Zero hours contracts and self-employed workers revisited

self-employed workers: fruit pickersBusinesses have been quick to recognise the benefits of using zero hours and self-employed workers as a means of reducing their overheads.

The costliest item for most SMEs is their payroll and for many the legal obligation of paying the national living wage is seen as a significant burden, hence the popularity of the zero-hours and self-employed models.

According to the latest ONS (Office for National Statistics) figures the number of zero-hours contracts in use across the UK rose by about 100,000 in 2017 to 1.8 million.  That is still below the peak of 2.1 million in May 2015.

Nevertheless, these contracts are clearly still popular with some sections of the work force, particularly students, women and part time workers, as well as SMEs, for their flexibility.

However, in the last six months several court rulings have arguably eroded the benefits to business of using self-employed workers.

The most recent was a Supreme Court rejection of an appeal by Pimlico Plumbers in June 2018, against the decision of an employment tribunal ruling of unfair dismissal. The case involved a self-employed plumbing and heating engineer, Gary Smith, whom Pimlico had dismissed when he tried to reduce his working hours following a heart attack.

As a result of other court cases both DPD and Uber have had to change their employment models to provide worker benefits such as holiday pay, the minimum wage and pension contributions.

What next for businesses using self-employed workers?

Businesses understandably will want to retain the maximum flexibility to be able to adjust worker availability to reflect seasonal peaks and troughs and to keep a tight control over their overheads.

While it is likely that there will always be some workers who will value that flexibility to be able to fit working hours around other responsibilities, such as family or educational commitments, the UK economy is currently in a situation of full employment which makes it harder to both find and retain suitable employees.

Despite the current uncertainties resulting from the UK’s decision to leave the EU, a looming global trade war and an increasing number of workers affected by the many retail store closures that have been a feature of the last few years, there is likely to continue to be a shortage of relatively low-skilled workers due to the reduction in numbers of EU migrant labourers since the 2016 vote to leave the EU.

This is of particular concern to the agricultural sector that needs seasonal workers to pick and pack fresh produce.

Not all of this can be addressed by increased automation, which in itself has significant cash implications at a time when businesses are holding back on investment while there is uncertainty over their prospects for future trading.

If, as looks likely from the court cases, the mood among workers is shifting against being used as disposable labour, businesses will also have to assess the damage to their reputations from sticking to the zero-hours and self-employed models.

Is it time for SMEs to reassess their employment practices and as a consequence their business models?

Brexit uncertainty has gone on too long for UK SMEs

brexit uncertainty and migrating businesses

Will Brexit uncertainty turn businesses into migrating birds?

In the days running up to last Friday’s cabinet meeting at Chequers many of the UK’s largest businesses were warning that complete lack of agreement or clarity on the details of the Brexit negotiating position meant that time was fast running out for them to plan their future operations.

Businesses, both large and small, were clearly also less than impressed by the Government’s lack of attention to and understanding of their need for clarity so they can make practical plans.

So, while I have avoided commentary on the tedious, ongoing Brexit saga as far as possible, for once I am focusing on it, not least because of the events of the last few days.

After the Chequers meeting, it seemed that at last there was a “third way” proposal over which there was cabinet unity.  The details are expected to be published later this week.

But it seemed that at last business concerns and the future of the economy were finally front and centre in the proposals and this was tentatively welcomed by businesses.

By Monday, however, all was up in the air again as the UK’s main negotiator, David Davis resigned, along with another leading negotiator Steve Baker, and the chorus of disagreement from the usual Brexiteer suspects in Parliament was growing louder. And then Boris!

As an aside I can’t help thinking about petulant children who don’t get their way and the lack of leadership by those seeking to distance themselves from an outcome that was always going to be based on compromise.

Why businesses, particularly SMEs, urgently need an end to Brexit uncertainty

The key issues for SMEs, many of which are involved in pan-European supply chains, are clearly what the eventual outcome will do to costs and access to various components or raw materials not to mention access to skilled labour and markets for our goods and services.

It is not only the large supermarkets that operate a “just in time” model for supplies, so do many manufacturers. The model helps to reduce overheads and the costs and cash tied up when holding a large amount of reserve stocks, not to mention the warehousing needed.  However, it also relies heavily on reliable, prompt and efficient delivery.

