Six pieces of advice you can give (and take) in a slow economy

I was reading the April, 2012 editing of Inc. magazine this morning and came across an interesting article that I think all people in business would benefit from reading. It was titled Fast Growth in a Slow Economy and suggested 5 strategies to grow sales when people aren’t too interested in buying. I’ve added a 6th strategy and that is, take time out to read magazines like Inc., Success, and the Harvard Business Review. You’ll be amazed not only by what you learn but what a profound difference it will make to your client communication skills and the real and perceived value that you represent to them.

Strategy 1: Drop your worst customers

When you do a Pareto analysis of your customers you will inevitably find that 80% of your profit comes from small % of your customers, often as low as 20%. Not all the low profit contributors are candidates for dropping but the bottom 15-20% should be reviewed carefully. They will be consuming a disproportionate share of your valuable resources and will be causing a disproportionate share of your problems.

Action Plan

  • Give special attention to the relationship you have with your valuable customers
  • Raise prices to reflect value delivered – customers in respect of whom you can add most value will willingly pay higher prices when you are willing to provide that value, customers who are totally price sensitive will probably want to leave and that will be a good thing
  • Give special attention to the relationship you have with your valuable customers

Strategy 2: Keep close to the people who know you best – your customers

Steve Jobs says your customers do not know what they want so don’t waste your time conducting focus groups. That might be sensible if your key strategic play is innovation but it’s a dangerous generalization for the vast majority of businesses.  Customers may not know what they want in future but they do know what they don’t want now and what they don’t like about you and other businesses.

The most valuable feedback you can have about your business comes from two sources: your customers from customer advisory boards and your team members from team member advisor boards.

Action Plan

  • Make listening to your customers an integral part of your operating plan.  Quarterly CABs should be the rule.  Don’t limit invitations just to your customers, ask representatives from other spheres of influence, your suppliers, other business owners. Conduct CABs that focus on different things e.g. your service protocols, your proposed marketing plan, service design concepts, pricing protocols, etc.
  • Routinely seek feedback using the Net Promoter Score that should be requested by means of a self-addressed post-paid postcard or web questionnaire immediately following each significant instance of service.  Post the NPS moving average for your entire team to see how you are going.

Strategy 3: Be a strong contributor to your local community and keep your focus on the type of clients you are best positioned to serve.

Often way too much time is invested in trying to snag big prestigious clients where frankly there probably is not a good fit.  When you have a really clear understanding of your strengths time spent on taking care of the businesses that is all around you is time well spent.  The more you can help local businesses achieve their goals the greater the good you will do for your community and it will be rewarded with loyalty and referrals.

Action plan

  • Be vocal about your support for, and results achieved for, local businesses.
  • Seek speaking opportunities locally to share your expertise
  • Join or support local service and other charitable organizations but not with a view to profit from the connections you make but because you really want to contribute to the welfare of your community.

Strategy 4:  Treat everyone as a potential partner or employee

Occasionally a project opportunity comes along that may be too big for you t tackle or perhaps it involves some competency you do not have.  If that happens consider working with a firm that may in other respects be a competitor.

Action Plan

  • Make a note of the skills and areas of competency of people or firms in your area that may be of use to you in expanding your own firm’s service capacity.
  • Have a clearly documented protocol as to how you will ‘partner’ with other service providers giving particular attention to rules governing the ownership of intellectual property, revenue or profit sharing, and dispute resolution.

Strategy 5: Get small to grow

In a tough economy you get hit from two sides. First, there is less customer demand, and second, competition is more intense.  This is a particular problem in industries that have a high fixed cost structure and exit barriers are high.

This is a time to focus on looking for market niches that are being under-served or not served at all. This is obviously not easy and I will never happen if you sit at your desk and look at your business and your market with the same set of eyes that you have used in the past.  A great starting point is to run CABs with clients and focus on challenges they are having.

Action Plan

  • Buy and read Blue Ocean Strategy by Kim and Mauborgne
  • Dig deep to discover something that you can be very good at that their businesses are ignoring or doing poorly that would be valuable to customers
  • Don’t be afraid to treat competitors as potential partners with your niche service

And the most important thing of all …

Perhaps the most important strategy is to be confident in your ability to succeed no matter what the odds are. I’m told, the great golfer Arnold Palmer has only one trophy in his office. It was for his first victory in the 1955 Canadian Open and on the wall he has a plaque that reads:

If you think you are beaten, you are.

If you think you dare not, you don’t.

If you like to win but you think you can’t,

It’s almost certain you won’t.

Life’s battles don’t always go

To the stronger or faster man,

But sooner or later, the man who wins

Is the man who thinks he can.

When you understand that the world’s top 25 golfers are separated by an average stroke difference of less than 2 shots, the difference between the best and the rest has more to do with attitude than ability. And in the last 25 years the average winning margin in all major golf tournaments combined was less than 3 strokes over 72 holes!  Success in sport and in business comes down to a small number of things: some natural aptitude,  a willingness to work hard, a clear understanding of where you want to go, a realistic understanding of where you are, perseverance,  and a belief that you will prevail.

The pessimist complains about the wind.

The optimist expects it to change.

The leader adjusts the sails.

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