187. C-19 in 5 steps: DURRR (Downsize, Upgrade, Refocus, Renew, Reinvent)

Core Renewal, Index

Twin Challenges: C-19 and eCommerce 2023

The C-19 pandemic has popped the global, bubble economy. The just-in-time, supply chains and economies loaded with too much debt are all disrupted. Most of the global economy is locked-down. How will the New Normal economy emerge? No one knows. Guesses abound.

Until we have a complete – understanding of, testing and a vaccine for – C-19, tough times will persist. So, have at least three, adjustable, downsizing plans for – best, likely and worst – case scenarios.

In parallel to C-19 challenges, don’t forget to be inventing winning “digital models” by 2023. B2B e-buying was ascending before the pandemic. Now, C-19 necessities are teaching everyone how to use and like virtual interactivity and buying.

Two Downsizing Methods: Chain-Saw vs DURRR

The chain-saw technique? Use your financials to do what has worked in the past: even though present challenges are unique. Cut: all discretionary spending; all forward investment; and all operating-costs as fast as – sales, margin dollars and profits – fall. Then, sell harder (the same way) and be tough with channel “partners” in the – zero-sum, win-lose concession struggles.

Or: DURRR? Use net-profit analytics (with a cost-to-serve model at the line/pick/sku level) to:

  1. Measure the big, profit-loss cross-subsidies that exist amongst both customers and SKUs.
  2. Fix the losers to free personnel slack to either layoff or REFOCUS them on most, net-profitable customers.
  3. Decide which degree of aggressive DOWNSIZING to pursue: plan A, B or C. In all cases, payroll costs drop faster than margin-dollars while service value effectiveness improves for core customers.
  4. An overall goal: UPGRADE the quality of the remaining employees and customers. To…
  5. RENEW service value for the few, best – customers, customer niches and target accounts – that really matter. Chain-saw competitors will be under-staffed and delivering declining service to all customers: most profitable and unprofitable alike.
  6. Stealing competitors’ most profitable accounts – with total team focus – will be easier.
  7. Finally, REINVENT digitally with increased: free cash-flow, agility and can-do spirit. Let your most net-profitable customers (and suppliers) help guide you in co-creating new, all-win, digitally-enabled, business models.

Get Net-Profit-Analytics Savvy?

Check out: a) Blogs: 185, 186; b) (under “Resources” tab) Article: 4.11; c) the “Core Renewal Roadmap”; and watch/attend my all-new, 11 webinar series!