationship, and that can ultimately sap the health and strength of a company's vital customer connections. Reducing the nature and quality of the customer experience increases the risk that customers will look elsewhere. (See "Who's Caring for the Customers?" and "Don't Cut Corners With Your Customers" in the "See Also" area on this page.)
In developing strategies to retain their vital customers, senior executives have shifted their conversations from emphasizing "added value" and "organic growth" to "getting back to basics." Their focus is now on pruning expenditures that aren't clearly integral to the company's core brand promise. Thus, they're eliminating the so-called frills; shedding extraneous brands, products, and/or product features; reducing staff; and closing underperforming outlets. For many organizations, the new reality is less about opportunities and more about survival.
However, as executives scrutinize what they can pare and what they should strive to maintain, they should also take a good look at what they should increase. Yes, increase. The strategic focus should be on reallocating expenditures, which not only implies reducing spending in some areas but also perhaps boosting it in others.
One area typically targeted for cost reduction is marketing, and more particularly, marketing communications. The advertising/communications budget represents a tantalizing target. It's a rather large pot of money with an elusively indirect return on investment. And it involves activities that appear to have little or no impact on the customers' first-hand experience with the products and services they're buying. Cut it.
A word from the partner
However, if we look at company initiatives and activities not just through the financial expenditures lens but also from the viewpoint of the customer, a different picture emerges. As Gallup research has revealed, businesses that want to thrive even in challenging economic conditions must nurture customer relationships that will endure and weather the bad times as well as the good. For the long-term health of the organization, relationships matter far more than transactions. (See "The Constant Customer" in the "See Also" area on this page.)
And Gallup has learned a good deal about customer relationships -- both how they're formed and how they wax and wane. One characteristic of a healthy relationship is the presence of ongoing dialogue between the partners. There's an essential element of reciprocity and mutual commitment that's reflected in the degree to which the customer is "fully engaged." Partner-to-partner interaction provides for important feedback and mutual learning, allows for clarification of potential misunderstandings, and conveys respect and concern for the opinions and needs of both partners. (See graphic "How Engaged Are Your Customers?")
During tough times, it's expected that partners will keep each other informed of their intentions and activities as well as the reasoning behind them. After all, wives shouldn't keep their budget-paring efforts secret from their husbands, just as surely as husbands shouldn't sell the second car or rent out the spare room without informing their wives. In healthy relationships, partners share the plans they are formulating and the directions they are pursuing. So it is with company-customer "marriages."
Feedback without apparent response simply adds another layer of customer frustration.
And yet in today's world, where customers are increasingly uncertain about the future and often confused about the directions being taken by businesses to which they've entrusted their patronage, many marketers have remained strangely, and disturbingly, silent. The actions they're taking may merit mention on the evening newscast, but the focus in these stories is invariably on the depth of the cuts and the cost savings the companies will realize. Missing from these reports are the benefits that the customers might derive from these actions. And we must always remember that without customers, there are no companies. That's as true for ASDA as it is for Zenith.
In a recession, organizations must, of course, confront their all-too-obvious financial realities. Businesses clearly can't afford to launch expensive advertising campaigns when corporate resources are constrained. As with any other business expense, customer and employee communications programs must come under close inspection.
Talk to me
However, despite severely limited messaging budgets, companies still have an impressive array of alternatives available for soliciting feedback and establishing ongoing customer dialogue. After all, high-profile TV campaigns aren't the only solution to a marketer's need to keep customers and employees informed about what the company is doing -- and why. Given the variety of communications options, there's really no excuse for failing to reinforce the company's connections with those who matter most.
The Internet in particular can be a cost-effective way to communicate with -- and not just to -- customers. Companies routinely send messages to their customers, and they are increasingly using the Internet to send them. Yet the vast majority of these messages are simply account status updates or marketing efforts designed to entice yet another purchase. How many companies make serious use of these same channels to learn about what their customers are thinking and feeling?
The Internet can be much more than a one-way street that businesses use for routine updates or for selling stuff. It's inherently a two-way medium, and thus it's perfect for an ongoing dialogue between the company and the customer -- two vital partners with mutual concerns.
It's important to note that the Internet provides the means for interchange between these partners, but it's really just a channel that represents an opportunity. With apologies to Marshall McLuhan, in this case, the medium is not the message. Tweets, blogs, and social networks can serve companies as invaluable listening posts, but only if these tools are used to inform, interact with, and regularly respond to customers. Despite constricted budgets, organizations can adjust their existing customer communication programs to create opportunities for interaction, ensuring that messaging flows both ways. They can establish customer feedback panels and voice-of-the-customer Web sites.
But businesses must do more than solicit feedback from their customer partners. Company leaders must listen intently -- and even more importantly -- they must respond to this feedback. Feedback without apparent response simply adds another layer of customer frustration. True dialogue is always two-way, and the need for dialogue has never been greater.
In these tough and uncertain times, the voices of both the customer and the company are waiting to be heard. Dialogue can pay dividends in engagement, and customer communication should be money well spent.
