Chief Financial Officer & Chief Operations Officer
Melissa has 20 years of leadership experience, delivering against strategic objectives set at Board level. By introducing advanced and innovative methods she has driven up shareholder value through sales strategy, operational efficiencies and resource optimisation. Clear, key, innovative ideas that help SME’s and Corporates – read her replies below. Melissa has a very broad range of industry experience with large financial services firms and other blue chip companies and also a deep understanding of the digital processes that are driving successful companies forward today. (Her career to date includes: Chase Securities, Microsoft and SME’s. She has an MBA in Finance and Management from The Wharton School and a BA in Maths and Economics from Dartmouth College). We spoke with her to discuss major trends affecting SME’s
Q1: What are the major trends affecting SME’s
Firstly let me say, I am a financial operator, embracing operations, developing what can be done to build a company, knowing what equity shareholder value really means from a financial perspective but for me, key, is my focus to drive it from the inside. By shareholder value I mean growing a company’s long term ability to generate continuously growing cash flows, maximising this route, minimising risk – maximising opportunity making it reliable, durable, value that can survive change, competition and provide continual growth - with the momentum to continue growing.
The single most important trend that applies to all companies and especially SMEs is the migration to customer centricity (Creating a positive consumer experience at the point of sale and post-sale). This started with the social economy, when the social networks took root, such as Facebook. The reason is that customers now have infinite amounts of information and can access this feedback and information instantly and all times. That level of sharing and feedback has elevated the importantance of customer centricity. This means putting not just your customer base at the centre of your business, not just your target market at the centre of your business but every single customer as if they were their most important customer.
This is only possible when you have good technology and good analytics. Customers are not now locked in; before social networks you might choose a cell phone and stay with the model; it was easier that way. Now a user can ask the question on line – what is best? Customers can easily move from one supplier to another. So we have huge change in customer churn now and companies that ignore customer centricity will be in big trouble.
Automated personalisation is the key: you build in business intelligence around customer behaviour. This is not a person delivering the responses it is algorithms. Each business is different. I use the word personalisation meaning every customer feels the most important customer. You must understand your customer. I have been in companies mining anonymous customer data and we see when it is appropriate to email them – we do not track them it is not 1 to 1 but a trigger based on behaviour but we do personalise the message Customers want that.
Social media has created a huge opportunity – Democratisation of Customer Acquisition. I now can drive customer acquisition via inbound marketing – no TV advert budgets etc., I can drive business volumes now with social media. It has opened the door for smaller companies. I can drive a Facebook campaign for $7 per day; I can build an audience
Q2 What common pitfalls do SMEs have?
NOT INNOVATING is a key problem - this is a must. More SME’s must innovate; costs have dropped to innovate – even innovating a business model. For example if you have a chain of hair salons try a new queuing method.
Prioritise your opportunities that are based on relationships - It is risky building your business using your personal contacts; this is tricky as this does not scale. A company grows and grows then hits a wall. This is not business development it is just calling on friends. It is important Asian SMEs build using scalable models. The CEO has to get out there and build new business. The problem is thinking if I use all my contacts I am being smart but this ignores scalability – you can’t just take a contract just because it is available. You must focus on scalability. You have to know also how to say no.
Q3 What strategies have the greatest long term value for shareholders?
There are indeed ten or more strategies. For example a key strategy is to own a niche. If you really service a niche you are in a good long term position. Another is network externalities – the value of having that network – the more customers you have the more value is delivered to each customer. Social network also come in here; the more members you have the more customers you have, it all snowballs
Q4 What differences do you see with SMEs in Asia compared to the rest of the world?
ASIA is heavily relationship driven and internally the decision models are a top down business model. I come from the school of working smart not necessarily just hard. All countries are the same in many ways so I do not see any right or wrong way when comparing say European and Asian companies. Certainly in ASIA decisions get kicked up to the next management level. This can sometime be good sometimes not so good.
Business work on the cost plus margin business model. So pricing can be way under how people value the product. For example, imagine a coffee shop chain. They charge for the experience, the brand, the location. Coffee is a cheap product but they realised people are willing to pay for the experience. I used to be a trade supplier in the merchandising industry. I tried hard to get the product priced on how much the customer needed us NOT on the cost of the materials and then add a margin.
Asia businesses are extremely profit driven. This is excellent. In the US there can be those with huge value but not making a profit. Intangible value but in ASIA this has not yet caught on. If there are more IPOs in ASIA that may change with growth of capital markets
Q5 Are there any less obvious way to spend cash and save cash?
Two things here on this point:
- Reduce churn - The cost of churn gets diluted in your P and L analysis. You must identify your cost of churn. You must make the right investments to reduce this churn. This strategy pays dividends and should be on-going. IF you are seeing a lot of customer churn you must address this issue.
- Kill your darling, unless it has other strategic value - Look into your business and see what part of your business is not making money. One can stop the analysis after just analysing margin but the product may absorb a ton of overheads – if that is the case the area must be closed
These days there are huge opportunities to drive the customer experience. Invest in innovation - I don’t see enough of this – don’t forget to reward employees - profit sharing. So build a performance culture and thrive.