Chairman of the Business Exposure Group


CRM Systems – Vital or just another bit of business kit?

CRM is a strategy for managing interaction with customers and prospects.  The overall goal is to find, attract and win new customers, nurture existing ones, entice former customers back into the fold and reduce the cost of marketing and customer service.

This was the topic discussed by members at the recent meeting of the Business Exposure Group.

Do we really need a CRM system?  A growing business needs to manage relationships more efficiently, and can no longer rely on the old fashioned notes in the diary system.

There are various systems on the market – outsourced cloud based/off the shelf/bespoke.  Offering include sales force automation which reduces the number of salesmen, marketing measures multi-channel campaigns, customer service support which streamlines enquiries, appointment scheduling, analytics, collaboration between teams within a business, create special offers for clients drifting away, spotting profitability, customers historic trends, quote reminders.

What should you look for when purchasing a CRM system and how important is it for your business?  77% of staff don’t embrace new systems and there can be a lack of commitment to using the new system.  It’s important therefore to only choose the tools that you will use in your business.  Salespeople may reject the new system on the grounds that it is time consuming, difficult to learn, inflexible and doesn’t integrate well into their standard procedures.  If you get the right system, then salespeople don’t waste time trying to prioritise leads and lists, they can focus on selling.  Customer service teams don’t ask customers for their details multiple times and don’t have to manually search for their details.  Reports and statistics tracking of customers are instant.  Everything is stored under each customer name in the CRM system.

CRM system should not be viewed as an IT project because it involves the whole business.  Check your current system, it may need updating or replacing.  Does it have these features:

  • Telephone calls straight from the CRM system
  • Live chat to communicate with customers in real time
  • Interactive dashboards for easier business analytics
  • Cloud connected so you don’t have to wait until you’re back in the office to update
  • Email and scheduling software to search enquiries
  • Accounting software to see at a glance what customers might buy

But many say their staff hate their current system.  Is it user friendly?  Is it too complex?  Is it outdated and fails to provide the information you need?  Is your system GDPR compliant? Maybe it’s time to look at upgrading or even changing your CRM system.

So, what is the future for CRM?  It has everything to do with the customer, so that they become brand advocates.  The future is moving away from interacting with customers in the same way.  Messages and information should be bespoke.

Integrate teams – sales/marketing/customer service so that they all have the same perspective of the customers.  Use brand advocates to recommend – use social listening tools, get an alert the moment someone mentions you on social media – social CRM will grow and allow bespoke communications linked into an ‘all in one’ system which enables you to look at the entire customer journey.

Our members left the meeting with lots of useful ideas regarding CRM, realising that CRM is now a vital business tool.


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The Importance of Customer Satisfaction

According to the IOD 80% of companies say they deliver ‘superior’ customer service, however only 20% of customers agree with that sentiment.

Now with increased competition, crowded markets, little product differentiation and flat sales makes it more important than ever to give top class customer satisfaction.

So, how do you quantify, measure and track customer satisfaction and how do you know what your customers’ expectations are?

Consider the following statistics:

A 5% increase in loyalty can increase profits by 25% and a very satisfied customer is six times more likely to be loyal than just a satisfied customer.  Only 4% of dissatisfied customers complain.  The average customer with a complaint tells at least nine other people.  Satisfied customers tell five people about their good treatment.

So a business should view each purchase by a customer as an opportunity to recruit a promoter of the business.  Don’t just watch sales volume and rely on the sales rep describing your customers state of mind, track frequency of complaints and turn a dissatisfied customer into a brand advocate!

Customer satisfaction is based on

  • quality
  • business relationship
  • price
  • whether services/product meet or exceed expectations

So, how can you do more for your customers.  If a customer scores 90% satisfaction, they are then 90% more likely to recommend you.  If score drops to 80-89% the likelihood of recommendation drops to 48%.  It is fundamental in building a stable business.

Survey your customers using email/phone/mail or face-to-face and rate their experience on a scale of 1 to 5 and calculate the effect of customer satisfaction, for example if:

100 customers spend £100 per month and customer satisfaction is 90% then there are 90 happy customers and 10 unhappy customers.  10 unhappy customers = £1000 per month lost.

Next month customer satisfaction is 75%.  25 unhappy customers = £2500 per month lost.  That begins to put the importance of customer satisfaction into perspective.

Sales and management must head the initiative for implementing a customer satisfaction system.  Compare your own customer satisfaction with that of your competitors.  Engage your employees, measure everyone’s KPI’s and inform your customers about the changes you are making.  Ask the question of your customers why they prefer another brand over yours, get their feedback.  Are your employees making promises they can’t keep.  Identify the best company in your sector and benchmark against them.

