Business owners’ first inclination in a difficult economy is to cut costs, which is always the right idea, good times and bad.
But there is an equally effective strategy for a downturn. And chances are it will just keep you afloat but actually help you do well now and thrive when the economy improves. That strategy is taking better care of your customers.
True, during tough times customers are more likely to become price shoppers. But an excellent customer experience (CX) is a value-add buyers highly desire. If a price war does break out, you may lose customers, but the ones you keep will keep coming back, and those repeat sales are critical when they are pinching pennies.
Think about your CX. Say you’re trying to straighten out an order. One supplier puts you into a chatbot or automated voice system that runs you around in circles. Another connects you with a customer service rep who fixes the problem on the phone. Who is going to get your next purchase order?
The customer may not always be right, but the customer is always the customer. That is important for you and your staff to remember because you need your customers more than they need you. Make it a priority to save difficult customers. They’ll remember that the next time they’re making a buying decision. You’ll lose some, that’s a fact, but the ones you keep have the potential to become your best customers.
Another important element of building a good CX is talking with your customers. Ask them what they want, what they expect, and how good (or bad) a job you’re doing of fulfilling it. Relational conversations show a level of care that will have a positive impact. You may also find out what customers will want or expect down the road—by anticipating their needs and wants, you’ll be in a better position to capture their business in the future.
Social media is an excellent channel for assessing your buyers’ CX and staying connected. Follow customers on Facebook, Instagram, and other platforms, “like” and comment on their posts, add to chain discussions. Doing this not only keeps you and your business in the forefront of your customers’ minds, but your engagement also shows them they mean more to you than just a revenue source.
Expand Your Offerings
Instrument repairs and maintenance can turn your retail music store into a one-stop shop. While you may have to invest in training, in the long run, adding beneficial services to your business will likely aid its growth.
Cut Waste Not Corners
Do you leave the heat or air-conditioning/heat on after closing your shop? Stop. Do you overstock slow-selling inventory—or understock fast-moving inventory and then must pay expedited shipping costs to make your customers happy? That’s wasteful. Efficiency is another way to save money. Perhaps you have three employees working on Sunday mornings when business is slow. Why? Change their hours to meet the ebb and flow of your business.
Not sure where potential waste is happening? The numbers don’t lie. When in doubt, ask your bookkeeper or accountant. They may have some insights as to where you can save money. The key action is to take a critical look at your monthly and annual expenses and see where you can reduce costs without sacrificing service.
Toot Your Own Horn
Cutting back on marketing and advertising during a downturn is exactly the wrong thing to do. It’s a slow bleed—you may initially see cost savings, but you could easily lose your competitive edge and respective market share. If customers can’t find you when they’re ready to buy, you lose.
Still, review your marketing plan to make sure you’re squeezing every bit of return out of the investment. For example: if you send out direct mailers that don’t cover the cost of developing and sending them, either reduce or cut that program. But if SEM (search engine marketing) is working, then you may want to shift your direct mail budget into your SEM to get more bang for your buck.
As in reducing costs—it’s always a good idea to cut waste—you should review your marketing plan regularly. If you just started a new marketing program, like SEO (search engine optimization) marketing, give it time to mature. On the other hand, if tenured initiatives are not cost-effective, either cut them or shift the spend into more lucrative efforts.
Also, consider co-op marketing. Work together with someone or another business that has the same respective audience as you but a different offering. For example: split the cost of running an ad with a guitar teacher—advertise their instruction along with the guitars you sell. You share the cost but extend your message in front of a potentially profitable market.
Cash Is King
Adding to your offerings might not be the right financial move during tough times, but there is an effective work-around that can boost your cash flow: Collaborate! Let’s say you want to add instrument repair services but cannot responsibly divert cash flow into wages for another employee. Find someone who performs repairs and see if they’ll work with you. Offer them some of your back space to set up a workshop. You could also offer them a percentage of the service cost instead of an hourly wage. That way, you both have flexibility and you both make money when there’s money to be made.
What if you want to offer more products but can’t afford the inventory? Try drop-shipping. In essence, you take the order, pass it to your supplier, and the supplier ships directly to the buyer. You take a small mark-up, save the purchase cost, the supplier gets the sale, and the customer is happy. To make this work, customer service is key. If there’s a problem, you deal with it—don’t put it off on the wholesaler. The buck still stops with you.
Tenor saxophones may be the hot seller today, but what about tomorrow?
Talk to your vendors and suppliers. Major brands research trends, develop and produce new products accordingly. Use them as a resource—it’s in their best interest to move product based on their analysis and investment. Find out what’s in research and development. Ask for test or review models. Going back to your customers, when you talk to them or visit their social media channels, find out what trends they’re looking forward to and provide that feedback to your vendors.
Attending industry shows, conferences, workshops, and seminars is a great way to stay on top of trends. While these events are located all over the country, there are likely to be some within a comfortable traveling distance. Like marketing, not every event will provide a direct path to profit, but industry insight is undeniably invaluable to your overall growth efforts.
While there are no signs that current economic conditions will stabilize any time soon, acting now will go a long way to helping you and your business navigate through the proverbial stormy seas ahead. Let the uncertainty be a motivator. To quote Julia Cameron, “What we focus on, we empower and enlarge. Good multiplies when focused upon. Negativity multiplies when focused upon. The choice is ours: Which do we want more of?” If you want your business to grow, then you have your answer.