Finally, the Reserve Bank of India has admitted that India’s economy is facing a slowdown currently. The GDP has slipped from around 8% two years ago to 5% – the lowest in six years. This article might help you in planning recession strategies and keep your business alive
No business likes a slowdown. Customers tighten their purses, revenue dries up, the overall mood becomes gloomy. But slowdowns are part of a business cycle – they’re inevitable. How companies emerge from slowdowns, recessions, and depressions, however, depends on the kind of action they take.
There are three outcomes for organizations during a slowdown or recession:
- Some will fail – they will cave under the pressure of the environment and pull down their shutters.
- Some will survive – they will emerge from the downturn and regain their original shape over time.
- Few will thrive – they will become stronger and prepare themselves to take on challenges of the future.
We all want our organizations to belong to the third category, don’t we? If yes, here are six recession strategies that you can take to brave out the current and future slowdowns.
Here are some effective Sales Strategies during the recession
1. Reach out for Referrals
Word-of-mouth is the primary factor for between 20-50% of purchase decisions, according to McKinsey research. But most companies shy away from asking their customers for referrals.
Ask existing customers to refer to someone who will benefit from your products or services. If they share referrals right away, that’s great. If they ask you to call later, follow up at the specified times. Then connect with the referred prospects and introduce your company as one referred by your existing customer.
People are also four times more likely to buy when referred by a friend. Imagine how effective your sales will be even in slowdowns if you simply follow this one step.
To manage your existing contacts and referrals, you can download this free Google Contacts to Spreadsheets Sync tool.
To get more referrals from customers, it’s important to follow the next step.
2. Focus on Customer Retention
Many salespeople focus so hard on bringing in new business that they forget to check how many are exiting from the backdoor. Organizations can get away with it in during peak periods.
But during slowdowns, this strategy is as harmful as sitting behind a car’s exhaust pipe with the engine running. It will suffocate the organization and either hurt it badly or kill it.
A slowdown leads to a drop in sales. Use the extra time and energy available to improve customer satisfaction. You’ll realize how many unnecessary processes you can remove and how you can improve systems.
Satisfied customers don’t just stay with you longer; they also share referrals with you.
3. Identify Different Industries to Sell
The ancient proverb goes, “Necessity is the mother of invention.” Nothing makes you more creative than when you have to do more with less.
Identify industries and ideal customers that you don’t currently sell to but could use your products. Turn them into customers. And when the mood of the market improves, they’ll open their pockets even wider for you.
Don’t let them “this doesn’t happen in our industry” mindset hold you back. If all companies thought like this, would we get cameras in mobile phones or be able to pay our utility bills via mobile wallets?
You’ll be surprised how many industries can use your products if you just try.
4. Prioritize Cash Flow
One thing that most small businesses don’t realize is that cash flow is the most important aspect of the business. It lets you manage operations smoothly, invest in opportunities, maintain goodwill with your suppliers, and so on.
During slowdowns, cash flow becomes even more important because customers tighten their purses. If you don’t prioritize it, your business will go deeper into quicksand with almost no way out since even banks limit their spending.
Here’s an example. During slow market phases, a client of ours reduces its transactions with unprofitable customers i.e. customers who negotiate too much and demand that their last-minute orders be prioritized. Instead, the client focuses on offering better service to profitable customers. They also offer discounts to customers who pay their outstanding dues inside the credit period.
Such strategies might appear counterproductive on paper, but they are highly effective in business life.
5. Invest in the Future
A slowdown generally occurs because of a transition. In other words, a trend that existed for long is no longer relevant and old ways of working are not valid. Inefficient businesses get weeded out and ones that improve efficiency thrive.
According to research by Bain and Company, organizations that rank among winners are ones that move to capture opportunities before the recession. Bain and Company equate a slowdown to a tight turn on a racetrack – it’s the best place to pass competitors but requires more skill than driving in a straight line.
Invest in products of the future not just to sell what’s relevant but also to streamline your business. In the end, you don’t just want to survive the downturn; you want to emerge stronger.
6. Take Care of Your People
Slowdowns are worrying times for everyone, including your employees. They’re worried about the safety of their jobs especially because news about layoffs becomes more common. What your people need most is an assurance from you, the leader.
Assure your people that their jobs are safe. Prepare them for the future by training them on tools and products of the future. Keep your emotions in check no matter how gloomy the picture appears, because your people look up to you for hope. Motivate your people to give their best.
When you make your people feel secure, they will care for your business like it’s their own.
It’s tempting to try many things during a slowdown. It’s natural to feel stressed. But you don’t have to let the stress hurt your business. The economy already does that anyway.
Follow crucial points like the ones mentioned above with discipline. When the market appears stuck, you’ll keep moving forward. And when the market picks up pace, you’ll have the momentum to cash in on opportunities that emerge.
Good luck, dear friend. Stay strong. Your business needs you.
Thank you for sharing insights.
Suggested 6 actions above are very useful. Having all thoughts it all start with two basic actions that is focus on future and take initiative. Take initiative to make breakthrough and do not wait.
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