The Merger Benefit for SMEs

The Indian economy is bubbling and along with that are the big players. Pleasantly, this time round a lot of SMEs are also joining the bubbly bandwagon. A primary reason for this growth is the way smaller enterprises are taking to business decisions like mergers and acquisitions.

The Pretty Picture
A burgeoning number of Indian SMEs are entering into mergers and acquisitions with various players from India and worldwide. The numbers have nearly doubled over the last two years alone. At this juncture, one needs to thoroughly understand the advantages of mergers for a particular SME. With a merger, an SME can acquire a greater set of resources for itself which can include manpower, machinery and other innumerable assets. In turn, this can boost its efficiency which can lead to an increase in its output and also lead to a reduction in the cost of producing a particular product or services. This reduction in the expenditure and improvement in the output can convert to better business growth for the enterprise. 

How Mergers Help
Mergers can help an SME in covering/removing its weaknesses in the long run. For example, any SME that is lacking in its R&D is advised to merge with an agency with strong R&D skills which can boost the productivity of both enterprises. Similarly, in the global context, mergers assist SMEs in penetrating new markets. Any Indian SME can also partner with agencies from foreign countries to facilitate retail for both their brands within India. Besides bringing a host of new technology and products into the country, it would also introduce better management, practice and culture to the agency. Both the agencies stand to gain from merger and it provides foreign SME with the know-how about Indian market and its demands for the coming times. Also, while SMEs go into mergers, they get into some fruitful partnerships regarding proprietary rights for products which can benefit the end user. IT sector is a clear example for such mergers where SMEs combine to offer a variety of products for the user. This also opens new markets for the SMEs and also contributes to innovation and propagation of a particular merger.

Reverse Mergers
In many cases, mergers also help SMEs in rising out of debt and works as effective exit strategy for many companies. Many SMEs can also enter into reverse mergers whereby a private company can merge with a public enterprise and form a public entity with a control exerted by the private company. With a reverse merger, private companies can exert better control on an existing public company and still run an enterprise with a public existence. There are a number of examples in India itself where an SME has acquired a larger status through its timely merger with another SME. Most of these mergers are found to be from the manufacturing sector although service sector is also joining in this process. The option of  leverage buyout financing and acquisition funding process which is supported by private equity houses prove to be some of the reasons for the sudden spurt in mergers amongst SMEs. Mergers prove to be one of the best ways for an SME to grow and expand. With the advent of globalization, it has become a more opportune growth for SMEs.  

Repeat Customers: Driving Growth For the SME

We all know the importance and value of repeat customers for our businesses. More-so it is crucial for Small and Medium Enterprises to get repeat customers. In times, when global economies are going through major shifts and businesses are feeling the ecosystem evolving rapidly, it is important for every business/ entrepreneur to understand how to retain and build repeat customers.

Cost of customer acquisition: Repeat Customers Cost Less
To start with, we understand that getting a repeat customer is far less costly as compared to the investment done by the business for acquiring a new set of customer(s). There are many studies which have been done which prove the fact the above fact.
There are many business expenses which are related to customer acquisition: marketing, advertising, sales team etc.

Your business in times as competitive as today has to move fast and be on the look-out at all times, everytime, as each customer is being tracked by parallel and in many cases, similar set of services, which could be provided by your competitors globally and competitive prices as well and similar or at times better standards.

Source: http://static.searchengineguide.com/images/sudden-exposure-dsem.jpg

You sell by Word of Mouth
Its is given fact and almost all of us will believe, that repeat customers are walking advertisements for the business. Logic says that if a customer is coming back to your business, he/ she must have liked your set of services. Also, as business is more based on relationship, for SME's, a happy and satisfied customer, will majorly at all times, talk about your brand.

A referral from a trusted source, as we all know, works far more stronger and is a sure-shot way of developing business.

In the recent times Social Networks like LinkedIn and facebook have proven how powerful influencers can drive business for your emerging organization. There are fans following trusted brands, individuals alike which is dominating the board-room discussions in every emerging enterprise.

So how do you build repeat customers?
Though there is no magic wand/ mantra which you can speak of and customers will come running to you/ your business, but as in business, you can certainly follow the steps below and strategically work towards acquiring repeat business:

• Hire the right people

Your employees are your first customers. They are one of the most powerful sales engine for your organisation. Your business must ensure that demeanor and interaction with clients is focused towards cementing existing relationships and bring back business to the organisation.

Customers while interacting with your brand, actually do business with your brand ambassadors, your employees. Hence a powerfully enabled and empowered employee can do more good to your business.

• Your products/ services speak for themselves: be consistent, have a solid delivery

Large organisations as we see them today, did not grow as a chance or strike of luck! They grew to their size with sheer competence, ensuring that whatever they deliver is to the best of their abilities and that they are competitive enough as per industry standards, such that their customers get the best.

Being consistent is a lesson we learn early in life, while we are studying. As we expect even our national teams to perform consistently on the field, similarly we must maintain solid processes internally, which ensure quality at all costs and maintain consistency at all times.

Go to any McDonald's in a city and you will see the same products being sold over the counter, with the same speed and agility and pretty much the same taste. This ensures the customer that what he is going to get is value for his money and hence he walks in without a doubt.

You must set solid process oriented working methodologies in your growing enterprise, which ensure that your business creates ensured quality at all times.

