Last week I spoke about how companies can become more customer centric, but in ways that will differentiate them from their competitors. This week I want to give some more concrete examples of actions, inspired by the latest results of McKinsey’s recent survey on the economic outlook.
As their chart below shows, whilst sovereign-debt defaults, economic volatility and geopolitical instability are considered to potentially be the biggest threats globally, low consumer dem and continues to be seen as the greatest barrier to business growth at a local level.
This has been the case in the last six months of results, so I thought it would be a good time to share some thoughts on what organisations can do to offset this (potential) threat to their renewed growth.
# 1 Customers
This should be the starting point for all strategy and plan development, but is so often only an afterthought. Tough times have a nasty habit of showing up an organisation’s incomplete or total lack of underst anding of their target customer. If there are any areas of your customers’ life of which you do not have a deep underst anding, including how they are likely to react in turbulent times, then this must be what you start to investigate, before going to the other five points.
Are your customers pretty resilient to price? Do they often switch br ands, products or outlets? Are they portfolio purchasers or highly loyal? The answers to these questions and more, will help you to be better prepared for tight times and to know how to respond to their specific needs better than anyone else.
# 2 Value
Many companies have reacted to lower sales by reducing price and increasing promotions. In most cases, this has been a waste of time, unless they have always been selling at a price higher than their value. If you don’t know what your customers believe is your true value to them, then you need to run some research urgently to find out, and only then, if your value is below your current price, should you consider either of these actions.
# 3 Offer
In an attempt to maintain pricing, some other organisations have been reducing the size or quality of their products and services, usually without making this clear to their customers. Whilst this might work in the short term, your customers eventually look at the details of the pack content or their service agreement, and realise they are no longer getting what they thought they were. This will both annoy them and make them lose trust in your company; you are at risk of also losing their business too, sometimes forever.
Instead of making reductions in your current product, why not empathise with your customers by offering smaller packs or reduced services for a lower price. In this way, should they decide to switch, it will at least be to another of your products / services, so they can remain loyal and hopefully return to the offering they previously purchased, when times become less difficult. You will also be building their trust and appreciation of your company and br and, by showing them that you underst and their pain and have searched to find a relevant solution.
# 4 Promotion
As previously mentioned, some companies are offering cheaper prices if a customer is willing to buy more of the product, as in a BOGOF or “3 for 2” promotion. Whilst this may make the price per unit less, it is also asking the customer to actually spend more than he / she usually does on the product.
A much better way, especially for companies manufacturing products in multiple categories, is to offer bundled products. In this way you are not necessarily asking your customers to buy more, just differently, whilst also giving some of them a chance of buying a product that they may not as yet have tried. A wonderful win-win for you both.
# 5 Outlet
As customers become more sensitive to what and at what price they are making purchases, many will have decided to shop around or even change outlets. This means you need to stay connected to them and monitor their place of purchase in order to react should their habits change.
# 6 Communications
Are you one of the marketers who has faced a budget cut in the recent past? Unfortunately, when organisations are looking for money, advertising is often one of the first budgets to be cut. In the short term this often goes unnoticed, but by the time the reduction has an impact on sales, as it will, the slippery slope of share decline is often too difficult to reverse.
A much better reaction to hard times is to maintain or even increase advertising, since it can often be bought at a discount, due to lower dem and. Therefore you can get even more for the same budget and also increase awareness due to less competition and thus also a higher share of voice.
Have you already started thinking about what you can do to offset your own customers’ lower dem and for your products and services? Do your actions include any of the above, or have you decided on a different approach? Either way, we would love to hear about it; why not share your own story below?
For more information on how to better underst and your customers and their needs, please check out our website: https://www.c3centricity.com/home/underst and/
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