Recession? Downturn? Slowdown?
Whatever you call it, the rate of income growth across U.S. businesses has slowed to a crawl. 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, as worried folks spend less money. They no longer buy on impulse, which makes each transaction and sale a little bit harder.
But there’s hope and opportunity for those that use the right approach. 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.
The following business coaching tips and tactics will help you when times get tough. These tips apply whenever your company needs a boost. 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. But when customers are feeling the pinch, they become more aware of 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 10—“touches” to get someone to take action. And sales data shows that most people stop closing after the first try. Even professional salespeople usually quit after the third time. So, what should you do? Sell harder, use stronger arguments and go back to your people repeatedly.
2 Narrow your focus and broaden your lines
It may seem like a paradox to narrow and broaden at the same time, but you can do it by freeing 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 your margin and volume.
Next, make it easier for your quality customers to spend more money with you. Figure out what related products or services they want and sell those to them.
3 Spend more money on marketing
Most business owners “budget” for marketing—this makes sense if you think of it as a cost. But if you see marketing as a revenue generator, you should be willing to spend some defined fraction of that revenue to acquire more revenue. That fraction should be a function of your average customer’s lifetime value. If you follow tip number two, you will quickly increase your average lifetime value and will therefore be willing and able to spend more.
In tough times, you may want to consider increasing that fraction itself. If you normally consider spending 10 percent of lifetime value to acquire a customer, you may want to increase it to 12 or 15 percent. The exact percentage for your business is governed by factors, such as gross margin, average transaction size and time—all of which may change when the economy becomes cloudy.
4 Make it easier for people to do business with you
Recently I saw an article recommending that business owners tighten 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 more difficult for people to do business with you? You should be doing just the opposite: make it easier. 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 and 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 they won’t spend as easily or as much, but everyone still has needs and wants that must be satisfied. While people aren’t rushing to pull out their wallets for every offer that comes along, they’ll still spend on items perceived as valuable. What does that mean? Before the recession, you may have been able to sell your customers a product or service using a lot of fast talk. Now, you have to prove it to them. Spell it out and show them exactly how they will benefit from a product or service by using case studies, testimonials, examples and demonstrations.