If the eventual agreement on import, export and customs arrangements cannot guarantee the same level of efficiency it is likely that businesses may have to move to Europe if they want to survive.  Many are already considering doing this.

What the UK Brexit negotiators do not seem to have taken on board is the time most businesses will need to set up and carry out such a relocation, plus the effect it might have on job availability in the UK and on the UK economy.

Sourcing skilled workers in some key sectors has for a long time been a problem in the UK and the gap had been filled by workers coming into the UK, particularly in the construction, fabrication, engineering and IT sectors. Here too, uncertainty has taken its toll.

However, by the end of last week it seemed that these concerns were reflected in the new proposals and at last the concerns of eventual customs arrangements had been addressed along with the possibility of “special” arrangements to allow EU workers to be able to work in the UK post Brexit under similar arrangements as previously.

Of course, thanks to yesterday’s developments the fog of Brexit uncertainty could descend yet again and then there are the “unknown unknowns” of a looming US president-inspired global trade war, admittedly nothing to do with Brexit but far from helpful.

It would be no surprise if SMEs and larger businesses alike decided enough was enough and started the process of moving elsewhere. Are you likely to be one of them?

Are SMEs really unaware of asset finance or are they simply not borrowing?

asset finance predators?

Predators hunting prey

Last year the website, published research findings that seemed to indicate that many SMEs were unaware of the benefits of asset financing.

Its report, citing research by Close Brothers, said that “almost three-quarters (72 per cent) of SMEs in the survey did not know it was possible to secure finance against their turnover” (by which we assume they mean cash flow funding which in practise means book debt), rather than their credit rating.

It also reported that while 44% of SME respondents would consider using asset finance they were not acting on this.

It suggested that many SMEs were sticking with “inflexible and often unobtainable forms of credit” because they weren’t aware of the potential advantages of alternative funding options.

The inference, in other words, was that SMEs were continuing to approach the mainstream banks, despite the widespread perception that the banks were inflexible and unwilling to lend to them.

But how true is this?

Over the 18 months or so since there have been more pronouncements from asset finance providers.

In January this year CityAM quoted the MD of a business finance group, Peter Alderson, who said: “more are exploring financial options outside of traditional bank offerings that can support the level of business development needed to compete in new tech and online spaces.”

In the same month reported on a survey of brokers operating in the asset finance carried out by United Trust Bank and revealing that 39% of them expected demand for asset finance would grow throughout 2018, identifying the most likely sectors for growth as Construction, Transport, Waste Management and Manufacturing.

Martin Nixon, head of asset finance at United Trust Bank, commented: “There’s no doubt that awareness of asset finance is growing amongst UK SMEs. Lenders, brokers and industry bodies, such as the FLA and the NACFB are working hard to spread the word about the versatility and flexibility of asset finance and how quickly and easily transactions can be completed.”

This may be true, but according to the British Chambers of Commerce (BCC) borrowing among SMEs appears to have stalled.

The BCC yesterday released the results of a study it carried out with the specialist finance provider Wesleyan Bank which found that 56% of British companies did not attempt to apply for finance in the past year. Almost two thirds (63%) of them were small firms.

The study found that those that did seek finance showed a clear preference for the “conventional” which it identified as overdrafts (18%), business loans (16%) and asset finance (9%) and that half of these reported that they did so because of weak cash flow.

The BCC’s head of economics, Suren Thiru suggested that the results revealed a move from the “credit crunch to credit apathy where a lack of demand, rather than supply of finance is now the overriding issue”.

He called for the Government to do more to kick start business investment and to relieve the burden of business costs.

But is it any wonder that two years of uncertainty and opacity about the Government’s proposals for Brexit has led to the perception among businesses that the Government neither understands or takes heed of their concerns and that SMEs are holding back on growth and investment plans?

I would argue that it is not ignorance of asset finance but cost and a fear of a loss of control of assets.

The recent memories of lenders and their insolvency practitioner advisers seizing assets as an early response to default is too recent for business owners to believe that behaviour has changed and that it won’t happen again.

