“Make do and mend” strategies for your business

The economy is going through a huge state of flux, and this is having a dramatic shift in consumer behaviour. Staying on top and understanding how this is affecting your customers is crucial to making the right decisions and setting the best strategies to reflect new trading conditions.

The businesses that are best prepared responded a long time ago to this downturn. Some have been so ahead of the game they have even had time to launch entire new product ranges. They have been using their data to track who their customers are and what matters to them; this has enabled them to react ahead of the curve. Even they, however, probably did not predict the severity of this downturn.

Many businesses haven’t felt the need to really get close to their customers. Because the appetite for spending was so great, it was relatively easy to pick up customers with tempting offers or good credit terms. This isn’t the case anymore, and many businesses are left looking at a customer base that doesn’t really have any loyalty to the brand at all. Previous purchases were simply just transactions.

Whilst big changes like introducing new product lines can take time, you can nonetheless achieve a great deal simply by making small changes to what you already do, supported through better insights. This is more about “make do and mend” —getting more mileage out of existing assets and repairing what isn’t working as well as it used to—rather than about making big new investments. Here are a few suggestions:

1) Run a business health check. Understand which customers are supporting your business and will remain loyal to you through the slow times. Identify what your loyal customer base has been buying from you and what is important to them, and focus on this. Many businesses have spent the past few years wooing any and all customers with price-led promotions. The vast majority of customers who bought from you purely on the basis of price have no loyalty to your brand and will buy from whichever of your competitors is the cheapest. Identify the products and services attracting these unprofitable shoppers and prioritise investment elsewhere.

2) Be sure you know your return on investment for each of your marketing media. Before you go out and buy more media, track and monitor which of your channels are providing the best bang for your buck and attracting the best type of customers. Assume nothing; measure everything.

3) Price where price matters. Target your pricing and promotions to the products and services that matter to your best and most loyal customers. This will help you minimise the margin erosion and wastage that comes by attracting the wrong customers.

4) Be relevant to the right customers. This seems obvious, but too many businesses are still deploying a one-size-fits-all strategy. If you are going to up your marketing spend or modify your ranges to combat the downturn, make sure your team are targeting the right products to the right kind of customers. Localise your offer to suit the needs of the local market.

5) Review your loyalty programme. Now is as good a time as any to confirm that your investment in loyalty is attracting a valuable base of loyal customers and working as well as it should be to optimise your investment. Many companies have invested in loyalty schemes that are either too costly or not aligned to the needs of the business—for instance, they could inadvertently be training customers to hold off purchases until they receive a discount. Now is a good time to make these changes.

Your loyal customers are like a pair of good old socks: If you take care of them and darn the holes as they appear, they’ll continue to give you good service long after your discount pack of five cheap pairs has been thrown away.

William Beresford is strategy director of Beyond Analysis, a customer insight and strategy provider.