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surviving the current
economic downturn Recession-proof Your Business “Sure the economy is tough right now, but either we commit to be extraordinary and succeed or we fold like a cheap tent. What will be your choice?” Sadly, much of what we need to do to “recession-proof” our businesses is difficult to implement once the tough times have started. As a young guy, I ran the mile and two mile in competitive track and field. What I learned early on is that the day to train for the race is not the day of the race. For your business, you already should have been concentrating on: • building a clear and compelling brand identity • creating a customer database that lets you proactively communicate with customers who already know and love you • a commitment to “WOWing” your customers • being a true expert in your field • committing to doing the right thing and keeping your promises These things are part of an ongoing business culture and seldom work as a quick fix when the going gets tough. So, the question you have to answer is: Have you been preparing your business to thrive in tough times by being extraordinary when times were good, or did you get a bit too complacent? There are several things that can be done quickly in these challenging times to ensure that you survive long enough to put the long-term solutions squarely in place before any future downturns. 1. The first thing you can do in tough times is to simply decide that you will be 10 percent more profitable next year than you were last year. “Damn the recession, we’re going to grow this business.” To achieve this, you must be more focused, more innovative, more passionate, more proactive and more efficient than ever before. You must create both compelling customer value and world-class operating efficiency. Mediocrity is no longer an option! 2. Second, you must promote, market and sell like never before. You must work with and inspire every person on your team to create more customer value and more extraordinary customer experiences, to be easier to do business with, and to be smarter and more efficient in the process. You must control expenses without destroying your competitive advantage or your soul. Most companies have far more opportunities to save money than they imagine. 3. Create a half-day “Idea Fest.” Get everyone involved in bringing forward ideas on what you can do, right now, to create more WOW, sell more effectively and save money by eliminating waste and inefficiencies. Your staff know most of what’s wrong—and how to fix it. The problem is, you probably seldom ask them. Now is the time to ask them. Then, make the “Idea Fest” a semiannual event in good times and bad. Editor’s Note: We did this at Florists’ Review, for only an hour and a half. More great and innovative yet practical ideas were generated than we’ll be able to implement in three years! 4. Sit down with your accountant or accounting department, and make sure you understand the math of profitability. What most folks don’t realize is how relatively small increases in sales or decreases in expenses can have a dramatic affect on profitability. You need to get a handle on the “math” so that you can make smart decisions. 5. Especially in tough times, you need to be joyful. People come to you for the products and services you provide, plus joy. Not only are you in the flower business, you’re also in the “joy” business and, in tough times, people need the joy part as much or more than they need the flowers, plants, gifts, etc. So, make sure that you and all of your team are “up”, energized and prepared to do business joyfully and helpfully. Is that tougher to do in challenging times? Definitely, but just do it. 6. How can we actually thrive and not just survive in tough times? Don’t just stand there; be extraordinary. Change your offerings, change your policies, steal customers from your competitors, make something interesting and newsworthy happen in your business. A restaurateur friend recently asked me how he can survive the recession. His restaurant is in the fine-dining sector in a small town, and he’s already noticed that “regulars” are coming in less often. I created for him some simple math of “WOWing” customers that may apply to your business. It works like this: • If regular customers visit his restaurant six times a year and spend about $100 per couple in good times, that’s $600 per year in sales per couple. • Now, let’s say that in tough times, they come in only three times a year and spend just $60 per couple. That cuts annual sales down to $180 per couple. • Let’s say, however, that each of those couples are so knocked out by his warm welcome, his joyful service, his two new daily gourmet pasta specials at a very reasonable $17, and his new BYOB wine policy with a $7 corkage fee, that they rave about the restaurant to just four of their friends. If each of those friends come in just three times a year and spend an average of $60 per couple in tough times, the restaurant’s sales are up by $720. That’s a 20 percent sales increase on the $600 that they sold in good times. His gross margin percentage will be a bit lower, but his bottom line will likely be higher, and he has four new couples who are permanent fans. Not too shabby. In this example, my friend changed his offering to include some more affordable special items, he changed his policy on wine service to be more customer-considerate, and he joyfully welcomed and served every customer every time. What does that kind of innovative thinking look like in your business? What “special offerings” might you create? What policies need altering in order to be sensitive to your customers’ current level of stress? What level of joyful and helpful service would it take to WOW your customers and turn them into “raving fans”? Here are some examples that illustrate the types of things you might be able to do in your business: • To thrive in tough times, you’ll probably have to