These are extraordinary times. Even the most battle tested businesses have been pushed to their limits. At Destined, our team of experienced business operators have more than a century of combined expertise managing and scaling their own companies and advising business owners. For the past several weeks, we have been providing our thoughts and expertise in a continuing series of pragmatic strategies designed to position you not only to survive but to thrive.
In this article, we will examine Mistake #6:
Boom Packaging – Product Offerings for the Last Business Cycle
We define this “mistake” as a failure to review and to modify your product set to align with current market conditions. Most often made during a recession, this mistake is increasingly prevalent across industries throughout the economy.
An event as traumatic as a pandemic increases the impact on businesses, no matter their size. Product sets and packaging geared for a boom may feel “too big” or “too risky” in a crisis environment. It does not matter if the cause is a perception or an actual cash constraint.
We know that in difficult economic times customers often trade down to lower priced products and services or defer purchases altogether. Our experience is that to keep customers and to gain market-share, businesses often need to create product sets (products/services, packaging, and pricing) that:
a) feel less risky,
b) deliver more value at current prices (i.e. “give me more for my money”), or
c) provide a lower cost version to ease fears of committing to an expense.
One way to grow your organization’s revenue is by enabling customers to engage at a more comfortable entry price point. For example, a landscape contractor began offering “pricing incentives” on maintenance services but maintained “boom” pricing on its new installations. Customers were attracted by the incentives, engaging at price levels that were more comfortable in the current economic climate. Once committed to these lower-margin items, customers considered higher priced services and increased their purchases of services that were not “incented.” Over a six-week period, revenue increased 65 percent and overall profits increased, despite incentives on lower-margin service lines.
Deliver More Value
In response to the current crises, an industrial manufacturer is providing no-cost initial setup of equipment. The offer was designed specifically for customers that wanted to postpone delivery of equipment. By adding free installation, the company enticed customers to buy “now” because of the enhanced “value” of the purchase, particularly compared to the industry norms. Thus, the business generated revenue while maintaining customer relationships and building brand loyalty.
Professional service providers, such as law firms and accounting practices, provide another example of repackaging a product to deliver more value. Many organizations now offer free webinars to demonstrate their skill and competence as well as to help clients and prospects better understand their services. For participants, the incentive is the opportunity to engage with someone who is at the top of the class their field.
These webinars have the added benefit of expanding sales opportunities via a new digital channel that reach a wider audience. They also help these firms stay connected to existing customers and reach prospects during shelter-in-place restrictions. Additionally, webinar content can be repurposed through other digital channels, including the company’s website and social media sharing.
The company time and energy to plan, produce and market these events is a comparatively low-cost investment that maintains their existing price structure.
During economic downturns, successful companies recognize that consumers often prioritize their buying options because discretionary income may have been impacted.
One way to entice clients and prospects to purchase more from you is to provide a product or service “sample.” While used predominately in the food industry, free samples are not just for cookies and beverages. Like the value-added example above (“free webinars”), providing customers an opportunity to “sample” your service gets you in the door and increases the chances of future purchases.
For example, a brand marketing agency that would normally charge to assess and to recommend website optimization services might offer a less detailed but actionable review on a complementary basis. By providing a few specific recommendations to the prospect to implement, it demonstrates some of its expertise, creating deeper engagement earlier in the process.
Remember, customers still want to “buy” things. Whether it is a pandemic or an economic-induced recession, they just buy differently. Position yourself to anticipate purchaser needs. Recognize that some look for value while others want to buy more efficiently.
When a market is in flux, it is a good time to ask yourself if your client base has changed. If so, how can you respond by modifying your product set, packaging, and pricing to keep revenue flowing? How will you re-package some of your products or services to fit the needs of today? What can you do to keep your product or service relevant?
In the last recession, over 90% of the innovation that occurred resulted in changing how people could buy goods and services. Become part of the next boom innovation movement by retooling your product and packaging set today.
Even if your customer or client base has not changed, your competitors might have made themselves more attractive by changing how they operate to seem more appealing or offer a better value. Grow your revenue streams by being knowledgeable of what actions your competitors are taking and by offering attractive alternatives for current and potential customers.
How you thrive is a combination of factors. We are here to help. We have the expertise and experience. Connect with Kim to explore more.
Our next installment of this series: 7 Blunders & Key Mistakes Businesses Make During a Crises & How to Avoid Them can be found here – Mistake #7 Energy Management.
If you have missed any of the first five mistakes businesses make when coming out of a recession, you can read about them here: Industry Cycle (M1), Timing (M2), Risk (M3), Profitability (M4) and Business Model (M5).