The ONS reported a 20.4% drop in monthly gross domestic product (GDP) in April 2020, the biggest monthly fall since the series began in 1997 and drawing direct comparisons to 2002 levels – effectively wiping off 18 years of growth. These levels of damage conjure up the image of Covid-19 in the shape of a public health asteroid, hurtling towards economic dinosaurs. Most will survive – though
“It is not the strongest of the species that survives, nor the most intelligent, but rather the one most adaptable to change.” (Darrow)
Work habits are not the only change that has been forced upon the B2B world. Whilst almost all attention from each business is exclusively focused on the survival of that business, as we reach out to start to think about growth again, businesses may discover a new truth – the trusted suppliers they have built up long relationships with, are no longer the same.
In addition to learning how lockdown has affected the accessibility of their suppliers, customers will now also need to ascertain the impact on capability, quality of service or product, and mission alignment.
Furloughed workers are unable to partake in economic activity and a surprising number of businesses have either chosen not to embed an open / full contact model for those staff who do remain (working from home) through poor delivery or by design. Anecdotally, this is at least in part to ensure the workforce that remains can focus on key survival tasks, with plausible deniability for any ‘perceived’ reduction in customer service at such a time of global distress. It could well be that you find your requests for business critical data for your next report, just might not be important enough..
Fixed costs have required a serious haircut in all businesses. Furlough has obviously been widely used with 8.9 million on the Government job retention scheme on June 7th (Statista), but that has not stopped some already taking the step to reduce headcount, through non-renewal of contract, letting staff go, or redundancy. These seem to be spread mainly across freelance, contractors, and sub-2-year permanent. Experienced permanent staff have not been spared completely however and are likely to have been consolidated/hollowed out, too. Most anticipate a similar trend to what was seen following the 2008 crash, as the burden of the retention scheme moves back to the employer on an incremental basis from September. The levels currently are 3.9 redundant per 1,000 compared to 12.2 per 1,000 in 2009 (ONS). We could be in for some very challenging economic conditions ahead. That brilliant account manager that defined your ‘service experience’ with your supplier? They could have unfortunately found themselves on the wrong end of cost analysis when the quality of service was lower down the list of priorities for their employers.
If your contacts within your supplier have remained unchanged (great news for all involved) then consider whether they have maintained the compartmentalisation of services, you previously benefited from (usually unknowingly). Are additional risks now being taken by merging compliance and sales functions, for example? Has specificity been affected by ‘chunking’ different supply sectors to share fixed costs more effectively? Is that ostensibly brilliant account manager capable of delivering a full ‘360-degree’ service without the support functions they previously relied on? Looking forwards, 65% of Marketing leaders expecting a significant budget decrease in 2020/21 (Gartner), the story will be similar across the C-suite and resources are certain to be exceptionally precious in the months ahead – you can no longer afford to assume service levels will be what you have come to expect just because of an established brand identity/historical relationship.
Clearly direction matters. It certainly helps if you are aligned with suppliers who share a similar journey or set of values and the same in-house strength-in-depth as you invest in yourself. The IOD recently reported that four out of ten business leaders said their organisation had made adjustments that they intend to keep in place after lockdown. Clearly the crucial question is whether these adjustments are service beneficial. ‘Staged procurement’ is rapidly becoming the norm, where service facets are outsourced to maximise profitability and refocus fixed costs. From a Customer Experience perspective, however, this can create a vacuum of skill leading to dwindling service levels, hidden behind a veneer of familiarity with key personnel. It is crucial that in the weeks ahead, we all re-learn the missions/service intentions of our suppliers, and whether the global pandemic has significantly changed business models, in an attempt to protect profitability over the integrity of their mission.
As the dust settles on this public health shock, we all need to get to know each other again after several months shut away. Experiences must be pooled and news – good and bad – must be shared and understood. Business and the economy is no different. From a standing start, there has never been a better time to ensure that you are working with the suppliers that have prioritised service, and have a mission most aligned to your business now, and for the future. Business has changed – let us all embrace that.
