Consumer vs business confidence

Around the world there is a growing gap between customer expectations and management capacity to respond to a more wary, value conscious consumer. Smart companies will adopt a combination of management and leadership to establish effective demand for their products and services in this emerging era.

There is a marked contrast between the way that large companies are sitting on piles of cash and reporting low levels of business confidence and the world of consumers.

Gary Morgan reports rising consumer optimism about the Australian economy with 32% (up 1%) expecting ‘good times’ for the Australian economy over the next 12 months and 34% (up 2%) expecting ‘good times’ for Australia’s economy over the next five years.

At the same time, small business confidence is going into a major stall in the US, UK, Canada, and NZ.

Dipping for a second consecutive month, after ending several months of slow growth, the United States NFIB Small Business Optimism Index gave up 0.2 points, falling to 91.2. During the economic recovery, now three-years-old, the Index has averaged 90, making this the worst recovery period from a recession in the NFIB survey history (which began in 1973).

Nearly two-thirds of small businesses in California say that they do not plan to hire any new employees in the next few months, according to a recent survey conducted by the business advocacy group Small Business California. About 30% of companies plan to reduce the number of employees in the next year, 48% plan to stay at the same level, and only 21% plan to hire new workers.

In the UK, the Federation of Small Businesses’ (FSB) Voice of Small Business Index – which measures the confidence of small firms across the UK – showed that in Q2 of this year, small business confidence dropped dramatically. Strikingly, confidence fell in 13 out of 18 of the sectors monitored, with five sectors falling from a positive to a negative reading

Although 20% of Canadian small and medium-sized business owners reported plans to hire within the next three to four months – a higher number than average – small business confidence levels have fallen to a three-year low.

New Zealand firms became more pessimistic in the second quarter as the nation’s economic recovery lagged behind expectations, according to the New Zealand Institute of Economic Research.”

“Expectations continue to be really positive, but reality still is not keeping pace,” principal economist Shamubeel Eaqub told a briefing in Wellington.” People keep expecting the recovery to get back to the old way, but that hasn’t happened.”

Now is the time to listen to the mood of the customer and forget the self-serving volatility merchants of gloom and doom in the financial print media.

Management guru Peter Drucker is famous for saying that the purpose of a company is to create a customer: “A business is defined by the want the customer satisfies when he or she buys a product or a service. To satisfy the customer is the mission and purpose of every business.”

Leadership guru Sheila Murray Bethel provides a similar focus, concentrating on how to add a new world-class dimension to your current customer service initiative and how to increase their ability to accept, handle and thrive on change in an era of unprecedented transformation.

Bethel challenges commonly held myths about who you think your competition is and why a new perspective is so important. Her three steps to move from customer service to the enduring quality of value-added customer focus are:

• Customer servicing – the operations part, doing the task well.
• Customer relations – the human part, those one-on-one interactions.
• Customer development – the sales and retention part that brings true satisfaction to every transaction.

The next few months in Australia will see real prospects taking all three of these steps, especially if the RBA starts to curb the rise of the $A as a safe haven for international worriers. Early brand promotion and sales training are now needed to generate a positive Christmas season that captures the cash that has been locked up in the nation’s wallets.

Dr Colin Benjamin is an entrepreneurship and strategic thinking consultant at Marshall Place Associates, which offers a range of strategic thinking tools that open up a universe of new possibilities for individuals and organisations committed to applying the processes of innovation, creativity and entrepreneurship. Colin is also a member of the global Association of Professional Futurists.