During a Business Exposure Group meeting we asked ‘When is the right time to conduct a Customer Satisfaction Survey, is it

– post purchase

– periodic surveys

– on a continuous basis

– verbal feedback on a monthly basis

– should you have a formal measurement in place’

It is important to realise that what satisfied your customers at the beginning of 2018 may not satisfy them in 2019.  Use the Brexit issue as an excuse to talk and discuss concerns and areas of opportunity. If you receive a low score from the customer survey it is important to reply – ‘You were right to feel let down and this is what we are going to do to rectify the problem’. This makes you look proactive and gives you maximum credibility with your customers.

However, if customers complete a survey their expectations rise and they expect positive changes.  Do not let the surveys sit there gathering dust.

There are 6 parts to a customer satisfaction survey –

  1. Who should be interviewed – eg a truck manufacture, should it be the driver / manager / director
  2. What should be measured
  3. How should the interview be carried out
  4. How should satisfaction be measured
  5. What do the measurements mean
  6. How to use the survey to greatest effect

Put yourself in your customer’s position.  What do they consider important, and when you have evaluated the results of your customer satisfaction survey communicate some quick wins via your monthly newsletter to show how the business is committed to customer satisfaction and improving business processes.

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Non-Exec Directors – Are SME’s missing a trick?

The benefits and role of non-exec directors are well known amongst larger businesses but the picture is less clear for SME’s.

Is this something to consider or is it just another expense?  This topic was debated by members of the Business Exposure Group at their recent meeting.

In a small company it’s not about corporate governance as it is in large companies, but about credibility and a sounding board.  A non-exec director should ensure the strategy of the company is fully debated and then properly monitored.  A non-exec director can also ensure that the management do not become complacent.

Research shows that privately owned companies with a non-exec director stand a better chance.  With a non-exec director businesses show a higher profit margin.  Yet, people fall into three categories.

  1. Haven’t considered it
  2. Cost effect
  3. Can’t find a suitable candidate

Is there a need for a non-exec director in the SME world?

They can bring experience, contacts, and an objective and supportive view.  When turnover is £500K plus per year a non-exec director can be justified for amongst other things

  • Resolving director disputes
  • Offering support
  • Persuading busy directors to attend to cashflow
  • Persuading the founder to let go
  • Supporting a request from a reluctant bank
  • Assistance with a large or unhappy customer
  • Adjudicating highly sensitive reward schemes
  • Finding new business
  • Keeping the company on the straight and narrow re their strategy

It is a fast track to commercial wisdom because

they constructively question strategies

they bring experience which the business owners do not have

they provide a sounding board to the MD

If you decide to engage a non-exec director then there is a need to integrate them into the company, but there are challenges!

You need to have confidence in the person, not be best friends, they need to be your ‘awkward friend’.  Agree a fee and length of their contract.  Don’t take a financial investment in your business from them, as they need to be totally independent.  Avoid the ‘trophy appointment’, ie a retired executive looking for a hobby.  Decide if it’s better to have a finance non-exec director, or someone more general, as someone with experience of other sectors would perhaps be better value.

An experienced non-exec director gives outside stakeholders confidence in the company, but the decision to engage a non-exec director should be carefully considered, and provide them with offices and director insurance cover, as clearly a monthly attendance means that the day to day decisions are left with the daily management team, and the non-exec director, to add true value, should not be worried about any exposure on a day to day basis.

And finally, as soon as they begin to reduce their strategic impact, then find another because it’s important to know when to call it a day and find a new ‘breath of fresh air’.

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Challenges of Budgeting and its real value

Business owners and managers feel the need to prepare a budget, but very few actually appreciate the rationale behind the whole act of budgeting.

This was the main topic discussed by members at a recent meeting of the Business Exposure Group.

Should you have a formal business budgeting process, and ask yourselves why do we prepare budgets.

  • To assist in planning
  • Motivate and measure staff
  • To plan changes to your business / changes to your marketplace
  • Create objectives for the year and KPI’s
  • Address issues and problems
  • Provide financial forecasts
  • Consider investment requirements

However, if you have a mature business is there any point in budgeting when it will be much the same as last year.  A budget is not a forecast.  A forecast is a prediction of the future, whereas a budget is a planned outcome of the future.  Members were in two minds regarding the value of formal budgets.

A budget should be an ongoing process, not just a once a year routine.  Research shows that 87% of budgets are not used in reality, so is time spent preparing worth it?

