The main goal of a typical business up against troublesome strategic decisions is to outlive a financial slump. The business really should remain committed to its business plan, and discover harmony in producing cost-effective income and lowering costs. The goal should be to uncover methods to reduce costs without eliminating essential revenue producing expenses. I hope to be able to provide you with some of these opportunities, as prospective solutions to retaining gross profits for the duration of temporary periods of an economic downturn.
Generating Customer Referrals Being a marketing expert, I am often amazed by the empty stares I get when I ask a client: “How many referrals did this company produce last month?” If they know, it is rarely something substantial, for the reason that little effort is usually invested in the growth of this income source. Building customer referrals, especially directed at repeat purchasers, is an expertise of salesmanship, which appeared to fade away with the invention of technology and the Internet. Just about every business has a cost per sale metric they are comfortable with. Your salespeople, your customer service department, your email efforts, and the home page of your online business, are common contact points to showcase a customer referral program. Simply take your cost per sale figure, divide it by 3, and use that amount as a referral promotion. It becomes a cost-effective method to obtain customers and new income. A properly managed referral plan may add 2% to 5% towards your gross profit.
Customer Retention Plans I tend to get the exact same blank looks when I ask clients: “How many former customers did you reactivate last month?” Just like making referrals, this is a sales technique which has almost been forgotten. For every single customer you lose, you must find two new customers, to be able to grow your business. Normally, customer retention is simple if you take the time to understand why these people no longer use your company. You are likely to hear isolated incidences related to shipping difficulties, a rude customer care experience, and merchandise, which failed to satisfy buyer expectations. All you have to do is address the matter and fix the problem. Your client will be happy their business seemed important enough for you to make contact with them. A properly managed customer retention plan can add an additional 2% to 5% to your gross profits.
Strategic Retail Pricing Many organizations use a flat rate formula for establishing their retail prices. In good times and in bad, I am a great supporter of strategic retail pricing. I do not have faith in reducing prices, and margins, during sluggish cycles to generate revenue. Strategic pricing is all about advertising and marketing the value of your goods and services. A best selling product is worth more when it has higher customer value. Before decreasing selling prices on slower moving items, critique how the merchandise is being presented. Does the product or service have a good sales story that underscores its benefit? Is the art of professional quality and engaging? Your sales presentation might possibly require a tune-up. Packaging numerous best selling products into special offers is another great way to raise average order value. Just like you, buyers want to get value for their dollar also. Strategic retail pricing may help improve your gross profits between 5% and 10%.
Negotiate with Vendors Vendors experience the identical financial stress as retailers, but on a greater level. If you, and your industry is selling much less, so is your vendor. This enables you to work out a better price since it suggests to the supplier you are prepared to shop around, but you would like to offer them the opportunity of first choice. Can you save 5% with a pre-pay discount? Might you find some cost reduction on components of the product line for promotion? Ask your vendor how they could help you to keep them as a business partner, and allow them make offers to you. Aim for at least a 1% increase in gross profits whenever you negotiate with your distributors.
Employee Downsizing In some cases, this might end up being the only choice you have to lessen company expenses. I do want to emphasize the word expense. Your workers can easily be broken up into two categories: Overhead, and revenue generating. Sales agents and marketers generate revenue. Many of the steps described above would be hard to carry out without sales and marketing staff. A few states offer a partial unemployment program where you maintain staff three days a week, and unemployment compensates your employees for the other two days of the week. Always be sure to think through all of your possibilities, and their implications, before you act. Teaching new employees is less desirable than maintaining knowledgeable and trained existing staff. You might save a dollar today, and lose two down the road with the growing pains, and learning curves, usually associated with hiring new staff. If you do downsize, be sure to create, or update, a company organization chart so everybody understands their new assignments. Effectively downsizing your personnel should have a favorable impact on gross profits, and you should be able to prove that to the CEO on a regular schedule.
Improve Employee Efficiency and Production An employee can devote up to 25% of a day making use of business computers and the Internet for personal use. They will go shopping, chat, email, search for jobs, go to Facebook, and monitor their fantasy sports leagues, just to identify a few examples. I have personally seen e-mail metrics proving 75% of buyers responding to the e-mail, are buying from their workplace.
A few of my suggestions happen to be old-school, but this one capitalizes on the latest technology. OfficeShield is an inexpensive employee monitoring software program which you may install on your network. It will inform you precisely how many hours per day your employees are not doing work. It can also stop and prevent accessibility to personal use websites. If you add up your payroll and find a decrease of just 12.5% (an hour per day) in employee productivity, that converts to some significant weekly dollars, which should go directly towards improving your gross profits.
Of course, there are no chocolate or vanilla answers to the difficult issues which a company faces as it tries to preserve profits during a financial downturn. Even so, if you recognize and analyze areas of opportunity, create options, plan and implement actions, and evaluate the initiatives of your work, your business is a lot more likely to preserve and improve gross profits.
Craig Corbel is an Online Marketing and Strategic NYC Web Design consultant for small businesses nationwide. Find out more on Employee Monitoring Software by going to Office-Shield.com and downloading their complimentary demo.