Recently, I’ve been hearing more business leaders talk about scaling back to prepare for tough times ahead. However, a turbulent economy doesn’t necessarily have to end up negatively impacting your company – it all depends upon how you approach the challenge. While we can’t control circumstances and events, there are things we can do to rise to the occasion.
Changes in the economy may sensitize your customers to the value of what they spend their money on, where they spend it, and when they spend it. But — they are spending money. Three things you can do:
- Adapt your products/services to meet their new needs. For example, a company that makes computer equipment started offering more services so their customers could more effectively and efficiently use what they already owned. (Example: services include consulting, training, and coaching in addition to different levels of hotline and field service support).
- Demonstrate how the same products/services can add different value: Customers will continue to buy the same products and services at premium prices – even in a down economy – provided that sales people can help customers tap into how the value of their product/service meets their most important objective. (Example: In a down economy, if buyers can’t justify buying a luxury car for “fun,” they may still justify it for business reasons, performance, safety, security and other “practical” reasons).
- Provide incentives: Find new ways to add value for buying now rather than later, for buying bundled service packages, or for buying in larger quantities by offering special deals (Example: a storage company offers 2 months “free” if the customer purchases a one year contract instead of a monthly contract).
When faced with less demand from current customers, be sure to explore the reasons behind the drop and new ways to add value before abandoning the market. There may be more opportunities than you think.
Increasingly, the answer to less demand from current customers is for companies to reach out to new markets. For instance, both Southwest Airlines and Jet Blue Airlines -traditionally focused on leisure travel – are aggressively pursuing the business travel market. This approach has promise, but to be successful it’s important to remember one thing.
The key to successfully entering a new market is to adopt an investment mindset. For example, both airlines discovered they needed to make a number of changes in order to be “business traveler friendly.” Everything from flight schedules, layout of gate areas, accounting systems, and reservation management systems had to be adjusted to meet the needs of corporate travel departments. Clearly, these two airlines are evolving in ways that will eventually impact every aspect of their company.
Entering a new market has the potential to profoundly and permanently impact the nature of your company. Be sure that your key stakeholders understand and are committed to the significant investment and change it’s likely to take in order to succeed.
One of the biggest areas of control we have, regardless of external circumstances, is how we lead and manage our organizations on a daily basis. The way leaders approach the answers to each of the following areas have a great deal to do with why one company can exceed and their competitor in the same industry fails.
Questions to ask yourself and others in your organization:
What needs to be done? Why? What else could be done to accomplish the same objective?
Who will do it? Why should they do it? Who else could do it and still achieve our objective?
Where will it be done? Why? Where else could it be done and still accomplish our objective?
When does it need to be done? Why? At what other time could it be done and still meet our objective?
The more assumptions you and your organization uncover about your objectives and goals, the more choices you have available to respond regardless of the circumstances.