Predicting economic future cannot be 100% fool-proof, as we have experienced the futility of it in the past. Much of what we see is uncertainty. Rather than throwing up our hands and saying, we do not know, I think that it is better to see current and near-term economic conditions in terms of economic turbulence.
Turbulence is the uncertainty that comes from multiple conflicting forces that create uncertainty as it is difficult to separate reliable signals from noise. Inflation, Interest Rates, Supply Chain constraints, tight labour markets, geopolitical conflict, climate change, the potential for a recession etc. are some of the forces behind today’s turbulence.
Turbulence and Uncertainty
Turbulence creates uncertainty. Uncertainty erodes customer confidence delaying decisions and actions as it erodes. Companies feel those delays at the top line; in terms of lower customer engagement, slower revenue growth, dwindling sales pipelines, scant net new customers, etc. Companies also feel it in their bottom line as inflation, interest and exchange rates raise costs and reduce revenue recognition.
Relevance as a response to uncertainty
Navigating uncertainty and turbulence involves making big things smaller and more focused. This applies best to economic turbulence as its forces and factors are all outside of a company or leaders control. Given the external nature of these forces, leaders need to concentrate on what they can influence and control. Relevance is one of these factors.
Relevance is the strength of connection between a customer’s needs and the provider’s solution. Provider solutions lose relevance for multiple reasons:
- Customers value an alternative or competing solution better than the provider’s solution.
- Customer needs and requirements extend beyond or in a different direction from the providers solutions
- Customers do not understand or identify with the providers solution value promise – they cannot see themselves in the solution
- Customers do not see the provider as being the most viable option to achieve their outcomes or business objectives
But, raising relevance is not as simple as it seems
Turbulent times create complexity that requires providers to bring greater situational specificity to the positioning, messaging, and customer engagement. It is time to drop the ‘one size fits most’ approach to account management. It is also time to deemphasize the idea of product/market fit in favour of directly connecting to customer’s business outcome(s).
Providers need to raise their relevance as change reduces their chances of success.
There are many ways a deal can go wrong. There is only one way it goes right – customers see the relevance of your product and service to their needs. The figure below highlights the interactions between economic outlook, customer needs and the provider value promise.
Providers create a positive result whenever there is consistency between customer and provider context. When providers repeat the same positioning, this occurs in 1/3rd of the examples above. Alternatively, providers can take action to change positioning and promise to bring it into alignment with new customer values or influence those values in their favor. Either way, raising relevance requires providers understand and adapt to customer and economic context. This makes the equation for success: Turbulence -> Uncertainty -> Customer Context -> Changing Provider Context = Relevance.
Mark P. McDonald, Distinguished VP Analyst at Gartner