ForeThought: Changing the universe to fit the equation

December 2, 2009 | Galynn Nordstrom

Yesterday, IFAI brought in their financial consultant to talk about 401(k) investing and the new Roth 401(k) option now available to us. He was an energetic and enthusiastic speaker, and presented the information clearly and concisely, but there was one point he made that clearly resonated with our gimlet-eyed and inquisitive staff members. He talked about how those people who had kept investing money in their retirement plans even as the economy soured and (we hope) bottomed out are now starting to reap the rewards as the market recovers. During the times of their lowest returns, he pointed out, the costs of the stocks their investments were buying were also at their lowest—meaning that their dollar had much greater purchasing power. Now that the stock market is recovering, anyone with investments is doing better—but those people who kept investing during the bad times are now reaping the rewards of their foresight.

That message is clearly congruent with the “how to survive the recession” advice so many business experts expound. Don’t cut your prices. Don’t cut the quality of your products. Don’t lay off valuable employees. Don’t stop innovating. Don’t stop developing new products. Don’t cut back on technology. Don’t stop taking risks. Don’t retreat inside the moat. Don’t cut expenses so much that you derail your ability to capitalize on new opportunities. And don’t stop marketing your products and reaching out to customers.

For my own part, I’ve spent far too much time in the last couple of years dealing with vendors that were obviously—and mostly quite unapologetically—lowering their standards of service, or timeliness, or reliability, or product quality, and using a tight economy as justification for it, when they bothered to justify it at all. It’s as though I, in the happy belief that most of my friends and relatives are indiscriminate idiots, invited them to a party, opened a bottle or two of a nice, spicy, robust Rhone to start the evening, and then switched to some pale, pink, fizzy plonk at some point in the evening when I figured they’d no longer notice. And then expressed polite disbelief when they all called me the next morning to complain about persistent headaches and fuzzy tongues.

In the article entitled “How to prepare for a natural disaster,” author Bill Lynott advises: Safeguard your most important asset. Your list of satisfied customers is the foundation for the continued health of your business.

One investment you should never stop making is in maintaining customer relationships. Yes, it’s critical to keep reaching out to prospective customers during tough economic times—because those times will pass, as our financial consultant repeatedly reminded us, and also because even during those times, there are always people (and businesses) doing extremely well. It’s hard to imagine an economy so tough that markets no longer exist. Markets aren’t nearly as volatile as customers. Yet many businesses seem to fall into the trap of thinking that “there are always more customers where those came from” when business is good or “nobody’s buying anyway” when business is bad.

Customer service doesn’t consist of a follow-up call after a job is done. It’s an ongoing process, and starts with research in order to verify current knowledge and future projections of consumer expectations. Do you know what your customers really want, or do you just assume that you do?

“Value” is always a variable.

Comments

Comments are the opinion of individual posters and do not reflect the views of Specialty Fabrics Review or Industrial Fabrics Association International.

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  Chris Nolan

  Dec 11, 2009
  12:09 am CST

  Afterthought: Changing the equation to fit the universe

  I just love stockbrokers, always urging to buy! I bought a mixed portfolio in 2001, right after 9/11; and since then watched it a soar like a rocket and dive like a submarine. It is now worth a little less than what I purchased it for, and after dividends has yielded an overall return of 5.3%.

  Frankly, it's too much for my nerves. It is a passive investment, looked after at vast cost by those who never advise to sell at the peak; only to buy at the bottom. The trouble is, if I don't sell at the peak, I have no cash to buy.