I am certainly no economist. I’m simply a hardworking small business owner with a penchant for a cautious side eye when times are good and a strong aversion to being caught off guard when the economy is flexing as it has been in 2022. As Mr. Dickens went on to say, it is an age of wisdom and an age of foolishness. No need to swing into crisis mode, but here are a few strategies wise retailers can consider to gain more control in a rapidly changing marketplace.
Your existing customers are your best customers.
Customer acquisition costs are much higher than retaining existing customers. And what do these existing customers want? Ask them. Feedback is a gift. Instead of your sales team asking the standard questions of customers, ask them what they do not see in your shop that they would like to see. I have found that people truly want to help you when you authentically engage them in a conversation about their wants and needs.
Diversify with options that enhance your loyal customer base.
We opened a candle studio last year and it has been a wonderful addition to our retail shop. Shocking to me were how many new customers it brought to the store. It also increased the average sales ticket beyond the cost of the actual candle making. We added a refill program that is another way we get people back into the shop — and this is half the battle. This summer we are launching a loyalty program as well. Initiatives such as this provide multiple ways to increase revenue and bring in new customers.
Target a niche consumer base such as the senior market.
Seniors have discretionary income and represent just under 50% of the total purchasing dollars spent, yet only 5% of marketing is directed to them. Consider exclusive offers to build loyalty and make sure if you ask for information they understand why and how it will be used. Special sale days, free delivery, focusing on ideas to appeal to grandparents and birthday gifts can be effective in delivering this important segment of the market.
Upsell and cross sell.
Are you merchandising to encourage cross-selling items? Do you cross tag your email list by purchase categories? This can help you target an email blast to upsell an item if a coordinating piece comes in or let customers know when items in their preferred styles are added. People LOVE to be the first to know about new inventory being added — when it is a relevant recommendation.
Strategically pare costs.
Cash is important in a downturn. Keeping 15% of your total revenue liquid has always been my goal, but if the economy gets tighter, I move that to 20%. Every dollar we spend is analyzed quarterly and I pay incentives to my accounting coordinator to save us money. Can you trim hours and not lose business? Have you checked your recurring subscriptions? Or reviewed longstanding contracts that renew without a review such as your internet services, alarm services, etc.? Can you outsource work less expensively than handling it in-house? Are you able to do more drop shipping to reduce inventory?
Perfect your processes.
During the best of times — supply chain woes and pandemics aside— we tend to let the processes of running our business slide. This is a mistake. When others speak of being lean and mean, my interpretation of this is not simply the hard costs of running a business but being efficient in a way that would make Mary Poppins proud. Write out every process for every thing you do in your business. Do not let these things be “in the brain” but not on paper. Make every step clear and concise. Then, review it bi-annually.
Navigating the waters when you do not know if the tide is coming in or out can be stressful. The best way to respond to the natural stress of uncertainty is with considered and strategic planning to be in the best possible position you can be.