5 Ways to Survive &
Thrive in an Economic
Downturn
There is a famous quote from the movie Shawshank Redemption. Morgan Freeman’s character says, “you either get busy
living or your get busy dying”. In times of economic uncertainty this couldn’t be truer for businesses. Research and
history shows that economic downturns are the best time
for strong businesses to get stronger and that increasing
investments in slower times can actually be more effective than doing so in a boom. This strategy provides strong
returns during slowdowns and extraordinary growth and
profitability in the years following. These same facts suggest
that businesses that reduce activity during a downturn do so
at their own peril.
Enter business process outsourcing (BPO) and strategic
marketing investments.
Based on proven practices and historical trends, the following
ebook explores five strategies to help a business maintain market
share, manage costs and gain a competitive advantage.
Strategies
1.OU T S OU R C I N G
Better, Faster, Cheaper
2.D IGITA L MAI L R O O M
It’s Not the Document It’s the Data
3. R ELAT IONS H I P M AR K E T I N G
The Easiest Way To Grow Customers? Don’t Lose Them
4. ENTERPRISE CONTENT MANAGEMENT
Improve Efficiency, Gain Control, Save Money
5. K EEP Y OU R B R AN D V I S I B L E
For Fast Rebound What Markets Improve
1 . O UTS OUR C I N G
Better, Faster, Cheaper
Outsourcing has become a bit of a buzz
word these days. It’s not a new idea. The
term dates back to the 1970s when manufacturing companies looked for outside
suppliers to take-on nonstrategic business
activities—cleaning, transport or legal services. Outsourcing has evolved considerably
in the last 40 years—now encompassing
functions much closer to core business.
As Michael F. Corbett explains in his book
The Outsourcing Revolution Why It Makes
Sense and How to Do It Right: “...companies no longer outsource only vertical
business units. The new cross-functional
approach follows a process horizontally
throughout an organization—so-called
business process outsourcing, or BPO.
Now more companies are seeking strategic
advantages based on outsource alliances.
While the relentless push to operate more
efficiently remains the driving force behind
outsourcing, it has also become a competitive, strategic marketplace tool, allowing
companies to improve response times and
develop new products faster than ever.
Once focused just on reducing expenses,
today’s outsourcing initiatives are likely to
help companies do things they previously
could not do”.
Any business process can be outsourced—
supply chain management, revenue cycle
management, manufacturing, payroll, IT,
accounting, customer service, etc.—and
there can be immediate cost savings. BPO
is a key driver in operational efficiency. By
streamlining core business functions, organizations develop efficient responses to
changing market conditions in a cost effective manner.
Studies show companies can save upwards of 20-40% on internal operational costs when adopting the use of
advanced technology platforms. As an
example, a well-developed information
management product platform saves time
and money by speeding up product development, protecting jobs and delivering cost
effective organizational scalability.
Companies that outsource business
processes are able to drastically reduce
their costly infrastructure requirements.
Through outsourcing, companies gain
access to world-class capabilities and infrastructure. Below is a model that shows
the predictability of the financial impact
of outsourcing (right) vs. in-house fixed
operations (left). It demonstrates how as
volumes ebb and flow due to market conditions and/or seasonality, outsourcing allows for the most efficient costing model
preventing cost overruns and losses.
Outsourcing is not a one-size-fits-all
solution. Outsourcing engagements are
custom tailored and are often deployed
in a “lift and shift” methodology. This
involves the transfer of employees and
technology to the partner, who then
begins a process of re-engineering and
normalization. With employers being
more digitally connected than ever,
outsourcing business functions can be a
relatively seamless process. BPO means
a business process outsourced; it does
not mean a company is forced to adapt
an outside process that deploys in a
disruptive fashion.
Outsourcing is truly a strategic tool that
offers benefits too compelling to ignore.
Decreased costs, increased flexibility,
enhanced expertise and the freedom to
focus on core business means leaders
can no longer look at it as a business
tactic, but as a competitive advantage in
an ever changing marketplace.
When selecting a outsource partner it is
essential that the partner is specialized in
the particular function and can perform
that function more efficiently than the
parent company could.
2. DIGITAL MAILROOM
It’s Not the Document, It’s the Data
Quite simply, paper kills business
efficiency and creates costly errors.
This may sound funny coming from a
company whose brand is so closely
tied to printing, but as our company
evolves, so too does our philosophy on
information management.
Businesses need data to remain
functional and competitive and that
data must be delivered quickly and
accurately to knowledge workers who
are making critical business decisions.
But many businesses are still using paper
to deliver this data—which is inefficient
and costly. It is also prone to errors as
15% of all paper is misfiled and 7.5% of
all paper is lost. Measured by cost per
unit and response speed, the traditional
letter is the least efficient channel in
Customer Interaction Management.
