Cover Story
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Business Advice from Andrew J. Policano, continued ...
A
well-known fact of business is that it costs less to retain a current
customer than it does to attract a new one. The best way to retain
customers is to always provide an avenue for open dialogue and
interaction. In addition to the dialogue, strategic action based on
this information is critical. In today’s environment, this often means
being flexible, even on price, and offering more services that add
value by responding to needs. Given the credit crunch that many
individuals and businesses are facing, offering flexible payment
schedules is also a valuable option that will likely be appreciated and
remembered by customers. This flexibility, which shows an understanding
of your customers’ plight, can help to establishing long-term loyalty.
While
the above strategies may pose challenges in the short run, if your
competitors have already adopted them, you may have no choice but to
implement them, as well. But cutting prices doesn’t necessarily lead to
a proportional decrease in margin; you can cut costs, too. One way to
save, if your business is related to a physical product, is to lower
your inventories. But there are many other cost-saving strategies.
Recessions often bring out efficiencies and cost-cutting opportunities
that don’t seem possible at other points in the economic cycle.
Another
great way to retain – and gain – new customers is to innovate. An
economic downturn presents opportunities to be creative. A great
example is the introduction of McCafé by McDonald’s. Recognizing that
it had the supply chain, logistics and
capital to compete with
Starbucks, McDonald’s launched a line of specialty coffees at lower
prices. While Starbucks had succeeded in getting the world to crave a
latté, McDonald’s provided the latté at a price the world can afford.
This innovation was well-timed and wouldn’t have been as successful had
it been launched during the boom period several years earlier.
So,
listening to your customers and strategically acting on their feedback
is a significant part of retaining your customer base through the
downturn. But the truly successful business owner – the one who will
not only survive but thrive – sees an opportunity and, through
strategic innovation, acts on it to obtain a superior, enduring
competitive position.
Andrew J. Policano | Anil Puri | Esmael Adibi
Abe Helou | Linda A. Livingstone | Timothy Peters
Ahmad Hosseini | James G. Ellis
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Business Advice from Andrew J. Policano, continued ...
A well-known fact of business is that it costs less to retain a current customer than it does to attract a new one. The best way to retain customers is to always provide an avenue for open dialogue and interaction. In addition to the dialogue, strategic action based on this information is critical. In today’s environment, this often means being flexible, even on price, and offering more services that add value by responding to needs. Given the credit crunch that many individuals and businesses are facing, offering flexible payment schedules is also a valuable option that will likely be appreciated and remembered by customers. This flexibility, which shows an understanding of your customers’ plight, can help to establishing long-term loyalty.
While the above strategies may pose challenges in the short run, if your competitors have already adopted them, you may have no choice but to implement them, as well. But cutting prices doesn’t necessarily lead to a proportional decrease in margin; you can cut costs, too. One way to save, if your business is related to a physical product, is to lower your inventories. But there are many other cost-saving strategies. Recessions often bring out efficiencies and cost-cutting opportunities that don’t seem possible at other points in the economic cycle.
Another great way to retain – and gain – new customers is to innovate. An economic downturn presents opportunities to be creative. A great example is the introduction of McCafé by McDonald’s. Recognizing that it had the supply chain, logistics and
capital to compete with Starbucks, McDonald’s launched a line of specialty coffees at lower prices. While Starbucks had succeeded in getting the world to crave a latté, McDonald’s provided the latté at a price the world can afford. This innovation was well-timed and wouldn’t have been as successful had it been launched during the boom period several years earlier.
So, listening to your customers and strategically acting on their feedback is a significant part of retaining your customer base through the downturn. But the truly successful business owner – the one who will not only survive but thrive – sees an opportunity and, through strategic innovation, acts on it to obtain a superior, enduring competitive position.
Andrew J. Policano | Anil Puri | Esmael Adibi
Abe Helou | Linda A. Livingstone | Timothy Peters
Ahmad Hosseini | James G. Ellis
BACK TO MAIN PAGE
Abe Helou | Linda A. Livingstone | Timothy Peters
Ahmad Hosseini | James G. Ellis
BACK TO MAIN PAGE