Perhaps it’s better to always discuss financial decisions with your team.  Ask …

  • Does this align with our culture
  • Is there another solution which is better for our customers, even if more expensive
  • Is there something less expensive that provides the same value
  • Is the timing right
  • Do we really need to make this expenditure at all
  • What is the worst that could happen

Getting the employees acceptance of the budget is important.

  • When setting targets should they be aggressively challenging or easy to achieve?
  • What you don’t want is budget padding where some people introduce slack so their budget can be easily achieved
  • Setting high targets can result in loss of staff motivation
  • Allow staff to have some input of what they are measured on

Structured planning is the answer to improve profits, reduce costs and increase ROI.  Don’t allow yourself to get bogged down in the day to day problems of the business, make time to look at the bigger picture.

An important consideration when planning your budget is to allow room for flexibility, as quite often brilliant ideas and projects come up which have not been factored into the original budget, and it would  be wrong to discount the opportunities.

Be prepared to make changes to the budget as the year progresses; if money needs to be reassigned then don’t be afraid to alter it.  Budgets can be flexible.

One of the members of the Business Exposure Group stated ‘We abandoned the traditional budget.  We believe sound business decisions should be based on what’s best for our employees, our customers, our operation and whether the decisions will help us in the future – not on a budget’.

When setting budgets the members suggested taking into account the following.

  • Rolling 5 quarter forecasts eliminate the distortion caused by having financial incentives to meet a fixed target for a single financial year?
  • 13 week cash flows are better and easier to keep updated to the ebb and flow of your business and provide a better picture of reality to make business decisions?
  • A budget really helps you do a better job of belt tightening during recent difficult trading
  • Resource allocation should be about putting funds behind the right high value opportunities.

Our members left the meeting with lots of new ideas to put into practice in their own businesses.

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Building a Cash Management Culture

Do you manage cashflow or do you just rely on being careful?  Do you have a formal strategy for improving cash flow?  Do you have a cash management culture?

These were questions posed to members of the Business Exposure Group at their recent meeting.

82% of business failures are as a result of poor cash management.  60% of businesses have inadequate cash flow.  In many industries cash is difficult to access which creates problems for you to remain competitive, maintain financial stability and pursue growth.

But, how do you encourage a cash flow discipline in both good and difficult trading times.  Do you link compensation to achieving specific cash flow targets?

During the meeting our members came up with the following points:

Use email to send invoices rather than post, this should speed up billing and collection.

Reduce error rate on invoices.

Don’t wait to invoice at the end of the month, and have a regular schedule to follow up on all collections

Ask for a deposit or milestone payment.

Incentivise customers to pay faster by offering discounts.

Exhaust current stock and delay expenses.

Request better supplier payment terms.

Finance purchase orders.

Sell or lease idle equipment

Turndown or postpone work

Don’t pay early, pay electronically and on the last day the payment is due.

Sometimes more flexible payment terms can improve your cashflow more than a bargain basement price, so don’t always focus on the lowest price when choosing suppliers.

Arrange a line of credit from the bank, even though you don’t need it immediately.

Ask suppliers for extended payment terms.

Ask you best customers to accelerate payment.

Offer clients fixed rate retainer packages for some of the work, this way you get paid up front.

Suggest payment by monthly direct debit, instead of by cheque.

Offer finance as part of your product package to ensure that you get paid on time.

Operate a ‘just in time delivery’ to eliminate dead stock.

Offer discounts on lower demand products.

Source items from low cost countries, but beware you may need to pay upfront and buy in large volumes, so it may be false economy.

The popularity of financial software has made cash management easier, but as difficult as it is for business owners to prepare projections it is one of the most important things that have to be done.  But, does an educated 3 month cashflow forecast work in reality, and should you continually review your projections? All members agreed that you should have a line by line projection for every significant outlay in the month.

A further problem is managing cashflow in a seasonal business which is never easy.  You need to clearly identify the highs and lows of the yearly cycle and be confident that your projections are realistic.

One of our members commented:-

‘To our surprise we were called by our bank for a meeting shortly after we filed our annual accounts.  We were seen as high risk, despite being profitable, having sales growth and cash in the bank.  We were told that we would have to pay higher interest rates and would have restricted access to funding.  The problem was inadequate cashflow.  So, we reduced debtor days by 5 days (75 to 70) and inventory by 15 days, which improved our negative cash position by 60% and restored our relationship with the bank’.

This subject created a lot of debate amongst members of the Business Exposure Group and they went away with additional ideas of how to improve the cash management in their businesses.

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Are you controlling growth – or just letting it happen?

