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It’s hard to take a step back sometimes – but it’s worse if you don’t

Does an ostrich really bury its head in the sand when a difficult situation arises?  Personally, I haven’t witnessed any large birds in this compromising position...

Does an ostrich really bury its head in the sand when a difficult situation arises?  Personally, I haven’t witnessed any large birds in this compromising position but I would hazard a guess that if this protection strategy was adopted by our feathered friends there wouldn’t be too many of them left to grace our planet. However, for some reason, the association has stuck. The sentiment on the other hand has been analogised thousands of times throughout history and its outcomes witnessed across businesses of all types and sizes.  As for the practice of ignoring what’s around the corner, well this seems to be as common today in its different guises as it has always been.  From a business perspective I would suggest that this chink in the human armour is partly to do with not wanting to admit failure or adopt change.  Failure in decision making, strategy and failure to address the reality of what the figures are saying.  The truth is that all businesses make mistakes - of varying severity – it’s the consequence of their dynamic nature.  It’s probably fair to say it’s OK to make mistakes but it’s not OK if you don’t make an effort to either recognise them or do something about them.  By the same token, good decisions must also be recognised and repeated where appropriate to best effect.    The challenge is how to take the metaphorical step back to see the whole picture in order to avoid making errors of judgement in business.  The solution lies, as always, in the detail.  Let’s take a look at what information will lift the clouds of uncertainty.

Taking a step back from your business can be a difficult task as it challenges you to be objective, neutral and open minded.  And for some business leaders these characteristics often chafe against other powerful traits such as confidence and ego.   A common denominator for all businesses of course, is customers.  We all have them, love them or loathe them.  And this trite expression actually makes the precise point about business relationships.    What is not recognised or acknowledged quite so much is the importance and balance of customer relationships in relation to value.  Taking a step back from your customers and looking at them with an analytical eye will reveal that not all customers are equal and addressing this fact can have a major impact on business transformation.  A big claim you may think but the rationale is actually logical and straightforward.  Let’s take a for instance.  Your business has multiple operating divisions, each serving different markets with different products with some overlap.  Customers are dealt with at a divisional level and little information is shared across the group.  To compound this fragmented situation, each operation has its own customer relations, P & L and marketing budget.    The question is - how do you determine who your best customers are - particularly if a customer does business across multiple divisions? When taking a step back from the silos of business activity you might ask the question of the collective importance of a customer, the overall relationship and the total gain.  To do this you would need to measure the value of each customer and rate this across the customer base.  We use the term Money Mapping to encapsulate this analysis.  It uses empirical data to score a customer according to its value to the business ranging from ‘Treasure’ accounts – your absolute to-die-for relationships, to ‘Avoid’ accounts at the opposite end of the value spectrum.  The data speaks for itself and paints a clear and concise picture of each and every customer.  Now that you have this information you will able to do a number of things you couldn’t do before the exercise.  The first thing is to make rational decisions based on concrete facts - not gut feel or anecdotal information.  Secondly, it puts you in a position to redress the balance of effort and reward, allowing greater resource and focus to be made in the direction of your higher value customers.  Thirdly, it provides a sobering reminder of how some customers are not only the bane of your everyday life but are also losing you money and devouring valuable and often scarce resource. 

You have taken a brave step back from the business and found that customers are indeed a mixed bag of delight and poisoned chalices.  But at least you can now start to transform your relationships and fortunes to reflect the real value you have identified.  This may result in reducing the number of customers your serve but this loss – as hard as it might appear to be - is massively offset by the gain from your other relationships.  As for our more complex example, the gains are potentially huge.  In this scenario the power of Money Mapping as an analytical tool would identify that certain customers are key to the entire business and as such, the customer engagement strategy and experience can be modified to create a proportional relationship.  You are now in control of who you ideally want as customers, how you want to interact with them and what their real value is to your business.  I told you it was logical and straightforward!  In addition, now you have profiled your customers and understand the characteristics of your Treasure accounts, with the help of your data analysis partner you can actively target businesses with similar profiles with the hindsight of knowing the potential synergy that will already exist.  It’s a win-win situation. 

Taking a step back isn’t a sign a weakness, it isn’t a show of fallibility or lack or confidence, quite the reverse, it is a mark of a good strategist looking to make more from less.  And if you ever find out the truth about the ostrich – let me know.  I might have my head buried in emails but that’s another story.