Business Leaders’ Focus for 2021 – Acquiring New Customers [Survey Overview]

This post was originally posted on the NetSuite Blog. By Art Wittmann, Brainyard Editor

If 2020 were a Dickens novel, it would sit somewhere between “David Copperfield” (all good until an evil stepdad — er, virus — shows up), “A Tale of Two Cities” (K-shaped recovery, anyone?) and “Great Expectations” (2020 was just so promising — until it wasn’t). We wouldn’t presume to compete with Dickens’s ability to make transitive moments in history come to life in personal stories, but we do have a lot of data on the outlook of business leaders prior to and during the wild year that was. In this evolving story, our latest data writes a chapter about an increasingly positive outlook, a focus on fundamentals and a thirst for new customers.

In December, we re-fielded our survey from December 2019, with only a small number of additions that allow for acknowledging the effects of the pandemic. Our goal was to learn how 2020 had changed the goals and priorities of business leaders. We largely found that metrics for success remained the same from the start of 2020 to the start of 2021 — it’s hard to argue with revenue, profit and cash flow as top metrics — but the top activities undertaken to achieve those metrics had changed fairly substantially.

In short:

• Respondents to our survey largely came through 2020 with little or no lasting damage and a positive outlook for 2021.
• Their measures of success remain largely unchanged, but customer acquisition is a notably new top activity for the year.
• Most respondents expect to spend more in 2021, with spending on payroll, technology and marketing leading the way.

Most notable is a focus on improving sales and secondarily addressing supply chain issues, for companies that are susceptible to supply chain issues. Fewer respondents cited product and customer experience improvements as top activities, though those still ranked near the top of the list. A nearly 60% increase in those focusing on sales is perhaps an obvious outcome of the pandemic. Even for businesses that weren’t substantially harmed last year, it’s likely some of their customers were.

Perhaps more surprising is that just two in five companies cited improving sales as a priority last year. Since our survey respondents tended to be smaller companies, it’s likely that a good economy plus a laser focus on customer experience and product improvement amounted to a formula for steadily improving sales. Then, a year in which the economy retreated the most it has since 1946 changed that formula.

We also single out supply chain issues here because many of our respondents came from services industries that shouldn’t have been significantly affected by supply problems (though some, like healthcare, certainly were). When we add up the respondents who came from supply dependent industries, we see that around 90% of them are concerned about supply chains. Not surprisingly, the drivers have changed here, from concerns over tariffs last year to COVID-related issues now. Respondents expressed these in freeform answers, which often described continuing issues with suppliers but also indicated a proactive attitude toward resolving issues.

While the focus for 2021 seems to be around ensuring the pace of business is what it needs to be, most respondents were bullish on 2021, with 73% expecting a good year (vs. 80% last year). Also, the reported spending trends are swinging around to look like they did before the pandemic, with most respondents increasing their capital spending. This is a win for CFOs, as they supported spending back in September while other executives thought they’d still be cutting in 2021.

Since April, when cuts happened across the board, everyone has agreed on one area for new spending: technology. Now, expected spending increases in technology match those predicted last year. While many spent on technology to manage work from home and open ecommerce sales channels, it appears there’s more to be done.

The other two areas in which spending outlooks are nearly as aggressive as last year are payroll and marketing. Last year, respondents nearly universally said they’d spend more on payroll, and among their top worries were historically low unemployment and growing skills gaps in their workforces. The pandemic has had its effect on unemployment, but the skills gap largely remains.

The marketing spend is clearly in support of goals around new customer acquisition and the realization that marketing, particularly online marketing, is more critical now that face-to-face sales and events like trade shows aren’t in the cards.

This post was originally posted on the NetSuite Blog. By Art Wittmann, Brainyard Editor