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Beating A Recession – 4 September 6, 2008

Posted by David Dirks in Recession: How to Beat It!.
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When firefighters have to fight a forest fire, they often start other fires that help to burn off tinder and contain the original fire within a boundary before it burns itself off.  At first, it sounds odd to start a fire to put out a fire but that’s what it often takes to beat one down.  I believe the same thing should happen when the economy slows down and what worked before suddenly doesn’t have any impact on your ability to create sales or profits.

One of the best ways to beat a recession is to join it.  I mean from a product or service point of view that is.  It means finding and/or creating products and services that your customers and potential customers will find attractive when things are tight.   Tougher economic times force people to look for alternatives that will provide them with what they need at a price they perceive they can afford.

Fight a recession by creating recessionary products and services.  Bundle them in such a fashion that your price seems very attractive for the value your customer is getting in return.  And you can do it without giving away the shop, which I never recommend doing.  Discounting is for losers.

Here are a few ideas to demonstrate what I mean.  I just picked a few random businesses but the strategy is the same regardless of your business.

•    Getting the best mileage you can squeeze out of your car is clearly a priority when gas is double or triples what it was per gallon a few years ago.  With an economy slowing and people fearful of losing their jobs, keeping your car in tip-top shape to last a few years longer is critical.

For the retailer who sells car accessories or the garage mechanic in town, now is the time to create products and services that will appeal to people who find those services valuable and attractive.  Why not package a special “Mileage tune-up” that allows you to diagnose all the key areas of a vehicle that can drag down mileage?  You could create a diagnostic checklist that you could then use to up sell the necessary products and/or services you need to help the customer improve their mileage.  Bundle into     that service package as much value as you can.  Maybe it’s a “50 Point Fuel Efficiency” diagnostic that you can create at a price point for that makes it attractive against what it would cost to have them leave their car in less than good working order.

Or how about hosting a seminar at the shop that gives people tips on how to increase your mileage on their own?  How about a workshop for first time drivers that helps them understand what, how, and why regular general maintenance pays off in the long run?  Think of these workshops as ways to promote traffic to your     shop, educate your current customers and create new ones.

•    A CPA firm could look at creating a similar diagnostic tool that enables them to market it as a value-added way to help businesses identify ways to reduce costs.  What are businesses worried about when business slows?  They are worried about these kinds of things:  Am I bleeding money that I don’t know about?  How can I insure I have the right financial tools and data to make the key decisions on wide range of day-to-day business issues?

When times are good and profits are rolling in, those good times cover up a lot of mistakes.  Recessions can show a business just naked it really is.

The point is this:  create and bundle services that are attractive to businesses that want to survive to make it back to the ‘good times’ again.

•    When things get tight, people take longer to make a decision about whether to buy this or that product/service.  People don’t want to be sold…they want to be informed and educated.  Do it in a way that gives them a real business edge, and you’ll see the sales come.

Like a famous men’s clothing retailer says, “Our best customer is an educated customer” or something to that effect.  Create seminars/ workshops that offer your current customers deep and valuable content.

Don’t make it a sales seminar.  Nothing turns people off faster than a business education seminar that is really a sales pitch in disguise.   Educate them on what they need to know to be more effective at doing A, B, or C.  Demonstrate your expertise and ability to deliver results.  And provide this instruction for free.  Hire a marketing or advertising agency to help you put together a first-class seminar/workshop.  Don’t make it a bad looking PowerPoint shlockfest.  When someone leaves, they should feel that they’ve been well fed with solid information.  That creates the kind of goodwill you’ll need to leave a positive impression on them.  Then and only then can you can ask for the sale and have any reasonable chance to get one.

•    Don’t get into a price war.  Lowering prices to seemingly appeal to cost-coconscious buyers is a fast way to go out of business.  Yes, people pay more attention to price but they pay more attention to how that service or product purchase makes good economic sense in the short and/or long run.  Bundling products or services in a way that says to the customer:  “You get much more value for the price than anywhere else.”  For those that are just chasing the lowest priced deal, let them go elsewhere.  Let them go fight it out on E-bay.

Whatever your area of expertise, you need to think outside the norm and create products and services that help consumers deal with slower economic times and come out ahead.  Fight fire with fire and provide them with bundled services/products that make sense and appeal to the economic times we’re in.  In the long run, you’ll keep sales growing, earn profits, keep your current customers, and even make some new ones along the way.

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Comments»

1. Stacey Derbinshire - September 6, 2008

You know, I have to tell you, I really enjoy this blog and the insight from everyone who participates. I find it to be refreshing and very informative. I wish there were more blogs like it. Anyway, I felt it was about time I posted, Ive spent most of my time here just lurking and reading, but today for some reason I just felt compelled to say this.

2. David Dirks - September 17, 2008

Thanks Stacey. We appreciate the feedback! Keep us sharp by letting us know if we can expand a topic or add a topic that might be of interest to you.

Dave


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