In the current economy, most people are looking for the best possible deal out there. Before you cut price or reduce quality of service to save money, consider these points.
Everyone knows that this economy has taken a huge toll on just about every industry, every size company, and every type of workforce. When you see on CNN.com that there are now a record 5.6 million Americans who have been out of work for at least 6 months, you know times are difficult.
Businesses with fewer than 50 employees cut 68,000 jobs in November 2009 alone, CNN.com reported. And many small business owners have told CNN that their banks have stopped lending them money that the owners say would help them weather the current recession.
Business Owner – Customer Relationship
But let’s look at things as they currently are from the small business – customer relationship angle. Here’s the situation at hand… We try to remain loyal to our customers through thick and thin. However, given the current state of the economy, every customer is looking for the best deal possible. Prices are being cut out of sheer necessity and businesses are going under because they’re losing money.
However, there is still a level of quality required behind our product and service that must be maintained if we are to remain viable for the long haul. And sometimes that quality and definitely the experience that got us there in the first place cost something and has a certain value.
Now here’s the really hard part… we may need to be ready to let some customers go as their natural migration to a cheaper/lesser service or product in this economy and stick to our guns. That seems to go against every fiber of our being and our overall business goals, but it can be a very slippery slope to forsake quality and price in order to try to retain customers who are about to jump ship anyway.
If we remain viable and continue to put forth a quality product, then new customers will come and we will emerge on the other side of this downturn. A few old customers will remain because they like the product or service and haven’t been hit hard enough to need to make a switch. However, if we lower our quality and prices too much now, it will be very hard to ever raise them back to the level they should be at. Once you’ve given the customer a cut-rate deal, it’s hard to take it back.
Some Customer Retention Measures
Before you cut price or reduce quality of service to save money, be sure you’re doing everything you can in terms of customer retention. Here are a few things you might do (if you’re not already doing them):
Increase your face-to-face customer interaction. Depending on your industry or type of business, you may already be doing lots of this. But if your type of business requires more electronic communication, you might try connecting with your existing customers in a more personal way for a while and see if that helps. It’s a lot easier for your customers to cut ties with someone they rarely see. If you reach out and touch customers in person, it will be hard for them to make a switch.
Modify your service or offering. Avoid getting in a rut with whatever you’re doing or providing. You may be doing it the way you’ve always done it because it’s been working in the past. But what’s worked in the past isn’t necessarily working in this economy. And if you’ve read this far down in the article, you must at least be anticipating you’ll be affected if you haven’t been already.
Ask your customers how you’re doing. Feedback from your customers is good – even if it’s bad. Actually, especially if it’s bad – because then it will really tell you something and perhaps give you some advanced warning. Remember, take it constructively because without customers, we’re just making product for the fun of it!
Be ready to change how you do business with your customer. You can help them out financially while at the same time still maintaining your price and quality of product or service. Look at how you allow customers to pay for your offerings – possible changes terms of existing agreements or purchase orders and look at how you process payments or extend credit to customers. Show a willingness to flex and they may lose interest in going somewhere else.
It’s critical to ask yourself, given the state of the economy and the ever-changing landscape of our customer base, is it worth it to modify price, product, or process to try to retain current customers who are looking for a better deal? Or should you stand firm with how you’re doing business and look for new customers? Only you can answer that question – just remain mindful of the quality of service that got you to where you are today.
One bright note, Bank of America just announced that it is pledging $5 billion in loans for small and medium-sized businesses (SMB). The bank even said it will be reversing some of its previous loan declines. So, from a banking and overall financial standpoint, there seems to be at least some hope on the horizon for SMBs in need of a cash injection to keep from taking extremely drastic measures or closing shop altogether.