Have a Palette of Strategies to Use During Slow Times

Every economy and every business has ups and downs.  The trick to weathering the storms successfully is to be prepared for them.  Simple, just return to the basics: make sales your top priority, qualify your customers from a credit perspective, manage your cash flow and inventory levels, and cut cost where appropriate to do so.

Strategy #1...Reactivate Dormant Accounts
The quickest and easiest way to do this is to sit down with your list of past clients or customers, call them, say hello, and see what's going on. Don't make this a hard-sell call. Tell them, "Hi, it's Jane. I'm calling just to check in and see how you're doing, since it's been a few months since we last spoke." Ask what's new...how s/he is doing. You don't have to ask for work directly, but when you end the conversation, you might say something like, "Well, it's been good talking with you. Keep in touch, and if there's anything I can ever help you with, don't hesitate to give me a call." This lets customers know you are interested in working with them again — without putting the pressure on them to give you an order right then and there.

If you are uncomfortable phoning, you can send a letter/flyer/brochure, perhaps calling their attention to a recent article, literature on new products or services, or testimonial letters from your other customers. This accomplishes essentially the same goal— to recontact and reconnect with customers and reminds them of your existence, products, services and availability. What kind of results will you get? It depends on whether you catch someone with an immediate or upcoming need.  On average, expect one order or assignment for every 10 calls you make.

Warning: Don't call up and say, "I'm not busy and need work right now; do you have any assignments?” or "Things are slow; how about an order?"  The customer feels pressure, feels s/he has to come up with an "excuse" why they haven't given you an order lately. This is uncomfortable and awkward for both of you. It also makes you seem desperate, and you do not want to seem hungry or needy. Always say you are calling to help them.

Strategy #2...Provide Superior Service to Current Customers
When business is slow, you want to do everything you can to hold onto your existing customers — your bread-and-butter accounts. The best way to hold onto them is to give them not their money's worth, but more than their money's worth. Now is the time to go the extra mile, give that little bit of extra service that can mean the difference between dazzling them and merely satisfying them. The best protection against a downturn in new business is an active list of delighted customers — people who give you a steady stream of continuing business. So cultivate your current customers. Nurture them. Serve them well. Do everything in your power to delight them so they keep coming back for more.

Strategy #3...Have Existing Customers Drum Up New Business for You
It’s probably fair to say that the customers you’re currently dealing with now associate with like-minded people. People who are in a similar income bracket and have similar interests, hobbies, buying habits, ethical and moral beliefs and even personalities. Better yet, people in decision-making roles who purchase from you tend to know other people within their sphere of influence or industry who are your ideal potential clients — people like them who could have a truly similar need for your products or services.

And therein lies your sleeping giant. A giant you can harness by creating a structured way of capturing these referrals from all your customers…a referral system. A system that means you has a way of asking every customer to refer other customers to you. In this way, referrals no longer come to you by chance or default. Instead, it’s a predictable, ongoing process.

This suggestion often deters people because they don’t want to be seen as too aggressive. Do not look at this strategy that way. If it’s true that most of your customers are happy with your business and the products and services you sell, then it follows that most would be quite happy to refer you, given an easier opportunity to do so. In fact, a systematized referral system merely provides your business with a way of rewarding people for what they’re currently doing (referring people) and encouraging them to do that more often!

Even if only 50% of your customers actually referred people to you and then only 25% of those people actually purchased, you’d still be ahead, wouldn’t you? In this example, you could have added a quarter more to your client base for very little cost. (Of course, these figures will change, depending on your type of business and the quality of your referral system.)

Strategy #4…Plan an Ongoing Marketing Campaign
This strategy has two parts to it. When things are slow, you increase the percentage of your time spent on marketing and prospecting for new business. During a lull in business, you need to make this extra effort to attract clients or customers, follow-up on leads and close sales. The second part of the strategy may not be so obvious. It's this: To prevent a lull in business from ever happening in the first place, you should market consistently and aggressively all year long, every week — not just when you need the business. Planning an ongoing marketing campaign ensures a steady stream of new business leads.