steal some customers from your less determined competitors. How might you make it easy for people to sample your value, learn more about you, and switch to you? Here’s a great example from the masters of marketing at Apple. To entice PC users to switch to Mac computers, Apple Stores now offer to transfer all PC computer files onto a new Mac, for free. • Online stockbroker, Thinkorswim.com will make switching your account from your traditional broker easy and stress-free by doing all the paperwork for you. So, you don’t need to call your broker to have that ugly talk about him/her being “fired.” Think about what fear, doubt, stress or negative assumptions might be preventing some people from switching their business to your shop, then find a creative way to make that go away. • Do you have an electronic customer database? If you don’t, shame on you. If you do, how will you use it to remind customers what’s going on in your business or to ask for an order? An independent pizza delivery business in Vancouver uses its database to proactively call customers on the days that they often order pizza for home delivery. The company calls midafternoon and leaves a voice message asking the customers if they’d like to order pizza again today. Sales immediately increased by 24 percent, simply by asking for the order. Of course, you need customers’ permission to do that under current privacy legislation, but that’s easy to do. When they give you their contact info, you ask for permission to gently advise them when you have a special offer or promotion that will be of interest to them. In the case of the pizza place, it could be an offer of two free drinks for customers who phone before 6:30. How will you use your database to grow your business and your bottom line? • Do you have a media database of local or national media people who have an interest in your products or services? If you don’t, you should. Why is this important? So that when you’re doing something wonderful, uplifting, special—dare I say, “extraordinary”—you can fire off an e-mail blast and, perhaps, get some “free publicity” that everyone’s always looking for but is too lazy to go after. Here’s the short version of how to get some “free publicity” that can create celebrity status for your business. First, you have to be a story, then you have to tell your story. That’s it. How do you “be a story”? Make something extraordinary happen in your business that’s worthy of some media coverage. A travel-agent I know offered a free seminar on how to overcome your fear of flying. That was a story because no one else had ever done it. He advertised his special event, sent out an e-mail blast to his customer database, advised his local media about it—and got a ton of publicity. What kind of seminar or event could you create to coach your target customers on how to live better, make smarter choices and get more of what they want? • Or, you could provide extraordinary experiences. My fine-dining restaurant friend offers special wine-pairing dinners throughout the year, each with a particular regional theme and menu available only that evening. And it’s always sold out. He promotes these events to his database of loyal and interested customers at absolutely no cost, and he advises the local newspaper. Is this more work than just offering the same menu every night and hoping that some customers show up? Darn right it is. • When I was a fashion retailer in the 1990s, the Toronto market was decimated by “cross-border shopping.” Thousands of Torontonians were streaming across the Canadian/U.S. border to Buffalo, N.Y., to spend their money. One Saturday afternoon, a customer said, “Donald, I don’t know what all the fuss is about. With your great selection, your extraordinary service and wonderful value, the only reason my friends and I would go to Buffalo is for the great chicken wings.” It took me about six seconds to figure out that if we had great chicken wings, there’d be no reason to go to Buffalo. So, we created a monthlong “Better Than Buffalo Chicken Wing Promotion” in which we offered six delicious chicken wings and a beverage for a $2 donation to the Children’s Wish Foundation. I wrote and recorded a 60-second radio commercial in which I announced that we were now officially “better than Buffalo” and, tongue in cheek, I invited everyone from Buffalo to visit our store. Then, we painted a wide white line across the parking lot in front of the store and painted “Canada” on one side of the line and “USA” on the other. We created our own “border” for customers to cross and built a “Canada Customs guard house” right there, rented a Mountie costume and hired a guy to wear it. This was a big deal. Our sales immediately went up 27 percent, we got written up in every newspaper and interviewed by every TV station, and we touched people’s hearts by raising more than $8,000 for Children’s Wish Foundation. I know that you’re not a restaurant or a clothing store, but the question remains, “What extraordinary, wonderful things could you do to get ‘famous,’ attract more customers and touch hearts? Finally, measure performance, celebrate and reward success...and deal promptly with non- performance. Now is the time to identify the “weak links” on the team and invite them to make an alternate career decision. They’re costing us money and standing in the way of progress. So, what will you do to “recession-proof” your business? Will you commit to doing better...not worse? Will you involve your team in creating breakthrough ideas and delivering joy? Will you choose to be more focused and proactive? Will you write out a “Commitment to Action” plan within the next week, then determine who will do what, by when...and then follow up? Or will you just pull the covers over your head and try to somehow make it through? Reprinted from “Donald Cooper's Management Newsletter,” November 2008;
www.donaldcooper.com/Downloads/v2/PDF/Nov_2008.pdf |
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