We advise most of our clients to consider building their balance sheet based on slower growth rather than rapid growth based on asset-based finance. It takes one slip for the advisers and lenders with penal default clauses to see profit from misery.

July Key Indicator: this month we investigate the future of Retail

the future of retail on the High StreetFew people can be unaware that the future of retail on the High Street has been in peril for some time.

There has been a seemingly endless litany of “big name” closures or attempts to restructure, from BHS and Toys R Us to Carpetright, M & S and House of Fraser to Maplin and most recently Poundworld.

But the retail sector encompasses not only physical stores on the High Street and on edge of centre retail parks, it also includes online-only operations, such as Amazon, eBay and Etsy and those retailers that have both online and physical shops like John Lewis and Lewins the Shirtmakers.

Nor should the small, independent niche shops be forgotten in considering the future of retail.

Clearly the preferences and behaviour of consumers is a key factor, but it is not the whole story, as I shall outline in this analysis.

The pressures impacting on the future of retail

Most of the difficulties facing the physical retail sector are well rehearsed.

They include escalating labour costs including wages, staff administration and compliance and the Apprenticeship Levy imposed on larger businesses since last year. These, along with the 2017 business rate revaluation that came into force in April and ever-escalating rents have had a significant impact on overheads for High Street stores, whether they are large chains or small independent SMEs.

Indeed, it has been argued that the rate increases have weighed disproportionately on the smaller retailers and, as I reported in a blog in May, the FSB has argued that the Government’s new online appeals system seems to have been designed to be hostile to business, bureaucratic and beset by glitches, while offering no in-person support, no phoneline or live chat options and involving a time consuming and opaque process for uploading supporting material when making an appeal.

Then, there are the landlords, although in fairness this term should also cover the many institutional investors representing such organisations as pension funds, which, arguably, need to maximise their revenues to protect the people they represent.

An equally well-rehearsed explanation of the difficulties has been the competition from online retailers, who do not face the overheads that come with a physical store and can therefore offer substantial discounts to shoppers.

This brings us to another key factor that affects the future of retail – and that is consumer preferences and behaviour.

Here, the convenience of online shopping at any time of the day or night as well as price competitiveness has been identified as the key factor in the so-called “death of the High Street”. But there is more to it than that.

As the TUC General Secretary Frances O’Grady, said: “Retail depends on customers having money in their pockets. One reason why some shops are struggling is because wage growth has been very weak.”

Not only this but, as was reported yesterday, an estimated 50,000 retail staff have been made redundant or seen their role put under threat since the start of this year. It should be remembered that these people are also consumers who are now likely to have less money to spend. In this context the recent collapse of Poundworld could be seen as a worrying development.

Not much discussed, but also worth considering is the strategy of local authorities and the planning process in town centres over the last 20 or more years. While cash-strapped councils understandably wish to maximise their revenue from business rates and are therefore likely to have been attracted by flagship “name” stores to anchor their High Streets, the results arguably have been an unappealing sameness to town centres such that it is difficult to know whether you are in Sunderland, Colchester or any other town you care to name. Another bugbear for shoppers is the cost of parking, also a revenue stream for local authorities where the cost is discouraging shoppers who instead go to out of town retail parks.

Can the future of retail in the High Street be revitalised?

Let’s look at consumer behaviour first. Shopping has always been to some extent a social activity and there are already signs that those authorities that have paid some attention to the appearance and appeal of their town centres may be reaping the benefits as markets, small, specialist independents and pop-up shops, together with more places to eat, have a coffee and socialise, appear. Municipal flower beds and baskets even, make shoppers feel welcome.

Equally, many shoppers will say that while they appreciate the convenience and cost saving of online shopping, there is no substitute for being able to examine and try on purchases.  This is where some innovative retailers, such as Next, have provided opportunities with click and collect options that allow customers to try on orders and if not happy, the shop will organise the return of goods for them. It also means that the shop can operate from a smaller space to cut its overheads.

Another change in behaviour among shoppers is to buying fresh produce locally and doing bulk shopping online or by car at large out of town stores. This is helping promote specialist and artisan shops that are close to where people live or work. The large stores have also latched on to this by introducing local concessions into their stores.

