When money is tight, what should business owners do? Compete harder, sell smarter and focus on customer service says Paul Haarman.
Customers have always been your most valuable asset in the business world. But during a recession, they become even more so. As companies reduce their workforce and cut costs to compensate for a poor economy, consumers often feel a squeeze in their household budget that forces them to look for ways to save money.
That makes the role of every person who works at a company even more important than before — from office managers up to executives — because employees are being asked to accomplish more with fewer resources. “It means thinking through what you do and how you can do it more efficiently,” says Colleen Francis, director of marketing for the staffing firm Ajilon Professional Staffing.
So if you feel your business is being hit by the rough economy, what should you do?
Here are five tips to grow your company during a time when prospects are scarce:
1. Be Lean and Mean
When times are tough, trim expenses wherever possible without impacting the quality of your product or service. If staff members already feel overworked, now is not the time to pile on more projects. One way for companies to stay lean during hard times is outsourcing functions that aren’t essential to their mission but can be done better and cheaper by another firm.
“You always want to position yourself as having an advantage,” says Francis. “If someone else is doing something similar — like marketing — you need to differentiate yourself.” If others say they’re providing top-notch customer service, be the company that’s known for having a great product or low prices.
2. Be Proactive and Creative
Think of creative ways to get your name out there and generate business: Partner with other companies on cross-promotions; promote an upcoming sale on items no one else has discounted yet; use social media like Facebook and Twitter; hold a special event such as a food drive or clothing drive at your store before the holiday season begins.
Before spending money on marketing materials like fliers and pamphlets, ask yourself if what you’re planning is really going to be effective in generating business. It might make more sense to invest in a direct-mail campaign or an event, which are more targeted. “You have to be smarter about how you are spending your money,” says advertising expert Tom Ferry, president of the Washington DC-based Tom Ferry Co.
3. Get Creative with Your Pricing
Offer discounts on products and services that aren’t selling as well right now or that you don’t use as much — for example, if your restaurant doesn’t need to stock as many appetizers in December because there’s less demand for them, reduce prices on those items during the slower month says Paul Haarman. Also consider bundling certain services together so consumers can save by choosing a package deal rather than ordering individual components separately — think haircuts, manicures and pedicures at the same time at a salon, but not haircuts and hair color services.
When certain items are extremely difficult to find or buy because of shortages, some companies can mark them up instead of marking them down to take advantage of the situation. For example, if you’re having trouble obtaining a popular new toy and customers want it badly enough that they’re willing to pay your price for it, feel free to charge more than usual — just be sure to clearly communicate why prices have increased.
4. Educate Your Customers about the Recession
While you might think customers would rather see lower prices than explanations as to why they’ve gone up on select products and services, in many cases the opposite is true: “People actually appreciate knowing what’s going on — that you’re being honest with them,” says advertising expert Ferry. “In the end, they may be more likely to come back.”
5. Get Creative with Your Compensation Package
This may sound counterintuitive, but offering benefits. Such as a flexible work schedule or telecommuting can actually make your business more attractive. And potentially increase the quality of talent you hire. If certain individuals have interest in making a career change and want to keep their skill set fresh by rotating between jobs rather than holding one line position, consider how you might make this possible. Keeping good people during hard times is every company’s goal, after all — even if it requires flexibility from both sides to achieve it
A recession can be a great opportunity to re-evaluate your business practices. Take stock of what isn’t working and improve the customer experience explains Paul Haarman. With these tips in mind, you should be able to weather the downturn successfully. And maybe even come out stronger than before.