Thanks to automated methods, a digital
mailroom offers enormous potential
for the reduction of transaction costs
and acceleration of business processes.
Deploying a digital mailroom saves
companies thousands of dollars by
eliminating paper processing and the
delays and costs associated with errors.
What is a digital mailroom exactly? A
digital mailroom is the automation of incoming mail processes. Using document
scanning and document data extraction
technologies the digital mailroom analyses incoming letters, forms and invoices,
digitizes them and then automates the
classification and distribution of the mail
within the organization. OCR (Optical
Character Recognition) and ICR (Intelligent Character Recognition) technology
automatically distills and confirms information for use in databases and business
process functions by knowledge workers.
The infographic below demonstrates
the work flow for the West Canadian
Digital Mailroom.
The digital mailroom offers many
powerful benefits to organizations
looking to improve their efficiencies
and workflows, while embracing the
paperless movement:
• Improved process quality
• Progressive responsiveness to
customers
• Higher visibility and control
• Increased information security and
compliance
• Evolved project collaboration
• Reduced required headcount
needed for manual process
• Responsive mobile working
environments
When selecting an outsourced partner,
it’s essential to partner with a business
that can deploy quickly and has a proven
track record for getting the best results.
3. RELATIONSHIP MARKETING
The Easiest Way To Grow Your Customers? Don’t Lose Them
During times of economic downturn,
companies actively seek alternatives to
satisfy their changing needs. Often, organizations look to marketing in first round
cuts. However, in these times, it’s crucial
to not cut back on marketing budgets.
Instead, companies should increase their
marketing efforts to maximize customer
retention and loyalty.
Outsourcing marketing and communication strategies to an external vendor
who is a specialist in the industry can
help strengthen a brand and maintain
brand equity. Keeping your brand topof-mind has a large and long term impact on profit margins. According to the
Harvard Business School, “increasing
customer retention rates by 5 percent,
increases profits by 25–95 percent.”1
In order to determine the cost to retain
or replace a customer, the customer
lifetime value (CLV) must be calculated. What is customer lifetime value?
CLV determines the profit a business
makes from a customer. To calculate
this, take the revenue earned from
a customer, subtract out the money
spent on servng them, and adjust all of
the payments for time value of money.
This information can then be used to
determine the value of each customer
and the cost of replacing them through
other communication strategies.
Customer lifetime value can help companies make important business decisions.
For example:
• Marketing can calculate how much
should be spent to acquire a customer.
• Customer support can use the information to determine how much
should be spent to service and retain
a customer.
• Sales can use this information to determine which types of customers are
the best and should be highly sought.
A strong relationship is key to retaining
customers and maintaining loyalty. These
relationships are built through strategically designed marketing campaigns
which foster customer loyalty, interaction, and long-term engagement.
A well-executed campaign can build
a foundation of trust and build shared
values with consumers. By humanizing
shared values, organizations pay attention to consumers and take heed of their
personal interests. This requires doing
some research on what interests them,
how a business impacts their day-to-day
activities, and then utilizing this information to strengthen the relationship.
In a rapidly changing marketplace
business has become increasingly
competitive. Simply providing a
service is no longer enough. Engaging
in relationship marketing is a highly
effective and proven strategy.
How can you engage (and retain) your clients?
Industy Articles: Posting articles on the
company website help demonstrate the
business expertise and build a position as a trusted advisor as an industry
expert.
E-mail Marketing Campaign: Monthly e-mail newsletters provide a direct
channel to inform custovmers of any
updates, changes or events occurring
within an organization.
Blogging: Weekly or monthly blog
articles ultimately humanize a company,
build credibility and trust, and establish
an organization as an industry expert.
Social Media: LinkedIn, Twitter and
Facebook allow a company to position
their brand as a valued contributor of
information and bolster visibility among
current and potential clients. Participation in relevant social media platforms
enables direct communicaiton with
clients without sales pressure.
Using an outsourced partner to strategize and execute the communication
strategies outlined above can greatly
benefit the parent company. The parent
company gains an advantage through
the experience and knowledge of the
outsourced partner, resulting in cost-savings and higher return on investment
from the well-executed campaigns.
4. ENTERPRISE CONTENT
MANAGEMENT (ECM)
Improve Efficiency, Gain Control,
Save Money
Driven by the rapid rate of information
growth, businesses need to find better
ways to manage paper information and
electronic files. Enterprise Content Management (ECM) is designed to simplify
information across any business platform.
Once thought of as a luxury and convenience for Fortune 500 companies, ECM
is now essential for any well-run business.
Lower cost, less complicated ECM systems are a key tool of the economic
survival kit.
