Capitalizing On the Sluggish Economy

Most economists are predicting the recession our economy has entered to last at least two years. Learning to cope with, and even capitalize on, a slow economy my mean the difference in remaining viable in your market or having to find a new line of work. If you manage to implement tactics that are successful in a slow economy you may find even more success than expected when the market returns. (See our article from our Fall Newsletter Growing Your Business for more).

Convincing Your Customers to Buy

As the market continues to slow one thing is for sure, your customers will become much more frugal with their spending. Understanding this is of particular importance if you are in the retail sales business, but the lesson can be applied to an industry. Your customers have less money to spend than they did this time last year, so it’s important that you convince them to spend their money with you.

Help them understand the alternatives to buying your product or service. For instance, if you sell cars let them know that putting off buying a newer, more efficient vehicle may mean higher fuel and maintenance costs down the road. Now is the time to help your customers understand why it is important for them to invest their money in your product or your service.

Recognize that your products and services are not only competing with others like your own. With your buyers in a frugal mindset, they will be comparing spending their money with you and their other desires. Again, if you sell cars your customers may be trying to decide if they want to put a down payment on a new car or make a contribution to their IRA. It’s your job to convince them that your product is the right choice.

Remember that even though your customers are thinking their purchases through more thoroughly, they will still be buying things that they feel the benefits of outweigh the costs. Help your customers justify their purchases by telling them about potential emerging savings, lower maintenance costs, or more features. It also helps to understand why your customer is interested in purchasing from you so that you will know what they find valuable about the product.

Another key is to understand your customer's timing. For instance, most people who are purchasing a car prefer to take their time to do some research so that they can make sure they get the car that they want. People who are purchasing air conditioners, on the other hand, are most often reluctant customers who are uninformed about the product and just wish to get the purchase over with. Understanding how your customers view their purchase will help you understand how to present the product in a favorable light.

What Does the Future Hold?

So, what can we expect once the economy does turn around? We can expect that some of the budget-conscience habits that buyers will form over the next few years will become permanent. Buyers who are in their twenties and thirties now are forming their buying habits in a much less secure economy than their parents did and it will likely affect their spending habits even after the markets recover.

It is unlikely that buyers who are forced to shop at large-scale retailers like Wal-Mart will return to the smaller retailers once the economy stabilizes. In fact, many of them will find that the quality of goods found at the big-box stores is adequate considering the price point. These shoppers are not likely to abandon the values they have come to expect at the large-scale retailers, in fact, they will likely search for similar values in other products.

The economic slow-down will also force all businesses to focus on customer service. With less money to spread around, the companies that focus on treating their customers right will remain viable while the others will fall by the way-side. Once the economy turns up, buyers will still expect the level of customer service to remain high.

As you prepare your business for lean times, keep these things in mind. They may just make the difference.

Source

http://www.kiplinger.com/businessresource/summary/archive/2008/customer-marketing-fuel.html

http://www.kiplinger.com/businessresource/forecast/archive/whats_next_for_retailers_081124.html

http://www.kiplinger.com/businessresource/summary/archive/2008/Spending_Sullivan.html