The cost of doing nothing

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The cost of doing nothing

Rex

Navigating through turbulent times is never
easy, but today’s economic conditions are more challenging
than most of us have ever faced. Our instinctive reaction is
to switch to defensive mode: cut all strategic projects and
then wait until things improve. But retreating could prove to
be more detrimental in the long-term. These turbulent times
could actually present new opportunities for companies
that invest wisely in information technologies. Through the
use of customer relationship management (CRM) software,
companies can consistently deliver an exceptional and
personalised service to their customers, achieve significant
cost savings and ongoing productivity improvements, and even
increase revenue share through focused selling.

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The challenge for small and mid-sized companies
The global downturn has brought about a dramatic increase
in business failures over the last six months and nowhere has this been more apparent than among small and mid-sized
businesses (SMB s). For larger companies, more cash on the
balance sheet provides some degree of insulation, while smaller
businesses have seen a rapid decline in cashflow as a result of
slowing customer demand and evaporating lines of credit.

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There has been a sudden rush to cut spending as
companies use every means possible to restrict or eliminate
activities that are not seen to improve sales or add value to
the bottom line in the short-term. However, cost reduction on
its own will not steer a business safely through the economic
downturn. Businesses also need to examine how they can
safeguard revenues and profitability, and look particularly
within their own customer base. Otherwise, they are just delaying the inevitable: more painful cost reductions and the
very real possibility of sliding into an irrevocable decline.

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What can you do?
Cutting costs while maintaining growth is a formidable
challenge at the best of times. During a downturn, it can seem
almost impossible. To meet these goals, businesses need to
look for practical solutions that will help them to maximise
productivity and increase effectiveness across their operations.
Increasingly, companies are turning to business software,
and CRM applications in particular, to drive through the
kind of operational improvements they need to survive and
accelerate out of the downturn. By optimising revenuegenerating
activities at a lower cost to your company, CRM is
uniquely positioned to assist you during the most challenging
market conditions.

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Why CRM?
First and foremost, CRM helps you to protect revenue from
your current customers. It ensures that you are delivering
the exceptional service necessary to safeguard their loyalty,
notwithstanding increasing cost pressures. What’s more, by
providing deeper insight into customer behaviour, CRM helps
you to unearth latent revenue opportunities within your
customer base for complementary products and services.
Selling more to existing customers may be the first priority
during a downturn, but the important task of acquiring
new customers cannot be overlooked. Without growth in
customer numbers, any business runs the risk of exhausting
its revenue base over the medium-term. Selling to new
prospects, however, is generally regarded as being 5–10 times
more costly than selling to an existing customer, so improving sales and marketing efficiency will be vital for growing your
customer numbers during the downturn. In times of recession,
CRM solutions can allow you to extend the reach and
effectiveness of your new business programmes. They can help
you refine your ongoing processes, increase your productivity
and introduce significant cost savings.

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Why invest now?
Your customers and potential customers are facing identical
cost pressures, and they have changed their purchasing
patterns accordingly. In many cases, they will be spending less
than before. But in all cases, they are looking for even greater
value for money, and are far more discerning about potential
purchases and potential suppliers.
The ‘cost of doing nothing’, in respect of addressing your
internal activities, is significant. Table 1 highlights the potential
cost of inaction with a series of practical examples. It also
examines some of the underlying issues that may be affecting
a company like yours and discusses how CRM can help to
address them.

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How CRM can help your organisation
CRM is a business strategy, not simply a technology. In this
slowing economy, CRM is an enabler; it is now an operational
and financial imperative for all SMBs.
CRM provides management teams with enhanced central
control over operations and budgets, helping them to manage
these areas more effectively – key during challenging times.
With powerful reporting tools and dashboards, managers can
get instant insight into business performance across multiple
criteria. With real-time visibility on revenue and budget
variance, their decisions are based on accurate information
and they can validate forecast data with full drill-down to the
underlying opportunities. All of this means that they can take
any necessary corrective action earlier in the cycle when it has
maximum impact. Integrated with your back office applications,
CRM provides a complete view of the business and streamlined
end-to-end business management capabilities. n