Many of the larger retailers that have found themselves in difficulties have also offered online and click and collect services.  However, there has also been an increase in the numbers that have tried to restructure, using the option of a CVA (Company Voluntary Arrangement) to renegotiate deals with landlords and thereby reduce overheads. While there are signs of some landlords opposing the use of CVAs, or imposing strict conditions, if agreed they do at least guarantee some continued revenue, albeit reduced, rather than landlords being left with empty property on their books.

A number of developments that may also help the future of retail

Recently, a think tank, The Centre for Cities, has argued that city centres should be diversified to include more offices and housing arguing that they are currently too reliant on retail, but also that if retail is to survive it needs customers to sell to, such as those working and living nearby.

The UK Treasury is also working on a fairer tax system to help High Street retailers, based on scrapping business rates and replacing them with a “turnover” tax.

In the US, a Supreme Court ruling has allowed states to collect sales taxes from retailers that aren’t physically based in the state, meaning customers will likely have to start adding taxes to their online shopping bills, while on June 19 in Belgium the European Commission held a conference to examine the future of retail and what can be done to help with the current challenges.

It is too soon to say what impact any of these developments will have on physical and online retail but equally, it is too soon to write the obituary for physical retail.


Late payment regulations need beefing up

late payment penalty?In April this year I reported on the scepticism with which SMEs had greeted the appointment of a Small Business Commissioner to help SMEs to deal with larger businesses’ late and unfair payment practices.

Paul Uppal was appointed in December 2017 and ran his own small business for 20 years. In interviews since, he has reportedly said he hoped the problem can be solved by “cultural change rather than legislation”.

But in any case, Mr Uppal’s powers are limited to taking information from SMEs, investigating and helping them through a complaints procedure. Changing behaviour and holding to account larger business and especially public bodies this is not.

He said he will name and shame persistent late payers.  I don’t think he has offenders quaking in their boots! Indeed, given the practices they condone in their firms, or turn a blind eye to, I don’t believe ‘shame’ is something executives worry about. The new badge of honour is having the hide of a rhinoceros.

Mr Uppal’s appointment was the second of two measures introduced by the Government to tackle the problem of late payment.

Previously, from April 2017, it introduced a legal requirement on large businesses to report via a publicly available Government website on a half-yearly basis on their payment practices, policies and performance for financial years beginning on or after 6 April 2017. Failure to report or reporting misleading information has been made a criminal offence punishable by a fine.

The legislation covers businesses above a threshold of:

* £36 million annual turnover

* £18 million balance sheet total

* 250 employees

By December 2017 only 29% of larger businesses that had reported had paid invoices within 30 days on average.

So much for the shaming strategy.

Stronger penalties on late payment are needed

The calls for tougher action are growing stronger.

A report by YouGov has revealed that legislation that would force payment of bills within 45 days is strongly supported by 61% of British companies with fewer than 250 staff.

The FSB (Federation of Small Businesses) has estimated that 50,000 SMEs each year close because of late payments and that public bodies are among the worst offenders, with 89% of suppliers to government reporting that they had been paid late.

From my work with SME owners, I am well aware that waiting for up to 120 days for payment by a larger customer can play havoc with your cash flow and can push you into insolvency if you aren’t brutal with agreeing and enforcing appropriate terms for payment of your invoices.

It is a difficult balance to strike, payment terms versus your relationship with important customers. Managing the relationship involves making sure that your terms are followed. You can be sure they will demand theirs.

While tougher regulation might enforce a maximum time for paying invoices, together with meaningful penalties for failure to comply, I would argue that you need to establish payment terms up front and then make sure they are observed.

What is business anthropology and how useful is it?

business anthropology and the evolution of human behaviourAnthropology is the study of humans and human behaviour and societies in the past and present and business anthropology applies the same methodology to the business world.

It can therefore focus on a wide range of business behaviours, including management, operations, marketing, consumer behaviour, organizational culture, human resources management and international business.

If you read my blogs regularly you will know I am a firm advocate of knowing, understanding and monitoring every part of your business, from operations and processes to cash flow and profitability and of regularly reviewing your management accounts.

These are all very practical and crucial aspects of a business’ performance, but I would argue that no business can hope to sustain its success and profitability without also understanding the human beings with whom it engages.