• Know Your Customer - Well!

Learn this art from the banks. When you open a banking account, you fill a KYC form (know your customer). This is to ensure that the bank as an institution knows you well enough. Having such information creates a close relationship based on mutual trust which the client has with the banking institution.

But for SME's building a whole team of people with a KYC process seems an ardent task. Such business challenges can easily be tackled by innovative CRM (customer relationship management) software, available in the market. Smaller businesses can look at the Microsoft Office 2010 Standard and Professional Plus versions, which include Outlook with Business Contact Manager (BCM).

• Make them your best critiques: Co-create

Your customers could be your best critiques. They are at the receiving end of your set of services/ products/ solutions and hence you must always ensure that you take solid feedback from your customers on how are they experiencing your business proposition.

Co-creating with your customers, will ensure a solid relationship which will provide mutual respect and growth. Your customers grow close to you and your business, this way and it obviously helps!!

• Shake hands: go do it

Though it seems more and more profitable for any business operation today to leverage technology like video conferencing and mobile phones etc. Making a physical contact with your customers always creates an equation which is far different from anything else. Once an understanding is set, you can hence leverage the power of technology to touch base, while also helping your customer reduce cost and optimize business operations.

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Winning Mantra for SMEs: Co-create with Your Customers

The Small and Medium Enterprises, evolving into emerging businesses of today, face various operational challenges. With the ever evolving market dynamics, there is stiff competition all around and the customers have a wide variety of choice (most of the times) to the services that you have on offer.

How do you still ensure customer retention?
When we talk about customer retention, there are many interesting variables which are to be taken into account. A strong delivery is one such crucial measure. The business ecosystem is evolving so fast that every emerging business has to emerge accordingly.

But there is so much to do, How do we 'ENGAGE' our customers?
Co-create!!! Co-creation by definition has been explained exhaustively in this Wikipedia article. Lets understand by creating a perspective on the same with respect to the Customer - Enterprise/ Business relationship.

The Evolving Communication Landscape and How has it Affected Business Conduct
In the times we are living in, business is being carried out in ways which were never thought of before. The communication landscape has changed and evolved so widely that it has affected almost every aspect of how businesses communicate both internally with their employees, while engaging them towards success and also how they communicate and engage their customers/ clients.

Social Media and How are Emerging Technologies Changing Business
Technology is changing the way we communicate, which is further impacting the way business is conducted. With the Social Networking revolution dawning upon mankind, there is a whole different view and meaning to what we call freedom of speech.

Businesses globally are waking up to the power of the new medium. Your customers have the ability to talk as powerfully and communicate as strongly today. Its a two way communication and not just you listen and I speak relationship.

So How do You Co-create With Your Customers?
Each business has essentially two sets of customers:

• Internal: employees
• External: paying customers

For any business to be successful, you need to always have both sets of customers engaged strongly in your conversation.

Whether you innovate, ideate, come up with new services/ business lines, look at positively affecting your bottom-line, these sets of customers are highly crucial for every step, the business takes.

There are many insights shared on this topic by gurus, but I intend to make things a little simple and create a thought flow, which will eventually emerge into a process flow. Setting expectations:

                                          Source: http://blog.allencomm.com/index.php/2009/01/benefits-of-internal-collaboration-and-collaboration-between-client-and-vendor-teams/

• Value is co-created by the customer and the enterprise
• Individual is central to the co-creation activity
• Customer - Enterprise engagement forms the core of the value creation process
• Customer - Enterprise engage at various levels, across functions and hierarchies for driving value
• Value driven, focused Co-creation environments are created within the enterprise to foster the Co-creation ecosystem

Lets now take an example to put the case forward: lets say you are an emerging company (SME) who is looking to innovate and come up with new lines of business/ explore/ expand into further business opportunities, while being strong in your domain.

How do you essentially drive the whole exercise? OR let me ask the first basic question, who all do you think must be the stakeholders of this entire activity?

A view to this is, an emerging company, which is many a times crunched on bandwidth, must Co-create with its customers and prospects. It must make focus groups within the company which are driven by targeted goals. These focus groups must be owned by internal employees who are guided by subject matter experts/ advisors.

The next step in line should be engaging your core set of customers who are affected/ will be affected/ will be prospects by/ for your new line of business. Engage?
Yes! Engage. Engage them into working closely with your business. But obviously you cannot expect your customers to put in time in your business, they have their own work to take care of right?!

Yes they do, and that is where collaborative - knowledge management technology comes into the picture. There are many tools and SaaS based platforms which are powerfully being leveraged by many organisations to engage their internal customers, while increasingly empowering the external customers to work closely as one team with the internal stakeholders.

The Lessons
Co-creation has to do a lot about the culture. Its not a process which you implement and it will fall in line, its a thought which needs to be pulled through and ingrained into the working ecosystem of a company. The next stage is usage of smart, social and collaborative technology (many SaaS based platforms) are available now, which are smart and well affordable.

The third and the last leg of the journey is the customer. Bringing him from the offline interactive world to a mode where he/ she connects online and collaborates with you to create success an grow together is another initial hurdle to be crossed.

Happy Co-creating and if need, connect with us by dropping in a comment to this blog post and our team of experts will be happy to share thoughts on how your organisation could leverage the power of Co-creation.