Achieving profitable growth has always been a challenge—and it is becoming more difficult in today’s digital economy. Many companies are responding with strategic cost reduction efforts. While reducing costs is vital to reclaiming profitability, traditional cost reduction techniques often have less impact in the front office. Cutting front-office costs can damage the customer experience and exacerbate customer switching. So, there are unique considerations with the front office that should be addressed via zero-based mindset, a holistic approach to sustainable cost savings.
Ignoring these unique characteristics within the front office can negatively impact the P&L. ZBC (zero-based commercial) overcomes this because of how it addresses customer profitability. By analyzing the economics of each customer—and investing in its most profitable ones—a company can drive greater economic returns than the competition.
changed hands in 2017
thanks to consumer switching.
Companies that succeed in complex markets will make customer profitability the foundation of everything the front office does. Here are some key principles:
Total customer understanding
In a cost-conscious, growth-focused environment, high-value customers—those that are profitable and strategic—should be the priority. Businesses that have cracked this code have used ZBC to build an actionable and sustainable customer economics model.
Beyond customer economics
It is imperative to govern the healthy tension between growth and profitability. There is also a need to address operating models so they are organized around internal structures such as functions, geographies, products and channels—not customer journeys.
The new front office
As companies establish a customer economics capability, and address operational challenges that impede sustainable change, they must also look for the next generation of front office transformations. After all, customer dynamics are only going to get more complicated in the post-Amazon world.
With ZBC, the front office can embrace growth as much as it does efficiency, redirecting resources without the unintended consequence of strangling growth. Here’s how to get started:
Live, breathe and love data. The front office must be a ZBC insight hub where end-to-end data is king, and visibility is complete.
Clean sheet the front office. The focus must be on rethinking the front office from a blank slate, spending against what costs should be instead of last year’s levels.
Get real about should costs. Companies can use technology, such as artificial intelligence (AI), to help establish what costs should be.
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