So how and where is business anthropology most useful?

Understanding the interactions and likely behaviour of the human beings with whom your business is involved is important to many aspects of a business if you want to increase profitability and grow.

It can be especially important if you have identified a problem that needs to be addressed.

Employee engagement is crucial to sustaining and improving productivity, whether it is in developing new and more efficient processes or simply increasing sales. Issuing instructions is not enough.  Productivity initiatives are unlikely to yield results unless people are well-motivated and feel valued and it is therefore important to understand what matters to them and what is likely to motivate them. This is where business anthropology can be a useful tool.

Another aspect of business anthropology that can add to your insights is how the workforce communicates with each other and with external stakeholders such as customers; essentially this is its corporate culture.

Crucially, your behaviour as a leader and that of your managers defines the workplace environment and over time embeds the business culture. But if you want everyone to buy in to the business’ vision and culture you need to understand how to “press the right buttons” and again business anthropology can bring insights into this.

Knowing the causes of and how to manage performance and stress alongside profiling staff and customers to understand how they are likely to react can be helped by using business anthropology’s insights to improve the success of growth and productivity plans.

And finally, in an increasingly global culture where it is likely that once the UK has left the EU businesses will have to redouble their efforts to build trading relationships with many other countries the insights found in business anthropology can help to understand and apply the conventions found in other cultures and countries.

Are we being naïve about the powers of technology?

stormclouds over the power of technologyThere is no doubt that using various IT systems offers scope for huge time savings and efficiencies but at what cost and how do you cope with the expectations of technology that many companies and users are not familiar with, not least about its performance and reliability?

There seems to be an ever-growing list of IT failures and meltdowns. They include the problems TSB has had in installing its new system, which locked people out of their bank accounts, made several thousands vulnerable to their accounts being hacked and money stolen and, it seems, have still not been completely resolved eight weeks later.

Then the VISA payment system failed for a day, making it impossible for customers to pay for purchases in countless shops.  The London Stock Exchange recently had to open an hour late “due to a technical issue” and, as I recently reported the Government’s business rates appeal website has been castigated by SMEs as being less than user-friendly. Those are just examples from this year.

It is not uncommon for Government-commissioned websites to go way over budget or to be delayed, such as the roll-out of Making Tax Digital, parts of which will not now be implemented for several more years.

Yet we are constantly being advised, or even pushed, into using technology and in many cases businesses cannot function without it.

How much should SMEs rely on the powers of technology?

It is all very well for banks to be closing rural branches and encouraging everyone to bank online, but this can be frustrating, time consuming and therefore costly for the rurally-based SME in a location where the broadband service is less than reliable.

Indeed, the FCA has just revealed research findings that consumers in rural areas of the UK are far less likely to use their smartphones for banking than their urban counterparts, largely due to patchy mobile and broadband coverage.

In a recent Guardian Article James Bridle argues that “We have come to believe that everything is computable and can be resolved by the application of new technologies” about which he says we understand less and less.

He cites the example of the Cloud, which we use for working in and for storing often crucial business information.

As he says: “the cloud is not some magical faraway place” but actually a “physical infrastructure consisting of phone lines, fibre optics, satellites, cables on the ocean floor, and vast warehouses filled with computers”.

Any physical infrastructure is likely to have vulnerabilities and weaknesses, and this is something that you should take into account when developing IT systems for your business.

Essentially this means that wherever possible you should get the best possible advice when choosing any system to install, taking into account your location and the reliability of the infrastructure.

You should ask questions about its capabilities, and above all you should both understand the limitations of the powers of technology and should always have data back-ups, whether it be paper records or external and locally-based hard drives to avoid your business being unable to function in case of a failure.

You should also have fall-backs if the system is down but I shall deal with business continuity in another blog.

Ultimately the powers of technology are huge but exploiting them requires vision, reorganisation, planning, training and considerable investment.

The pros and cons of setting up business in the countryside

business in the countrysideThere are undoubtedly challenges to setting up business in the countryside but in this blog, I will argue that there are also benefits.

