COVID-19: Business Response Strategy

Measures Business should take…..

What we see currently is it's not just a crisis based on the current developments but also seeing an oil crisis at the moment and in developing financial crises of course. There are a number of areas that are targeted based on the current crisis with a very uncertain future. If we look at the immediate consequences for a commercial organization, there is a significant reduction in mobility which means that supplies are struggling to meet their commitments, along with a reduced ability to service customers. 

This is also leaving us to the next stage which is of rapid changing demand profiles of customers, we see large shifts in demand, either decline that is the demand of restaurants have been closed basically zero revenue, we also see a surge in services hence quite a big shift in supply and demand all over the globe. Thus there is a significant shift in their pipeline or the existing engagement where clients try to get better payment terms, it also changes what kind of products and service customers are interested in. So what we typically observe from other crises is that there's a big and lasting change in demand from the clients so these are some of the effects that we see as a challenge to the commercial organization. 

If we move a little bit beyond the immediate crisis what we see is there are a certain number of companies that had managed to deal with the crisis in a way that they outgrow competition, they had not only grown in tough times but also outgrew the competition with positive growth in a declining market. A good example of this is Starbucks, during the last crisis they went much more aggressively on their licensing or franchising model and therefore actually managed to grow their footprint in a lot of different international markets during the crisis and had a significant shift in their business model. Companies like Hoon IED actually changed their offering so it fits with the new customer demands This is something we typically see in a big crisis, there is a significant shift in customer demand and if you're able to react quickly and develop new products or services you can actually capitalize on that shift in demand. That's what Hyundai did when they started changing in terms of their leasing and free returns and made a very attractive offering for their customers. 

How is this going to hit your revenue across the world and so what markets, what customer segments, what industry segments are going to be hit and how much do you expect these segments to be hit and therefore you need to look at how can you then counteract that decline of the revenue. Presenting you the plan to increase the market share during this crisis. We see six key areas that need to be focused on for a commercial organization for the stabilization of your organization.

Cost-cutting: With a drop in the demand that we see right now and an unclear future we are going to do the reduction in our commercial orbital operations in terms of this standard overhead cost. There's quite a bit of excess capacity in terms of things that we've invested, it could be companies newsletters, marketing campaigns that we can probably cancel with quite a short notice, Companies work for a client that you know we're spending you know ten thousand dollars a week on internal communication on with a media Bureau so it just shows you that there are areas you can cut of course I think none of us can what we are seeing from our Chinese clients is we're actually seeing quite a big uplift after they've started opening up their economy again and they're trying to recoup what they lost during the shutdown and of course that's a positive sign that shows that there is a sharp take once we were out of the crisis 

Stay Close to the customers and protect the revenue: Now this is key for the commercial organization and this might seem like a very simple graph and a very simple recommendation but the focus needs to really be on the high-value customers so the majority of your revenue that comes from a number of 20% of your customers is 80 percent of your revenue or something like that so we really need to double down on these customers be very close to these customers that look how we can adjust our trade terms our policies anything in order to help them and make sure we get the revenue from these customers in the short term. We also see a lot of companies in the b2c world, they have started freezing loyalty. 

Bring your Clients & Organization together: Many organizations are bringing marketing and sales closer now this is a great opportunity to do that so if we can really get marketing to generate a lot of leads at the moment for sales then we will also see an uplift in performance. Most of the organizations have campaigns running or have a campaign for the year, they could move forward, then push these campaigns out and discuss new opportunities for those key accounts that saw a 20 to 30 percent uplift in their service revenue with these key accounts. Now it's time to break down these barriers between the organizations and bring them together so they can work more efficiently. and do zoom or Skype or any kind of meeting technology to gather and actually analyze the opportunities. Here what do we need to do in order to move the opportunity forward are we going to increase the value of this opportunity, who are the stakeholders we need to contact to do executive selling and so forth doubling down and these deals will absolutely increase your win rate

Systematically it's a very good idea to connect in the situation of a crisis for the big accounts to go in and have these sessions with our best customers in order to see how we get through this crisis together. 

Upselling & Cross-Selling: If we look at how we can increase the average order size, key focus areas would be upselling and cross-selling on the accounts. Very successful companies are very good at adjusting their offerings to these new segments and this is a nice consulting picture. Looking down the markets, stripping down your offer to a product that's now growing in demand so a less attractive product, what we don't recommend again is to just reduce your prices because that's very dangerous. Customers are expecting to get the same kind of services for a much lower price so look at whether you can down strip your products and make solutions that fit the new market environment then there would be a big difference in profitability on different product categories so that we can have high-value products where we can charge a higher margin. Due to better offerings and a better market position with less competition, this is the time to double down on those areas so if we can take market share in high margin segments, high margin product areas through a targeted commercial effort.  This is a good way to protect the profits in a declining market so that's what is recommended in terms of focusing on the high-value segments and product categories 

Change your revenue model: We can do many projects around shifting the revenue model from a CAPEX to an OPEX, this is also called servitization if it's in the b2b space. There is a lot of b2c areas with car-sharing services and other things, so this is typically a good time in a big crisis when companies are not ready to make big investments. If you can shift your revenue and business model over to a more OPEX based business this is a very efficient way of protecting your revenue and most likely also winning market share. 

Adjusting your offering: Owing to the current shortage within the medical field, we came across the news that Dyson is trying to see if they can change their vacuum production to creating ventilators Similarly Carlsberg in Denmark, one of the world's biggest losers during this crisis is shifting and looking into whether they can do hand sanitizers, Lego the world's biggest toy manufacturer is looking into protective matte plastic masks instead of Lego bricks. So we're seeing a lot of companies trying to really support society but also maybe generate a revenue model from it. Companies that are adjusting their offering products during this crisis

Reallocating the resources: cross-functional teams should allocate some of the sales resources if the b2b environment grows in a crisis. We should be very aggressive in certain segments and create commercial SWAT teams to target areas that are not as hard hit by the crisis so there are lots of examples of it. Like if the online channel is growing then you can allocate some of your non-online physical staff to the online space. We've seen certain clothing retailers doing that and hence we can quickly shift resources to areas where we don't see a significant drop in demand in order to take market share or at least protect the revenue in those channels liquidity your profit loss 

I hope this was worth some minutes reading.

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