Transportation is your new challenge

Posted: January 5, 2011 in CRM, Economics, Technology
Tags: , , ,

The cost of business travel is going up and up and up and, oh yeah, Happy New Year.

Forget all the CRM prognostications you’ve been reading over the holidays, the only one of significance to your business and to CRM is what you’ll be paying to get in front of customers.  Last week a former Shell Oil President, John Hofmeister, gave an interview on CNN Money in which he forecasted $5 per gallon gasoline by 2012.

With the national average for unleaded regular at $3.07 last week—a rise of 42 cents over the course of 2010, prices are as high as they’ve been in a couple of years.  This would be good news for an ailing economy because increased energy use goes hand in hand with increasing economic activity.  But at the same time, runaway fuel prices have the potential to shred your SG&A line and tank the economy once again.

This kind of cyclical boom and bust is in the offing unless we get a handle on the transportation costs that are such a big part of front office business processes.  You don’t need to be told this but gas prices, diesel and jet fuel prices move in parallel, which just about defines the travel part of a company’s front office business processes.

The reasons for the rise are well known and follow a classical economic supply and demand curve.  The difference now is that in previous booms you could simply call West Texas, Oklahoma, California, Alaska, Mexico, Norway, Scotland and oh yes, the Middle East and ask them to open the spigots a bit more and all would be well.  Today you can’t do that because supply is at peak and the developing world—China and India but also places like Brazil—all want more energy.  When supply is stagnant and demand rises, so do prices so here we are.

If you’re not a Peak Oil fan, think in these terms—there hasn’t been a new refinery built in the US since the mid-1970’s and refinery capacity is maxed out creating another supply bottleneck.  Also, the cost of drilling in deep water can be as high as a hundred million dollars per well (whether not you discover oil).  That is not the same as the cost of drilling in the bad lands and those costs need to be passed on to the consumer.  You can pick your storyline but it all comes down to the same conclusion.  Travel is becoming more expensive so this is the year to anticipate changing your front office business processes and begin to do something about it.

What’s to do?  Well, much of it comes back to the technologies that mediate front office business processes.  The front office technologies that have been developed over the last decade—and especially the last five years—will come front and center as we craft new and better ways to interact with customers.

Chief among these technologies will be analytics.  You thought I’d say social media or perhaps online conferences, videos or something else?  I will but they aren’t first on the list.  Analytics is first because analytics is the killer application for everything else.  Analytics gives you the ability to make sense of all the data that social media churns up and informs your decisions about which video content to develop and deploy.  It also helps you make rational decisions about which customers to get in front of and when.  So if you haven’t begun dabbling in analytics I’d say yesterday was a good time to start, today is pretty good too.  Tomorrow is iffy.

Next on the list is everything else.  Once you know much more about your customers and, really, demand, you can make intelligent decisions about crafting your messages and putting them into videos and developing online conferences.  None of this is hard to do but it will make your life different.  It will take you off the road and put you on the phone and on the web.

Anneke Seley, co-author with Brent Holloway of Sales 2.0, tells me that some of the most successful companies using new technology are finding ways for marketing and sales to work more closely, breaking down barriers between inside and field sales and developing web and phone strategies where direct field sales was once the order of the day.  I’ll post an interview with Seley shortly.

Thinking differently about front office processes is not hard but implementing new ideas might be.  While we all want to save a buck, investing in new technologies that help do this is a tough call at the tail end of a recession.  Part of Seley’s advice to me is to start with a pilot project to see if a new approach will work in your company with your staff and products.  If success is elusive, think hard about people, process and technology.  Five-dollar gasoline and jet fuel spell a turning point and you simply have to get around that corner.

So, what did you think?

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