Quite simply, ECM is the process of moving paper documents and electronic files
into an organized electronic format that
securely manages data. As businesses
grow, so too does the amount information acquired. Tonnes of paper literally
piles up, taking over existing space. This
can lead to the adoption of off-site storage, which can cost thousands of dollars
a month. On top of that there is the time
spent by employees searching through
filing cabinets and travelling back-andforth to storage sites. With ECM, files are
visible and accessible through the click of
the mouse.
There are 3 key benefits associated with
Enterprise Content Management:
Improve Efficiency: There is a true cost
of labour associated with managing paper documents. PricewaterHouse Coopers found that the average organization
spends about $20 in labour to file each
paper document, and that is costs $120
in labour to search for misfiled documents. With employees looking for documents on a daily basis, it quickly begins
to monopolize their time.
Gain Control: Keeping physical paper
records where they can be handled
puts them at risk. They can end up in
the wrong hands, get lost or even be
destroyed accidentally. Electronic files
stored on a computer, without proper
organization, can also be at risk. With
ECM, businesses can track who sees
what, and how often, as all records can
apply role based security. ECM is also
a safeguard when disaster strikes—cloud
storage backs up your documents and
maintains access even if loss or damage
comes to a business’s computers.
ECM also helps organizations gain control when it comes to regulatory compliance through tightly managed and
secure systems.
Save Money: On top of improving
efficiency and better security, ECM also
saves money. Nucleus Research reported
that for every $1 spent on ECM, companies saw an ROI of $6.12. As businesses
start getting rid of paper and eliminating
filing cabinets, the money spent on storage space can be reallocated to money-making activities. Moving your ECM
to the cloud can multiply your savings,
eliminating the need for expensive up
front capital investments, and shifting
the hosting and infrastructure costs to an
easy to manage monthly expense.
Nucleus Research reported that for every
$1 spent on ECM,
companies saw an
ROI of $6.12.
Regardless of the economic conditions,
organizations have to watch expenditures
in order to stay competitive. If you are
thinking that an investment in technology would be cost-prohibitive, consider a
consultation with an ECM specialist. Our
team can provide an idea of the specific
benefits that a transition to ECM can offer your organization. Recognize that the
investments that you make now will pay
great dividends immediately as well as
when the economic pendulum shifts.
5. KEEP YOUR BRAND VISIBLE
For Fast Rebound When Markets
Improve
Economic downturns provide great opportunities for brands to build relationships
with consumers. There are several marketing strategies that should be followed
by businesses to position a company for
survival in the economic downturn and
for rapid growth for when the economic
recovery begins.
Research your customer. Instead of
reducing marketing research budgets,
increase the budget to and establish a
thorough understanding of how consumers are assessing value and reacting to
the recession.
Although many may think cutting a marketing budget is beneficial in an economic downturn, history proves otherwise.
Case in point, Kellogg’s vs. Post—battle
of the cereal brands.
In the early nineteen twenties, Kellogg’s
and Post cereal dominated the packaged
cereal market. But when the Depression
hit no one knew what would happen to
consumer demand. Post, did what one
might predict. They cut back on advertising, reigned in on expenses and prepared
to ride out the dust storm. Kellogg’s on
the other hand doubled their advertising
budgets, moved aggressively into radio
advertising, and heavily pushed their new
cereal, Rice Krispies. By 1933, even as the
economy cratered, Kellogg’s profits had
risen almost thirty per cent and it had become what it remains today: the industry’s
dominant player.
Advertising can and should be used
as an anti-recession tool. The business
brave enough to stay in battle during
and economic downturn, when everyone
else is playing it safe, can make dramatic
changes in their market position. Advertising should not be regarded as a drain
on profits, but rather a contributor to
profits and a means of achieving longterm objectives. The benefits of recession investment are often surprisingly
long-lived, with companies maintaining
their gains in market share and sales well
into economic recovery.
Fine-tune product portfolios. As the
state of the economy changes, so do the
needs and wants of consumers. Consumers will trade down to different products
that stress good value, so it’s important to
diversify product portfolios to accommodate. Industrial consumers generally prefer
to see products and services unbundled
and priced separately. Performance, reliability, durability, and safety become the
important factors for consumers. Price and
value should reign over company image.
The business brave enough
to stay in battle during and
economic downturn...can
make dramatic changes in
their market position.
Highlight core values. CEOs should reach
out to customers and reassure them they
have survived difficult times before and
can do it again. Companies that are successful should not abandon core values
and marketing strategies but rather
embrace them.
The time is now for growth-oriented
businesses to put marketing into high
gear with brand-building advertising and
marketing. For businesses that aspire to
be the dominant force in their market, this
is the perfect opportunity to make the
leap a reality. For businesses that already
lead the market, this is the time to ensure
—
WC
no one catches up. WEST CANADIAN DIGITAL IMAGING
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Calgary, Alberta
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