We’ve made a significant mistake with our customer proposition that has impacted sales and profitability. How do we recover the situation?

Whatever mistake has been made, there are several steps management can take to turn the situation around.

AlixPartners’ Nick Bradley says the first step is to admit the mistake and quickly create a credible operational and financial plan detailing how it will be rectified and the business recovered. Unexplained changes or lack of acknowledgement of the initial problem may make the situation worse. Any change should undergo thorough customer research, to find out which propositions should be trialled to establish positive results, before being rolled out across the entire store chain.

The recovery plan must be communicated to all stakeholders, including those who do not have a direct financial link to the business. Bradley says: “Obviously shareholders and other investors in the business need to be made aware of the recovery plan, but communication must go further than this. You also need to open a dialogue with staff, suppliers, credit insurers and, perhaps most importantly, your customers.” In addition, at times like this it can be worthwhile to seek help externally in order to provide strategic support, or to assist with operational or financial improvements. Additional public relations, marketing or consulting resource will actually save money if it leads to a quicker turnaround of the situation.

Bradley adds that once the recovery plan is in place, regular updates on progress should continue to be made to all stakeholders. “As part of this process internal controls and procedures should be checked, and information given to reassure stakeholders that changes have been made so that such mistakes are not allowed to happen again,” he concludes.