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Business Strategy:
Five Tips and Tactics for
Thriving in a Tough Economy
Recession? Downturn? Slowdown?
Whatever you call it, the rate of income growth across US businesses has slowed to a crawl, and that is scaring the pants off of a lot of people. Your own business may not be affected in any way, but the fact is many people are worried about their future. Very worried.
Bad news? In some ways, yes – obviously. Worried folks spend less money. They no longer buy on impulse, making each transaction, each sale, a little bit harder.
But for those of us with the right approach, there’s hope. Hope and opportunity.
Why? Because when everyone else is selling with less vigor and determination, you can do the exact opposite. While timid business owners are pulling in their horns and “conserving cash” you can outmarket them. As the unemployment rate creeps up, you can acquire their staff more easily. And good businesses are for sale and can be bought on the cheap.
Here are a few business coaching tips and tactics that will definitely help when things get rough. These tips apply whenever your company needs a boost. You can think of them as turnaround tactics.
1. Sell Harder
When money is flowing and customers are buying everything in sight on a whim, you don’t have to sell very hard. Hey – either they buy or they don’t. And if they don’t, there are plenty of other buyers, so who cares. But when customers are feeling the pinch they become circumspect about how they spend their money, and it takes more persuasion to get them to buy. Research shows that it takes as many as seven – even ten – “touches” to get someone to take action. And sales data shows that most people stop closing after the first try, and even professional sales folks usually quit after the third time. Sell harder. Ask more often. Use stronger arguments. Go back to your people repeatedly.
2. Narrow Your Focus and Broaden Your Lines
This may seem like a paradox – narrow and broaden at the same time. It isn’t. You’ve got to free yourself from all distractions. Prune outlying ventures and offshoots that aren’t really part of your core business. Narrow your focus and spend all your energy on strengthening the core products and services that contribute most to margin and volume. Next, make it easier for your good customers to spend more money with you. Figure out what related products or services they want and sell them those.
3. Spend More Money On Marketing
Most business owners “budget” for marketing, which only makes sense if you think of it as a cost. Instead, if you see marketing as a revenue generator you should be willing to be spend some defined fraction of that revenue to acquire yet more revenue. That fraction should be a function of your average customers lifetime value. If you follow tip 2 above, you will quickly increase your average lifetime value, and therefore be willing and able to spend more. Test first. Make sure your programs work before you roll out big. One more thing; in tough times, you may also want to think about increasing that fraction itself. If you normally consider spending 10% of lifetime value to acquire a customer, you may want to increase it to 12% or 15%. The exact percentage for your business is governed by things like gross margin, average transaction size, and time – all of which may change when the economy gets cloudy.
4. Make It Easier For People To Do Business With You
Recently I saw an article advocating business owners toughen their credit policies. I was shocked. After all, if you thought someone was creditworthy before, why would you suddenly change your mind? And why on earth would you go out of your way to make it harder for people to do business with you? You should be doing just the opposite: make it easier. Remember the old saying: when everyone else zigs, zag. If your competitors are running scared, welcome their customers with open arms. Offer terms. Give people credit. Ship for free. Stay open longer. Extend warranties. Provide better service.
5. Clarify Your Value Proposition and ROI
Remember: even if there really is a ‘recession,’ people are always going to spend money. Perhaps not as easily or as much, but we all still have needs and wants, and we are going to try to satisfy those. That means that while people aren’t rushing to pull out their wallets for every offer that comes along, they will still spend on things perceived as valuable. What does that mean? Before you may have gotten away with a lot of fast talk. Now you have to prove it to them. Spell it out; show them exactly how they will benefit – in financial terms and otherwise. Use case studies, testimonials, examples, demonstrations.
Get the final five business strategy tips and tactics on how to thrive in a tough economy.
Carpe diem. If you see opportunity and would like some help in seizing them day, get in touch. Paul Lemberg and his team at Axcelus can help you accelerate your business while minimizing the risks of growth. www.paullemberg.com/Business_Coaching.html