If we were to choose to believe what we have read in the newspapers and hear on the television in recent years, then one would be forgiven for thinking that we are all about to reach a very sticky end.
The media know that the more they can scare people, the more people will buy newspapers or listen to the news. In fact, it is a well known political tool that has been used on us more times than we might be happy to admit...
It has been said that the media have predicted 18 of the last three recessions. Since the middle of 2007 they have been peddling the recession story, even though we only officially entered one a lot later than that.
If you are in property or banking then your industry is facing some considerable risks. Nevertheless, it isn’t quite time to decamp to another sector just yet; some banks can still afford to advertise, including Loyds TSB and Santander that I have seen – so why is this?
You can view the current climate as an opportunity or a disaster. So what can you do about to exploit it to its fullest (other than switch the television off)?
1. Maintain your margins
Do not be tempted to slash your prices to attract custom. Let your competitors do that and then watch their service levels go out the window as they try to service sales when they have no margin.
A 2007 survey of customers had price ranked only the fifth most important issue to customers
Did you know that if you have a normal operating margin of 30% and discount your prices by 10%, you'll need to increase your sales turnover by 50% to maintain the same profit levels? Absurd but true.
2. People don’t buy on price!
Understand that people do not generally buy according to price. They buy for what they perceive to be a fair exchange of value for the money they are being asked to pay.
A 2007 survey of customers had price ranked only the fifth most important issue to customers. Only 14% said it was the most important buying factor, so 86% did not perceive price as the most important issue affecting their buying decision.
3. How much has changed?
Let the figures do the work not your head. Understand that for a large percentage of your customers, nothing has changed.
I will make some sweeping generalisations here: probably 20% of your customers are badly affected by the current climate, 60% are largely unaffected but could do with some reassurance, while 20% are almost entirely unscathed and could not care less about price, it simply is not an issue for them. So what customers should you be focusing your efforts on?
4. People buy on emotions, not logic
Be aware that people buy on emotions not logic (despite the fact that they would argue that point). I know of businesses who are deliberately increasing their prices at this time and have simply come to people like myself for some guidance on what language to use to make sure that they are selling features, not benefits. Or have deliberately introduced new more expensive products to cater to the percentage of people who are not affected.
5. Consider increasing your marketing
If there is only 80% of the trade out there, but your competitors have their head in their hands and are only trying 50% as hard – could you actually increase your market share? There are a number of inexpensive marketing methods that you are probably not utilising at the moment. Maybe that’s why some banks are advertising?
6. Invoice as quickly as possible
It astonishes me the length of time that some businesses take to get an invoice out, even though they know that they probably will not be paid until they do.
7. Play to your strengths
Think about outsourcing or delegating the things you don't like doing. Ask yourself whether your time could be more productively spent doing what you like doing, and which brings in more money than it costs you to do so.
In the meantime, switch the television off - that electronic income reducer has people in trance on average for seven hours every night. And stop reading the garbage they print in the newspaper.
Apparently, on average, we spend 15 years of our life just watching television. And yet the biggest complaint today is not having enough time!
Ask yourself, is this going to be helpful to me, and if the answer is no, then don’t watch it. It does nothing for your business, it does nothing for your health, and it does nothing for your peace of mind.
If you don’t believe me that television news deliberately highlights the negative, then just test it one last time tonight, listen to the flowery, sensationalised language that they use in their delivery and ask yourself why.
