In a Lousy Economy You Need a Strategic Plan More Than Ever
What once was an External Opportunity may no longer be so because of reduced consumer spending patterns or otherwise reduced demand. Businesses that do well in poor economic situations correctly identify opportunities. These opportunities may be more counter-intuitive than in rosier times. For example, take a look at the perceived needs of different market segments. These “needs” might be great chocolate, cosmetics, even some health care products. In tough times, needs often translate into products and services that make consumers feel better. You need to examine opportunities with precision. On one hand, an opportunity may be “basic”. On the other hand, it may seem extravagant. To many women, chocolate is a basic. To many men, it is an extravagance.
One or more of your competitors may now be an External Threat because they have adopted a price leadership strategy whereby they are undercutting your prices in the marketplace. The correct response in your new strategic plan may not be to match their low prices. Instead, you might want to emphasize the value of your products and services (market differentiation) or choose a niche strategy such as a hyper-focus on products or services for a particular market segment. As an example, a cosmetics product that has been targeted to a larger audience may be re-focused to a niche such as women over 50 who are active and have a strong focus on health. The product differentiation in this case could be redefined to zero in on the anti-aging benefits AND the product’s wearability and longevity during exercise.
Having established these strategies based on External Opportunities and Threats, you then need to assess your Internal Strengths and Internal Weaknesses so that you are able to respond to the new horizon of Opportunities and Threats that are presented by the current economic environment. Continuing with the cosmetics example: Does your marketing, advertising and product branding/packaging need to be re-tooled to emphasize the new focus on the active, health-conscious woman over 50?
The key to effective strategic planning in any economic environment is to regularly review your plan to make certain that it continues to work for your organization.
If you need help with your Strategic Plan, please contact us at info@strategicfutures.com. We have been around long enough (almost two decades) to have successfully facilitated strategic plans when the economic outlook was not so rosy. We have a successful track record working with businesses, nonprofit, association and public sector clients.
Customer Retention: Do Your Employees Understand its Effect on Their Paychecks?
Just about every business owner or corporation executive who is awake understands that it is far more costly to obtain a new customer than retain an existing one. This concept is even more near and dear to core tenets of running a business—in an uncertain economy.
Here’s the dilemma that consumers witness over and over like a recurring bad dream: Many employees who interact with customers do not understand the importance of customer loyalty to the bottom line of a company. Repeat customers help pay your salary. Fewer repeat customers, more expense required to find new ones… something might need to be cut from the budget… like your salary!
Granted some customers can be difficult; however, when a loyal customer has an issue, the customer service representative needs to be motivated to deal with it effectively AND know how to create a win-win resolution.
Consider this example: A customer takes his out-of-warranty vehicle for a routine oil change, and is told at the end of that service that the vehicle has a slow leak that needs to be addressed in the near future. Cost for this “recommended repair”—as written on invoice—is $1100. The customer is in shock. Not being a trust-fund baby, he says he needs to sleep on it.
The customer does some research and finds out that part of the problem is that the entire transmission has to be taken out to fix this small leak at a cost of $92/hour plus parts. It appears that since very few of these types of repairs have been made by this service department that the customer is paying, in part, for the staff’s learning curve. Further, upon following up with the service department, the customer is informed that the original quote was incorrect, it is really $1800 to repair the leak and, by the way, “You need a 30,000-mile service which costs an additional $600.” Now the customer has gone from shock to hopping mad. He is ready to leave his vehicle parked outside his house and buy a clunker for the $2400—and put a bumper sticker on the clunker that says “My other car is an X but I cannot afford to drive it.”
How should the dealership’s service department deal with this situation? Here are some options:
- Make certain that each employee is carefully trained so that when he/she quotes a price for a repair, especially when it is in writing, that it is correct.
- Stand by any inaccurate price quotes, giving the customer the benefit of the doubt.
- Charge the customer $1800 for the 30,000-mile service AND the repair of the leak to compensate for the inaccurate quote and encourage repeat business.
- Tell the customer that they are sorry
- Ignore the situation entirely
The answers that are more likely to help the dealership keep the customer? Hopefully, you know that they are a combination of 1, 2, and 3 above.
Final thoughts:
- A customer really doesn’t want to hear that someone is sorry for someone misquoting a price. “Sorry,” does not put more money in his/her bank account.
- Make certain that your staff knows what they are doing when they interact with customers. Each person needs to understand the importance of retaining loyal customers to their individual financial livelihood.
- Each employee needs to be given license to ask a manager when they find themselves in deep water rather than risk alienating a loyal customer.
If you and your employees are in tune on the importance of customer retention, you will keep more customers and run a much more profitable business.
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