In order to gain the most profitability from your customer base, you will need to drill down into each client’s portfolio and deliver on a well-defined service and product strategy
Many companies today still approach their client base with a ‘one size fits all’ mind-set when it comes to their supply chain processes and policies, over serving some customers and underserving others. Through the analyses of your profit profiles of both your customers and products, you can custom-build a more profitable CRM supply chain strategy to each client and thereby increase the overall profitability of their individual portfolios. In order to do so, you will need to consider the following:
1: Understand your products
Whether you are selling stationery, automation, Jan/San or furniture – or all of the above – you need to understand exactly which products give you the most profit, are best sellers, give a boost to another sale or are losing traction with customers. In a competitive market, this knowledge will be your mainstay of which products you should be promoting or not.
Use your CRM system to help you make your business decisions, tell you past behaviours and generate return sales in similar product lines. Your sales reports will show you which products are giving you the best margins, allowing you to further maximise your profits by finding where they can dovetail with other best-selling products. For example, who has purchased a mop but no cleaning fluid in the past month? While the mop itself may not deliver on the best margins, cleaning fluid can and will. Sales reports that deliver demand and cost-to-serve analysis* can help sales people to cross-sell additional product lines or undercut your competitors on a lower cost item since you are able to regain the profit from the second sale.
Technology will also assist you in scrutinising the different market segments and identify where to put your focus, i.e. which companies are looking to outsource their Jan/San servicing to a contractor; or the exponential growth in the number of educational facilities and the health care market which are seeing growth in cleanable space. It might also tell you that paper towels, facial tissue and toilet tissue are still the leading seller in this category, and that bin liners are the next hottest selling item, along with hard floor chemicals and cleaners and degreasers.
By understanding both your customers and your product combinations you can identify which are winners and which are losers, and then structure your supply chain policies so that some or all of the losers are turned into winners. For example, a stationery supplier which provides the same one-day lead time for both A customers and D customers may want to change the policy to three days for the D customers. This would move the inventory buffer point upstream in the supply chain, reducing overall inventory. The upstream buffer would hold a larger pool of inventory, thus increasing the odds that downstream demand will be satisfied with the exact product required. This change may have the effect of turning D customers into B customers.
2. Repeat versus new customers
It’s a well-known fact that it costs seven times more to grow a new customer than to retain an existing one. For the majority of businesses which see recurring revenue, these existing customers don’t just fuel growth, they represent all of the businesses’ profits.
With customer expectations higher today than ever before, the client also knows they have a choice to move over to your competitor if you don’t deliver. The simple 80/20 principle will serve you best here in identifying your most profitable customers instead of wasting efforts in chasing new customers. Identify which of your customers generate 80% of your sales, this will generally be about 20% of your current customer base.
This will also prove a strategy for SMEs facing competition from the big-box stores which win over those customers who are price shopping. By differentiating yourself from the box-movers by providing value on the back-end of purchases you can woo back price-conscious end users. Ensure your focus is on retaining customers by identifying which need reigniting, along with strategies to cross-sell, upsell and link-sell to your customer base.
In order to speed up your sales process, have a slightly different script for your different types of prospects which focusses on their problems. Then spend time making them feel special enough to become loyal to you. Ensure your service levels are excellent and your sales follow up on a par. People don’t buy products they buy solutions – people also buy from people – so make your contact personal and build their trust. The happier and more valued your current customer base feels, the more likely they will make repeat purchases and increase spend with you and not your competitor.
3. Be switched on, all the time
Use today’s technology tools to boost productivity and leverage it in order to simplify operations, improve service levels and at the same time reduce internal costs. Cloud based tools will ensure you stay connected to customer data, accounts, price lists, and current stock levels and will streamline communication and other processes, such as document revisions, so the team has more time to sell. Most importantly all data will be backed up all the time.
Since the best way to handle an economic downturn is to sell your way out of it, hire more sales staff to recoup lost margins and let them hit the road running to win more business. While your investment in technology will streamline your processes and productivity, your investment in human capital is the best asset in which to create revenue.
With mobile employees backed by the Cloud’s mobile technology you can save money in increasing efficiency and traveling time and shortening the sales cycle. At any chosen moment, a sales rep is able to see what orders a client placed last year, what stock has been delivered or not and instantly identify what the customer bought this year compared to last year. By placing your CRM in the cloud, you are afforded better scalability without time-consuming updates and licensing issues or loss of data due to power outages; and for SMEs the Cloud often ensures more security that they might have on their current IT systems. With big data the new watchword, you will need to adapt to these new technologies in order to boost your business decisions. If you think it is not for you, consider Amazon. They were one of the first companies to adopt business intelligence to analyse their customer’s buying behaviour through big data.
Social media can also assist in identifying what the market feels about your company and highlight issues with other suppliers. In addition, it can help you ‘read’ your crowd, for example which companies are focussing on sustainability and therefore interested in green cleaning products and equipment such as floor scrubbers that use less chemical products and machines that ionize water to help lift dirt particles.Today’s technology offers solutions such as e-commerce, back office automation, delivery optimisation and Internet purchasing and will empower you to handle more business and serve a greater number of customers using fewer resources – without the right technology, expect to be left behind.
