Lexel zeroes in on customer risk

Lexel zeroes in on customer risk

While Lexel might be keeping a somewhat closer eye on the state of its customers and prospects than usual, it is largely business as usual for the company.

Noel Simpson (Lexel)

Noel Simpson (Lexel)

Credit: Lexel

Rather than focusing specifically on customer acquisition or retention as a way to forge a path ahead in the wake of COVID-19 disruptions, Lexel is taking stock of its customers’ risk profiles to manage its client-base and their needs effectively. 

Founded over 30 years ago, Lexel has grown into one of the largest privately-owned providers of ICT infrastructure services and solutions in New Zealand. 

With customers on both sides of the Tasman, the company views retention of these clients as an important factor in its continued buoyancy and stability as it looks beyond the disruptions, but not the be-all and end-all of survival, post-pandemic.

“Customer retention is important, but it always has been; more of our focus is actually around risk mitigation,” Lexel CEO Noel Simpson told Reseller News

“We’ve profiled our customers into risk groups, and those customers who operate in industries which are more affected are being cautiously watched and treated with more attention.

“This means more communication with the customer to look at ways we can assist them, such as finance options, as well as tighter credit limits and quicker responses to slow payment, with a goal to reduce the risk of bad debts,” he added. 

For partners that, like Lexel, claim customers across multiple verticals, this approach makes sense, given that the current climate is affecting some industries more than others.

“For example, if you have a tourism base of clients, maybe it’s time to quickly diversify, whereas for central government or construction it’s [business as usual] BAU,” Simpson said. 

Indeed, the past six months has affected some customer industries more than others. According to Simpson, some customers have been able to pivot their business, such as going online, but others haven’t had as many options.

The way Lexel has approached this issue is to segment its clients into those who will spend and those who won’t — including those that may also represent a payment risk, with the company focusing its efforts accordingly.

“Some of the non-affected clients are BAU and don’t seem to be affected at all in terms of their behaviour and spend,” Simpson said.

At the same time, according to Simpson, some customers will be looking to drive savings and some may look to cut corners as a way to achieve that.

“However, those are not necessarily the customers you want to actively retain, so there are some honest conversations occurring with some customers and making it clear that the risk they are taking is theirs to take, but it’s on them,” he said. 

But among the customers it is worth maintaining close relationships with, new opportunities are on the rise, despite the collective economic weight felt by many businesses as a result of the disruptions caused by COVID-19.

“The smart customers are looking at the bigger picture and saving[s] to be made by accelerating their transformations, and [they] will be looking for partners which have proven experience in those areas,” Simpson said.

Focusing on the core

While Lexel might be keeping a somewhat closer eye on the state of its customers and prospects than usual, it is largely business as usual for the company, albeit with a reluctance to push the envelope on new, bleeding edge technology projects for now.

“We have deferred any ‘net new’ (science projects) until later in the year, instead trying to keep our focus more narrow on running our core business efficiently and effectively,” Simpson said. 

Part of Simpson and team’s reluctance to forge ahead with ‘science projects’ and instead focus on managing its core business soundly is perhaps down to the prospect of further disruptions on the horizon. 

“The biggest risk we all face is another full Alert [Level] 4 lockdown,” Simpson said. “If NZ has another COVID-19 community transmission outbreak, all rules are off and for some it’s into survival planning,” he said. 

Simpson suggests that business basics, such as a focus on core business operations and managing cost and change, should kick in as businesses look down the barrel of 12 months or so of operating in an effective recession.

“In essence, ‘stick to your knitting’ and do it well,” he said. “Once the economy recovers properly, by all means, broaden your scope and investments, but only once the country is at full speed again.”

Emerging opportunities

However, there are opportunities in the market right now, some of which are emerging from the perceived challenges faced by organisations at present.

“The reality is that many clients will find the next six months the hardest, if they haven’t already reformatted their business to maintain profitability, they could be in trouble, especially with government wage subsidies coming to an end,” Simpson said.

“From a technology perspective, many have changed the way their staff work, in terms of location, access and process.

“The risk is that these rushed or quickly scaled solutions may have gaps or risks, including security or availability, so will need reviewing to ensure they are fit for purpose given the new norm,” he added. 

Beyond working to meet the immediate needs of organisations in the local market as they continue to build their businesses around new ways of working now and into the future, Lexel is keeping it simple, focusing on the basic elements needed to continue running its business well, despite the uncertainty and dynamic nature of the market. 

Given that many of Lexel’s clients are only just beginning to turn projects back on, while others are still reviewing their own cost structures, including full-time equivalent sizing and staff roles, the time for adventurous projects has not yet arrived. 

“For us right now it’s about optimising what we have, ensuring that we have full utilisation and minimal wastage,” Simpson said. “For clarity, it’s not about ‘science projects’ on new possible products to bring to market and so on, it’s about doing the basics right.

“In saying that, we are continuing with some key investment areas, particularly around our Microsoft relationships and supporting clients to migrate effectively, including reworking of workloads and reworking their traditional business practices.

“Putting aside the pre-lockdown rush for remote access systems and devices, the prior focus areas continue,” he added. 

That said, for some businesses the quick pivot to remote working scenarios has opened up the possibility of broader conversations around enterprise-wide transformation prospects. 

Indeed, many clients are moving to cloud, according to Simpson, but they have finally realised that they can’t just lift and shift; they need to re-architect their workloads to the new platforms.

This also includes exploring how end users operate and the tools they use, such as solutions supporting a modern workplace. Further, for clients to be successful in this capacity, they need to ensure budget is available for end user adoption, from Simpson’s perspective. 

For the time being, however, there is plenty to work with. 

“We have seen many customer successes coming from going online, much of it done in a rush on the back of Alert [Level] 4,” Simpson said. “We’ve heard from many retailers which have said their retail sales are down, but their online sales are way up; that overall they are ahead.

“Anything that customers are doing to pivot to our new environment is generally being successful,” he added.

Reseller News Advance is a centralised editorial resource designed to help partners access forward-looking content as the New Zealand market attempts to reposition for growth.

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