Part of any business owners dream is to have rapid growth and an influx of business.  But increased demand puts pressure on your systems, people and cashflow.

So, how do you handle an influx of business?  Have you been able to maintain the same level of customer experience?  Have you made any changes in how you service your customers?  Do you have a strategy for growth?

This was the topic discussed by members of the Business Exposure Group at our recent meeting.

Some of the barriers to growth are – lack of business plans / muddled marketing / running the business in the same old way / meddling and misspent time / wrong objectives based on just sales / no financial strategy and poor controls.

Check your systems, processes and procedures are up to date and adopt a proactive management approach with a quality control system where everyone uses the ‘same scripts’.  The ability to grow must be influenced by your willingness to devolve certain decisions to staff.  You must have a strategic plan for the short, medium and long term growth of the business.

To achieve growth – invest in ‘safe bets’ / identify strategies with a good probability of success / start with core business and eliminate secondary products on a regular basis.

Good information equals good decisions.  Can you deal with a sudden influx of orders with no way to fulfil them?

First of all spend time finding out what is causing growth and understand why your company is suddenly getting more business, as this is could be important to many of your future decisions.  It is also important to understand the reasons why business is slowing down.

One way to overcome barriers to growth is to invest in staff development.  Try to plug the skills gap in your business to move your business up a level.  Identify staff responsibilities and make sure you employ and retain the right people.

Be careful not to expand too quickly, look at whether you are growing to be more profitable or is it growth for growths sake.

Many fast growing companies change their goals too often; they never quite complete a plan before starting the next one, and because of this will get into all sorts of difficulties when business growth stalls.  It’s important to retain the culture of your business when taking on new staff.  Be careful not to let them dilute the personality of your business.

Ask yourself when looking at growth:

  • Do I have the qualities and diversity of people
  • Do I have systems in place
  • Do I have the ability to delegate
  • Do I have enough cash

And finally, ensure that it is not your mind set that is holding your business back.

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Planning for a downturn in Business

Strengthening your business doesn’t just involve financial management, it includes strategies to maintain and broaden your customer base, keep morale high amongst staff and improve business practices.  Chamber of Commerce figures show that three quarters of SME’s are concerned about the economy but few have plans in place to protect their business, if business takes a downturn for the worse.

Have a plan which outlines a comprehensive menu of cost savings which could be implemented in a downturn.  Adapt products to be more suited to customer’s current needs, diversify to protect from the loss of a significant customer.  These points were posed to members of the Business Exposure Group at their recent meeting.

Cash equals survival, does this need to take precedence over profit if business goes awry.  Having a contingency plan to produce short term profit, despite a drop in revenue, can make all the difference.  A decline of 10% in revenue could wipe out the entire bottom line and most companies have a relatively narrow margin for error.

So it is important to develop your forecast on optimistic, realistic and worst case scenario basis.  But, who does?  Businesses generally fail because problems are noticed too late, so thinking about vulnerabilities and opportunities early on can be a big advantage.

Identify and maintain your strengths and your best customers.  Identify your highest-margin customers and understand what you are doing right for them.  Instead of cutting costs, be ready to shift resources to retain high margin customers and continue to be creative in how you can add value for your customers without increasing costs.  Look through your costs and identify what’s inefficient, what’s nice to have, what’s there historically, and what isn’t creating value like it used to.

Be ready to take a knife to anything that isn’t adding value.

So, how recession proof is your product or service – is it a necessity or a luxury?

Quite often banks have a level of credit granted but some levels may no longer be required, which may mean you should move them to other areas.  If business is good consider increasing your line of credit and establishing new credit facilities, even if you don’t need them at present.  Perhaps look into unconventional sources of finance as a fall-back.

Look at speeding up working capital to release cash.  If sales fall can you respond so as to avoid excess stock?  Review your sales forecasts, keep an eye on your stock inventory and reduce the number of slow moving products.  Look at other sources of income such as sub- letting part of your premises.

Review and delay your expansion plans and the purchase of high ticket items.  Categorise your company’s assets into, underperforming v high performing, and strategic v non-strategic.  Try to lock prices with your suppliers to stabilise margins.

Look at buying optimistically or defensively a competitor to stop them falling into the hands of another competitor.  Monitor advertising by competitors, if they are cutting down now is your chance to do more.  It’s equally important for your business to find new markets.

In conclusion, the best time to prepare for a downturn is when the company is operating well.  Plan ahead so that if needs be you can react in a controlled fashion.

Above is a snap shot of the comments made during the discussion at the Business Exposure Group meeting.

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