Obviously, for some businesses, such as those related to agriculture, leisure and tourism, a rural location is essential for access to customers, but it is taking a somewhat narrow view in an ever-more connected world to discount the possibility of moving out or setting up away from an urban location.

There are plenty of examples of all types of business, from digital media companies to engineering, already to be found in rural areas.

The drawbacks to setting up business in the countryside

High on the list of drawbacks are the adequacy or otherwise of the IT and transport infrastructures and the availability of employees.

For a business that relies heavily on IT and a decent broadband speed with uninterrupted access can be a problem. In theory, however, this is a problem that is already being addressed by the Government’s Broadband Delivery UK scheme albeit not quickly enough to suit some businesses.

The transport infrastructure may be more of an issue if your business needs access to a decent road system for the delivery of either goods or services, especially if you need access for HGVs, or to be sure that employees can get to work on time.

It is worth investigating the likelihood of planned work on roads with the local authority when considering a rural location.

Employees are also key, especially if you are moving location. While some people might be happy to move most are likely to need cars to get to work. The other issue is recruitment which can be a critical factor if you need skilled staff since they may not be locally available.

Amenities may be another issue, as rural areas experience a diminishing supply of local bank branches, post offices and village shops.

The benefits to setting up business in the countryside

A rural location does not have to be somewhere deep in the heart of a green landscape, although there are plenty of farms that have converted redundant barns into small business centres, if that appeals.

Scattered throughout the UK are plenty of small towns, many of which have industrial estates on their outskirts. It is quite possible that setting up your business on one of these will mean that in addition to a potentially more reliable IT and transport service, there will also be opportunities for collaboration with other, neighbouring businesses.

Equally, the cost savings may be considerable, not least on business rates, and it is often easier to access business support grants and other funding specifically directed at business in the countryside.

Recruitment and staff retention may also be easier as more and more housing estates are developed in smaller towns and those living on them may appreciate the opportunity to use their professional qualifications and skills to work locally rather than face a lengthy daily commute to an urban centre.

If you are thinking of setting up a business in the countryside it is also worth investigating the local crime figures. On the whole, it is still the case that the figures are lower outside of the urban areas but check with the local police for any schemes that that focus on protecting businesses.

There may be challenges to setting up a business in the countryside, but it is a mistake to discount the option without proper investigation.

The pros and cons of team building activities for SMEs

team building activities or socialising?There is considerable disagreement about the effectiveness of company team building activities, especially those that involve away-days for things like paintballing, go-karting, white water rafting and the like.

The question is whether team building activities away from the office will make a noticeable difference to your productivity, rather than simply to the bottom line of the businesses that offer such facilities.

According to Forbes Magazine, Kate Mercer, author of A Buzz in the Building: How to Build and Lead a Brilliant Organisation and a co-founder of the Leaders Lab consultancy, warns that such activities can actually damage your workplace because it takes a great deal of skill to bring out the learning points and to transfer them back to the workplace.

Not only that, she says, they can make some employees feel embarrassed and others feel patronised and too often they confuse socialising with actual team building activities.

Such exercises can also be expensive, particularly for a small business, and the American researcher Kenneth Stålsett argues in his doctoral thesis that while they may be fun – for some – they rarely alter established ties between colleagues or enhance communication and collaboration skills back in the workplace after the event.

Stålsett argues that team building should be tailored to the unique challenges that exist within each group, or business, and that team building should be a recurring exercise.

Do SMEs need team building activities?

There is a distinction between social and team-building events. During the planning, you need to be clear about the purpose and outcomes you want.

Of course, you want your business to function as efficiently and effectively as possible and therefore you want your employees to work well together.

This can be particularly crucial for an SME in today’s fast-paced economic environment where it is important to get new employees to fit in and become productive as quickly as possible.

There is no denying that your business productivity can benefit from a co-operative and well-knit team of employees and it is therefore important to encourage this.

This means your business environment needs to be comfortable, positive and welcoming, in the sense that everyone’s contribution is valued and where people are stimulated, challenged and recognised for doing their best.

Your team building activities need careful thought and design to encourage people to respect, trust and co-operate with each other and should be part of an ongoing process of building trust and reinforcing goals to ensure everybody is heading in the same direction and has a shared set of values.

