Economic Pressures Driving Innovation
La Jolla, CA - September 10, 2008
During the economic downturn, it's time to focus on the business basics, starting with your customers. Here are tips to mitigate the downside.
Economic pressures are forcing businesses to use innovative solutions to stay afloat in today's stagnant marketplace. A recent article in The New York Times explored the question of how to raise prices on products or services to meet the higher costs of running a business without losing existing customers. That question is not an easy one to answer, especially in the current economy, and making the wrong move could be devastating to your business.
It is absolutely to know your customers' pain points, as well as establish the degree of loyalty they will have to your company if prices increase. To determine this information, businesses need to delve into their customers' minds and acquire in-depth insight on how they think, feel and behave when selecting products, services and vendors. With this information, businesses can confidently embark on new sales initiatives with fresh intelligence their competitors don't have.
An article by Chris Philippi, president of Philippi Marketing and Associates, noted that the No. 1 reason businesses lose customers is because these consumers feel unappreciated. Indeed, 68 percent cited this as the main reason they stop using a product or service. Additionally, research has found it is five to eight times more costly to gain a new customer as opposed to retaining an existing when factoring in the cost of advertising, internet marketing, mailers, etc. to reach out to new business.
Lastly, while many organizations are decreasing marketing and business-development budgets to help the bottom line, during an economic downturn is actually the most important time to stay fresh in the minds of your customers, and to develop and strengthen existing relationships. To help stay ahead in today's market, here are five tips:
Give customers what they want.
Implement client surveys, informal or formal to poll your customers for their feedback. It can be as simple as making phone calls personally to key clients to find out where there is room for improvement.
Dig deeper into existing client relationships. Initiate client retention programs to help build deeper relationships, while also exploring further business opportunities by introducing them to additional services that you offer. Suggestions might be to take clients for coffee or lunch or golfing, as your budget allows.
Stay in touch.
Stay present with your clients by sponsoring client-appreciation events such as an informative speaker and networking gatherings. To cut costs, partner with other business associates or other resources such as your chamber of commerce to host the event.
Leverage outside resources.
Particularly for small businesses with limited marketing budgets, there are many invaluable outside resources to increase marketing reach. An example is the variety of easy-to-use online tools for email marketing such as Constant Contact, which has tools to create and deploy monthly client newsletters without design know-how. For higher strategy and research needs, consider bringing in an expert.
Develop relationships for future business.
Take advantage of this time to cultivate contacts and build new relationships. A monthly newsletter is a simple way to stay top of mind with contacts even if they aren't clients yet.
Along with the customer-retention initiatives described above, many forward-thinking companies are looking outside domestic boundaries for ways to find new customers. Recently, CNBC reported on HSBC Bank's inaugural "Financial and International Survey" of middle-market companies, which surveyed companies that are exploring global growth opportunities. Importantly, the middle-market represents $6 trillion in sales and employs 32 million Americans. Findings from the survey show that two-thirds of senior executives within this pool say sales abroad are growing faster than U.S. sales, and nearly half of these executives are currently evaluating international sales targets. Executives cited China, Brazil and India as the countries with the most opportunity for growth over the next year.
As the world develops into a true global economy, expanding their business overseas will be inevitable for many companies. To aid in this process and ensure a proper entry into the global marketplace, there some essential tools, such as market feasibility studies, benchmarking, customer analysis, competitor analysis, etc.
Though it may be a tough time for the U.S. economy, there are creative and innovative ways that can help large and small businesses mitigate the common pitfalls. By utilizing some of the tips and tools available to keep and grow customer accounts, a firm can not only make it through the slow times, but be even that much farther ahead when things turn around.
Nick Chini is a managing principal at Bainbridge, a San Diego boutique firm specializing in strategic consulting and capital advisory.
(as published in Financial Executives International Online Magazine)
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