Keep Customer-Focus in Budget Season

Finding the future less predictable leads inevitably at budget time, to moving numbers around a spreadsheet in preference to addressing the issues.

Every marketing guru in history, from Kotler to Drucker, warns we should not start from a monetary perspective. Yet, almost without exception, while claiming to be customer focused, companies ignore any impact on customers the moment they get into budget mode.

In services we see more and more cost-cutting. Of course, this is necessary. Over the last decade two things have happened that have led to huge amounts of waste. Companies have offered all sorts of extras to try to differentiate themselves and now find it hard to work out what actually meets a need and what is completely wasted. Secondly customers have been affluent enough to make choices that focus on core needs while saving them time, trading this benefit off against having to work harder to find the offer most precisely meeting their need.

These times are gone. Companies however are finding it hard to separate the value-creating and non value-creating aspects of their offers. They have forgotten how to build mutually profitable relationships. Time better spent hunting down these core strengths and ruthlessly pruning away that which does not answer customer needs is instead spent searching for the magic spreadsheet for the all-important budgeted profit. A perhaps mythical number, whose realisation depends on customers buying and on employees and systems delivering.

Of course, in the current climate, it may not be wise to speak up. CEOs traditionally struggle to get honesty from subordinates. In this climate it is even more unlikely. Few will choose to point out that the emperor has no clothes.

Behavioural economics, the biology of emotion, and neuroscience all show definitively how emotion forms a core part of reasoning. In Antonio Damasio’s book, “Descartes’ Error” he demonstrates how emotions help us to form context - they assist in processing the multiple facts we hold in our minds in order to make decisions.

But we also know that context creates bias. In Malcolm Gladwell’s book “Blink”, he gives many examples to demonstrate how these emotions can also fool us into making poor decisions based on the circumstances and history of the decider.

So, are the heightened emotions in the current climate helping or hindering the budget process for companies looking at what will happen in 2010?

It depends on their source. In an interview with Jeff Bezos, CEO of Amazon he made three excellent points. Firstly, focus on things that if they pay off, will pay off BIG. Then, think about what your customers want that WON’T change – things if you improve, will pay back for the next 10 years. Thirdly, think customer alignment. Make sure everything you do has a payoff for customers.

Zealously hunting down where we add value and focused paring where we don’t, pin-pointing investments that have the chance to pay off big and making sure that every cut or addition to the budget will ultimately benefit customers will make all that number moving far more productive!