In South Africa, we don’t do things by halves! While consumers and businesses in many countries are dealing with the dual global crises of Cost of Living and Supply Chain, we’ve added two of our own to really stretch our tenacity and resilience: the Energy Crisis and the Water Crisis.
While the impact of this Fearsome Foursome on the lifestyle, wallets and sense of humour of consumers has attracted much media attention and been well documented, there has been far less focus on the impacts being felt by businesses.
nlightencx, a leading SA-based customer experience (CX) agency, has sought to fill this knowledge gap through its own in-house research, using the agency’s extensive client database.
“We analysed the four main crises, their impacts on South African businesses and, most importantly, how our best companies are surviving – and even thriving – in the face of extreme adversity,” explains nlightencx CEO, Nathalie Schooling.
The first step was to determine which crisis is hitting businesses hardest. The evidence from the nlightencx poll is clear: Most companies (83%) say the Cost-of-Living Crisis is posing the greatest challenge. The Energy/Electricity Crisis is a distant second (17% ). The other two crises listed in the poll – the Supply Chain Crisis and the Water Crisis – attracted less attention.
“Given that Cost of Living is by far the greatest challenge, we then looked at prospects for a resolution to this crisis, how our most admired and respected businesses – the likes of Shoprite Checkers, Discovery Health, Discovery Bank and others – are coping,” says Schooling. “They’re not closing the doors and turning off the lights; they’re innovating and fighting back by putting themselves in the customers shoes. In doing so, they’re winning client trust and featuring prominently in customer-choice polls.”
No end in sight, for now
Schooling says the consensus is that it’s here to stay, at least for a while. She emphasises that the cost-of-living challenge is a global one, although it manifests differently from country to country.
According to Project Manager and Business Systems Analyst, Maryna Smit from BXS Consulting, it’s “a struggle for sustainability”. Explains Smit: “Projections indicate that this struggle will persist until the underlying issues contributing to the cost-of-living crisis are adequately addressed.
“Digging deeper into the root causes, another perspective emphasises that the cost-of-living crisis is intricately linked to broader challenges, such as energy crises and other systemic issues. These factors create a domino effect that permeates through businesses and retailers.”
Slashing prices is not the best strategy
Schooling says that their research is clearly showing that the companies weathering the storm best are those which don’t focus excessively on cost and being the cheapest.
“If your strategy is simply to be the cheapest offering, then when your competitor matches or beats your price, your only option is to lower your price again. It becomes a race to the bottom until the company runs out of profit margin. And no profit means you’ll soon be out of business.”
Rather, emphasises Schooling, the winning companies in the COL Crisis are those that focus on a good customer experience and customer-service excellence.
The recent 2023 Ask Afrika Orange Index, published by research company Ask Afrika, found that companies that focus on CX – enabled by service standards – typically exhibit increased revenue, are more profitable, have more engaged employees, and have customers who are willing to pay up to 18% more for products.
“This is significant,” says Schooling, “because businesses can invest time and money to understand what their customers are facing at the moment, and then create solutions to reduce those pain points. They can do the research, analyse the data, and provide the customer with what they need – which is not necessarily the lowest price, but the best solution for them.
“As businesses we can’t control the economy, the markets, the supply chain and interest rates. But we do have an element of control when it comes to how we treat our customers, the level of service we offer, and how we empathise with them.
CX Innovation proves key for survival
Consumer-facing businesses delivering winning CX formulas in the face of the Fearsome Foursome Crises of 2023 are already well known: The likes of Shoprite Checkers, who are leading a retail technology revolution with their personalised services, and the Discovery Group with their successful customer reward programs.
But there are others in the business-to-business space too. For example, logistics and warehousing property developer Equites Property Fund.
Recognising the infrastructure challenges facing its South African client base, the company is creating ‘logistics parks’ that have their own energy solutions, bespoke plumbing to deliver potable and non-potable water, sewage systems, and an additional layer of centralised security.
“Now is the time to meet the customer where they are at,” highlights Schooling. “It’s tempting and seems counterintuitive, but do not obsess over price despite the Cost-of-Living Crisis. Rather focus on how you can give your customer real value for their money.”