Marketing done today begins a selling cycle that will result in new business when you need it six months from now. What types of marketing work best in slow times? Use a combination of results-getting direct marketing (direct-response print ads, sales letters, self-mailers, postcards, special offers) plus low-cost/no-cost visibility-enhancing publicity techniques (press releases, articles, speeches, booklets, seminars, newsletters). Avoid costly image-building marketing — such as large space ads, slick corporate brochures, expensive annual reports and other marketing communications that can drain your budget without producing measurable results.

Strategy #5...Add Value to Your Existing Services
In a slow economy, customers in all areas are more concerned with price than ever before. Actually, their real concern is making sure they get the best value for their dollar. You can win new customers and retain existing ones by enhancing your services and providing your customers with more value for their money. For instance, if you are selling a commodity item, you could add value by offering faster delivery than your competitors. Or a larger selection. Or more colors. Or more options. Or easier payment terms. Or a better guarantee. There is no need to give away the store and promise an excessive amount of extra service. The customer will perceive just a little extra effort on your part as a significant increase in value. The extras you provide need not take a lot of time or cost a lot of money. Always look for ways to give the customer not just their money's worth but more than their money's worth. These little extras always pay big dividends in customer goodwill and ongoing future business.

Strategy #6...Improve the Quality of Your Customers
As your sales slow, do not get so desperate for sales that you sell to businesses not capable of paying. Strengthen your requirements for new customers by focusing on trade checks, bank checks, credit agencies, and even getting financial statements.

Strategy #7...Cut Costs and Minimize Expenses Where Possible
A natural reaction to a slow period is to watch expenses and cut costs. Often times these initiatives go too far. For many companies, a slow period brings to the surface the inefficiencies and wastes that existed prior to the slow down. While removing inefficiencies and waste may be needed, watch trimming away experienced workers. This tactic may not be the right answer. You may need these people now more than ever, especially in the sales force.

Strategy #8...Manage Cash Flow Better
Managing your cash flow with close attention to collecting receivables and delaying payables is vital in a slower economy. Your customers will be more reluctant to pay their bills on time and the aging of receivables is likely to climb. Your vendors on the other hand will be pushing hard to collect from you. The two-sided sword can cut deeply into your cash position. And as we all know…Cash is King.

Without angering your important customers, insist on prompt payment. Remember that 80% of your revenue is likely the result of only 20% of your customers. Explain to your customers how taking a discount by use of their bank line of credit can be cheaper than missing the discount with late payment. Do not continue to sell to accounts 60 days past due. Advise your suppliers that you are paying more slowly now but will surely pay. Tell them that they will have to wait to 55 days before payment, and then insure that they get paid 2 or 3 days in advance on a very regular basis. You have managed a bad expectation with a not so bad performance.

Strategy #9...Keep Control of Your Inventory
Don’t let your inventory get too high. Review purchases of raw materials on order but not delivered. Review current stocks and the stock points you have for purchasing additional material. Make sure your sales forecasting is accurate and not simply the hopes of the sales department.

If you sell to another business that is holding your product in inventory and will not likely pay until it sells it, get a security interest filed and a Security Agreement. When your customer argues that only their bank can get security, counter with “that’s fine if the bank is using your product as collateral for the payment it made to you but not fine as collateral for someone else’s receivable payment.” (Yes, there are inter-creditor agreements that regulate security to each party’s interest.)

Strategy #10...Keep Busy by Working ON Your Business
A slow period in your business is a good time to busy yourself with internal projects that will improve the business. Such as developing a new marketing strategy, making technical improvements to an existing product or service, auditing and improving your customer service procedures, revising your newsletter or Web site or any of a hundred things that need doing but never get done. Now you have the time. So do them.

Dugan & Lopatka’s Management Consulting Practice is designed to help our clients overcome the obstacles that hinder your ability to increase profit and value. Our team of professional Consultants and CPAs has insight not commonly found in a consulting firm. Having worked with thousands of clients in 34 states and seven countries, and in almost every industry, we understand not just the numbers but also the operational and human side of businesses.

In a slower economy, cost cutting, better cash flow forecasting and management and reinvigorated sales strategies are a must for survival.

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