In the last five or so years, corporate responses to a challenging macroeconomic environment have been dominated by two themes: cost cuts and price increase. By Josh Vandekar, Lee Mergy, Zach Newman.
The article provides a compelling case for why focusing on identifying the right customers is paramount for long-term success in an uncertain economic environment. It highlights that cost-cutting alone does not translate into higher shareholder value, which can lead to reduced growth and profitability. Instead, businesses should adopt a more strategic approach by understanding their customers’ true needs and deriving value from them. This involves making deliberate choices about whom to serve and how to enhance the customer experience. By doing so, companies can build strong relationships with their key customers, leading to improved operational efficiency and higher returns on investment.
Key Learnings:
- Cost-cutting alone is ineffective in driving long-term growth
- Identifying “win-win” customers is crucial for creating value for both businesses and customers
- Tailoring strategies to specific customer segments can enhance operational efficiency and profitability
- Companies should focus on building strong relationships with their most valuable customers to ensure sustained success
The trouble is, we’ve found that cost-cutting is ineffective in isolation, and consumers are showing that they’re increasingly unable or unwilling to pay higher prices, or will purchase less or make alternative product choices. Whether this period will ultimately be viewed as an anomaly or as the beginning of a new era characterized by near-constant disruption and accelerated innovation remains uncertain. However, what is clear is that this “new normal” shows no signs of going away anytime soon. Good read!
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