*Cost to serve analysis: calculates the profitability of products, customers and routes to market, and provides a fact-based focus for decision making on service mix and operational changes for each customer.
As South African e-commerce gains momentum, retailers can expand their reach significantly by adding online and mobile channels.
According to a 2012 report by technology research company World Wide Worx (WWW), e-commerce growth is accelerating. The study predicts that the Internet economy will increase its contribution to the overall economy from 2% in 2011 (R59-billion), to as much as 2.5% by 2016.
The authors say this can be explained at the hand of a ‘digital participation curve’. “It takes up to five years before new Internet users gain the confidence and experience in the medium to become active participants in the Internet economy. With the number of Internet users having accelerated from 2008, the number of experienced users will begin accelerating in 2013.”
This trend will continue until 2018, the authors say.
In the trenches
The experience of Cape-based e-commerce developer Realmdigital broadly corroborates this, says Wesley Lynch, CEO. “South Africans are becoming far more comfortable buying online, with value offerings like Groupon’s group buying playing a crucial role in making it more attractive.
“The natural appeal of e-commerce is the accessibility it gives products, something that store-only retailers cannot offer. The convenience of buying from anywhere in the world and having a physical product delivered at your doorstep is hard to beat.”
The market for digital products has further grown substantially, with music, books and other downloads leading the way, he adds. “The instant gratification of a digital download is even more of an incentive to buy online.”
Academic book retailer Van Schaik confirms excellent uptake of its online presence, www.vanschaik.com as well as a significant change in trading patterns and a net growth in sales.
The company says a massive increase in website traffic occurred after Realmdigital took over its development in 2011. “From 5 000 unique visitors per month 12 months ago, the site now registers on average 340 000 visitors per month,” says digital manager Melvin Kaabwe , adding that the company has had to invest in considerable extra capacity to manage the load.
Besides the effect of a new partner, he puts it down to a combination of progressively cheaper Internet access over time and the proliferation of non-PC devices sold with data bundles.
The prevalence of low-cost BlackBerrys on campuses – for two years the youth’s favourite phone according to the Sunday Times Generation Next survey – has also helped. “We view mobile commerce as key to accessing this market, and a boon for our serious entry into e-commerce as an academic resource. Making the site as accessible as possible to mobile users was one of the formative briefs for the site, and Realmdigital did that for us.”
If retailers dither about the online investment and the additional cost of selling (including distribution to customers), they should consider the spike in volumes they are likely to experience, says Lynch.
While Van Schaik’s increase in online sales has been less pronounced than its increase in visitors (30% up year-on-year in February), Lynch says retailers must not expect to be Amazons overnight. “That is a healthy increase in anyone’s terms,” he says. “In addition, online retail is now pretty competitive, with Kalahari, Loot, Wantitall and others all making their mark – and there can be no clearer argument for getting online now.”
Kaabwe concedes other extraneous factors. “Only about 2% of South Africans are shopping online ‘properly’, in the sense of using credit cards. The course most likely to lend itself to card purchases is the MBA – students are a more affluent demographic.”
With e-commerce finally shaping up to be the force it was always expected to become, real-world retailers will have to work out how to compete with a new generation of leaders – Amazon, Kalahari, Wantitall, Loot and many others.
At the heart of embarking on this new direction will be choosing the right digital partner, one that can greatly assist with working out a winning e-commerce and marketing strategy that will get the volumes to justify the leap into new territory.
With competition intensifying, Van Schaik is currently piloting a number of initiatives that will give it an edge over competitors, including multiple digital entry points to the company’s catalogue, any-device downloads of texts, same-day delivery and extra call centre capacity.
Realmdigital is a top South African e-business strategy and technology partner, specialising in Internet and mobile platforms. Contact Wesley Lynch on Tel: +27 (0)21 975 0959, Cell: +27 (0)82 784 4905, Email: email@example.com
Or visit www.realmdigital.co.za
Something every bride anticipates is the first night together with her husband following her wedding celebrations. Your honeymoon night may be your first consummation and one of ‘pure pleasure’ or you might already have an established relationship of ‘proven pleasure’ with your partner, either way, nothing can take away the excitement of making love together for the first time as man and wife.
Whether your honeymoon night is a rite of passage or a time-honoured tradition, it serves as a doorway into the future that will deepen your bond of love and trust with your husband. Here’s how to make that ‘first night’ count… (more…)
A brief overview of some of the emerging trends for business and consumers leading into the year 2013.
As we gear up for the year ahead, business must focus on the emerging trends and latest technologies which will power business towards a more dynamic future.
Mobile devices will rule in 2013, as consumers use them to maximise their every moment, be it experiences, purchases or communications. Gartner predicts that by 2013 mobile phones will overtake PCs as the most common Web access device worldwide and that by 2015 over 80 percent of the handsets sold in mature markets will be smartphones, allowing consumption to occur anywhere, anytime, along with the tools and resources to create and capture value being more broadly distributed too.