So yes, your team building activities are important, but they are about a continuous process, not about expensive away-days.

Those should be seen as enjoyable social activities, perhaps as a reward or thank you for employees’ exceptional efforts. They should definitely not be compulsory.

How should SMEs approach their marketing post-GDPR?

guerilla marketing post-GDPRMany SMEs issued emails to the contacts on their lists asking them whether they still wished to receive their marketing post-GDPR.

It has been suggested that many of these businesses were already GDPR compliant and such action may not have been necessary. The estimated the opt-in rate in response to requests has been approximately 10%, drastically cutting business contact lists if those who haven’t opted-in are removed.

However, rather than see this outcome as a disaster or as signalling the death of e-mail and digital marketing, it could be argued that it is a timely reminder that your marketing activity needs to be reviewed. I would argue that it should be regularly monitored, scrutinised and refreshed.

After all, as one small business recently told me, having a lengthy list of customers going back ten years or more is not in itself valuable if a proportion of them have neither communicated nor bought anything for years!

The beefing up of privacy regulations, therefore, can be seen as a prompt to review your marketing goals, tactics and strategies post-GDPR and there are a number of things you should do in response.

Obviously, you should have clear policies on privacy and these should be easily available for your customers to read on websites or as hard copy, as well as being mentioned on website contact forms and pages.

You should also review which of your staff have access to online platforms, such as Facebook, Twitter, Instagram and so on, that the business uses, ensure that they know exactly what they can and can’t say in line with both GDPR and company policy. They should also be aware that they may face disciplinary proceedings if they do anything that could damage the company’s reputation and most importantly they should be given adequate training to do it correctly.

Innovative and targeted marketing post-GDPR

But the change also means you may need to be more detailed and specific about the post-GDPR marketing in several other ways.

Firstly, you should look again at and refine the data you hold for your customers.  To effectively target the right potential customers or clients, data is key to the effective and economical use of marketing initiatives, but you should not hold inappropriate or unnecessary personal information.

If you monitor customer behaviour as a means of identifying key characteristics, as many e-commerce businesses do, you should ensure it is done in a way that is compliant with privacy regulations and does not constitute “spying” such as profiling or analysing without permission.

Secondly, as ever, the marketing goals post-GDPR need to be tightly defined and their effectiveness monitored whether they are about raising the business’ profile, encouraging trust or name recognition or for a specific initiative.

This means that any marketing activity, from emails to social media messages needs to be carefully and perhaps more tightly written.

It may also be worth exploring new marketing forms such as nudge marketing and guerrilla marketing.

Nudge marketing, first defined by Richard Thaler, is a technique for encouraging people to make decisions that are in their interests (as well as those of your business). A good example was the UK Government drive to encourage people to save for a pension. It introduced auto enrolment, which was compulsory on employers.

Employees had to actively opt-out and make their own provision if they did not want to be in the employer’s scheme.  The result was that the numbers of those saving for pensions increased significantly.

Guerrilla marketing uses low-cost and unconventional tactics, such as a flash mob, using stencil graffiti, stickers, or, as in one successful mobile phone campaign 2002, using actors who appeared to be just part of the general crowd and asked strangers to take a photo of them. During the interaction, the actors would rave about their cool new phone.  The point is to create a buzz, to be memorable and to get people talking in a way that spreads organically.

It may be that in the process of refreshing or redefining your marketing plan post-GDPR you will also find that some traditional forms of marketing, such as an actual letter to named customers advising them of a new initiative or offer that is time-limited, will also see a revival.

You should be mindful that marketing strategy and techniques never stand still and are constantly evolving and are only limited by the imagination.

As for how to deal with those who haven’t opted-in, it may be worth going through the list in detail to see if you have a ‘legitimate reason’ for keeping certain contacts. There is a huge difference between those on your database who made enquiries or were customers and those who were ‘scraped’ from a list. For B2B businesses you might consider that business emails are OK while personal ones should be removed. You might also send a more tailored email before simply deleting them.

Lawyers most likely will advise you to remove everyone who hasn’t opted in but this is understandable given that the new regulations haven’t been tested in court and they are right to be cautious. Whatever you do, you should log your decision and the reasoning behind it.

Happy marketing