Consumers will have started to see Quick Response Codes everywhere, from billboards to magazine advertising. Expect to see an almost universal adoption of these as they become an important part of every company’s mobile marketing strategy and as an engagement marketing tool. Services will continue to emerge that will enable customers to send QR code-based discounts and messages to friends via text messages and social networks.
Trends in consumption, government policy, and costs all point towards even more green industry business opportunities in the years ahead and a rising consumer interest in environmentally friendly business practices and products, accompanied by eco-status and eco-stories. The trend is not driven by customer interest alone, as sustainable business practices help companies save money over time: PricewaterhouseCoopers indicates that companies reporting sustainability efforts have a greater return on assets than companies that do not. It may cost more to install solar panels but monthly savings on energy bills add up fast. Increasingly, businesses are looking to enhance their operating efficiency through sustainability efforts, and opportunities in the sector will continue to abound for years to come.
As consumers lust for ever more exciting, new, interesting, niche, perfect and custom products in 2013, we will see the spread of new local manufacturing technologies such as 3D-printing and make-on-demand in manufacturing sectors in established markets. Along with these savvy, demanding customers we will see the industry focussing on the value of customer data to business and a proactive approach to brand delivery to shoppers as the flow is reversed. Along with rising labour costs in China, there will also be a return to ‘local is lekker’ produced products. Playing an integral role in this will be a proliferation of niche social networks already seen with Instagram, Pininterest and Vimeo. Expect to see more custom networks that use Facebook’s login mechanism as a gateway to smaller, more focused social networks.
Brands will be required to stand behind their product promises, both showing and proving that they have nothing to hide. As the world moves towards a more sustainable and socially-responsible future, companies will have to pro-actively provide evidence of their ethical and environmental credentials. As example, 69% of US consumers said they are more likely to buy from a brand that talks publicly about its CSR results, versus the 31% who would purchase from a brand that talks about its CSR mission and purpose and only 44% of Americans trust companies’ green claims (Source: Cone Inc., March 2012).
The personal cloud will gradually replace the PC as the location where individuals keep their personal content, access their services and personal preferences and center their digital lives. With social networks already part of the mainstream, there will be an increased consumer focus on privacy and protecting their personal data. Businesses managing technology, especially those using ‘the cloud’ will need to be alert when storing, using and securing personal data to avoid a public backlash and potential legal agreements. Already there is an increasing trend for ‘self-reporting’ to reassure consumers.
Incentivising the workforce
Prior to the economic downturn, business recruited and incentivised staff with a combination of salary, bonuses and share options. As equity prices continue to drop, companies will need to relook at the structuring of incentive schemes so that they regain their place as a staff motivator, in order to retain top-class staff.
Market lines merge
The power of the internet and social media is allowing B2B and B2C customers to go direct into more industries, especially professional services. Along with new generations and the increasing power of the digital platform, social generations are reshaping companies from the inside, creating wider networks to create and deliver value to customers. As communications and marketing moves from a focus on one-to-one relationships to many-to-many, non-technology businesses will need to capitalise on these opportunities, with a strong online presence vital to their continued growth.
Pay it forward
Payment methods for businesses has been dominated by a handful of providers until now, requiring a network of merchant accounts, terminal providers and accompanying fees just to accept the most popular credit cards. A payment revolution is on its way, headed by services such as iZettle recently launched in the UK which allows businesses to take secure payments anywhere and everywhere via iphone, iPad or Android, where businesses pay nothing upfront and get a free mobile website for life. This combined with the growth of mobile wallets on smart phones and alerts to users of sales, offers and deals could spark a revolution for market stalls, events, pop-up shops, restaurants and delivery services and see more businesses requiring mobile compliant sites for phones and tablets.
3D-printing has been used by designers and engineers for years, now with falling technology costs we will being to see designers, start-ups and small businesses able to offer custom, small-scale production runs. A must-have new gadget in the home, it is also likely to stimulate creativity in a new generation of emerging designers and products, with growth in 3D smart phone apps and communities gaining momentum. Internet television will also support rapid growth in internet useage with services such as Google and Apple TV bringing services into homes along with 4k TV – an HDTV experience four times the resolution of current sets that will grow interactivity and bring data and information ever closer to the customer.
Big Data processing
Big Data is moving from a focus on individual projects to an influence on enterprises’ strategic information architecture. Dealing with data volume, variety, velocity and complexity it is forcing changes to many traditional approaches. This realisation is leading organisations to abandon the concept of a single enterprise data warehouse containing all information needed for decisions. Instead they are moving towards multiple systems, including content management, data warehouses, data marts and specialised file systems tied together with data services and metadata, which will become the “logical” enterprise data warehouse. (gartner.com)
With a rising consumer awareness of the role of a healthy diet, many brands will reflect their anti-ageing, and health related properties in their marketing. Along with gluten-free, lactose-free, MSG-free labelled products we will also see advances in quality and availability of whole range products, meat-free lines and innovative vegetarian foods and those claiming no-fat, no-sugar and salt-free alternatives, with many companies switching to “additive-/preservative-free” positionings, with the use of GM-free claims also growing in popularity.