The Covid-19 crisis has shaken the world. It has forced everyone to re-think how businesses operate to match the changing needs and wants. Those organisations that are smaller have benefited from being able to pivot more quickly than those larger organisations. Driving rapid revenue growth post Covid-19 is something every business needs to understand.
Staying close to customers is essential to understand their evolving pain points and deliver solutions. Any shifts create a need to re-evaluate your value proposition and business model in order to stay relevant, survive and thrive.
Trends have been accelerated due to the pandemic such as flexibility; sustainability, digital transformation, collaboration and remote working. Keeping an eye on future trends is critical to being able to prepare and adapt your business.
1. Focus on retaining existing customers
Research shows that retaining a customer is on average 25 times more cost effective than acquiring new customers – source HBR. Existing customers are also more likely to spend more – three times more per visit according to the Adobe Digital Index. During times of uncertainty, double down on communicating and understanding the changing needs of your customers. Your database will show you the 20% of your core customers who account for 80% of revenues – these are your ‘VIP’ customers. Go the extra mile with making these customers feel special with personalized communications, excellent service, gestures and special offers. Increasing customer retention by 5%, will increase profits by 25% to 95% (source: Bain)
An area that some business forget about when thinking about existing customers, is lapsed customers. Review your database for past customers who have the potential to re-purchase with you. Sometimes people forget about your business, and just need reminding.
2. Love, buy, repeat! Increase frequency of repeat purchase
As well as focusing on retaining existing customers as per tip 1, businesses should focus on increasing the frequency of their purchases. Customer life-time value is key metric to focus on whereby you try to extend the length of time that a customer is with you – for instance from 18 months gym membership to 24 months. Use tools like loyalty cards, and special offers for securing repeat business.
3. Re-think the business model
The shake-up provides a need to re-evaluate and re-set your business model. External changes have impacted on the way that the business exists. Re-consider all of the business model components to make sure your business is resilient to the #thenewnormal. There is the operational, profit, social model as well as the value proposition to consider. Out of adversity comes opportunity and by thinking differently and creativity, businesses will bounce back and come out stronger.
4. Find creative ways to increase value
Pricing can be a silver bullet to growing profitability as profit is a direct result of your pricing strategy. A key growth lever is increasing average order value. Pricing should be reviewed regularly to ensure the business has a clear understanding of where it is positioned vs the market average. Effective ways to increase the value per transaction are:
- Up-selling – Encouraging customers to purchase a comparable higher-end product than the one in question. It adds in little additional cost but increases significant perceived value and experience – e.g. a deluxe room instead of a standard room
- Cross-Selling – Inviting customers to buy related or complementary items – e.g. Amazon “if you like this, you might like this” – selling a parasol when buying a sun lounger
- Bundling – Adds more value via a package – e.g. M&S £10 meal uses items that would cost more per item if purchased individually.
- Tiered options – Research shows that when presented with 3 options, people tend to buy the middle option. Add a premium and a downgraded version of your product and services – e.g. Gold / Silver / Bronze
- Bigger volume – such as a multi pack or Extra size
- Increase the price – some businesses have not increased prices for years, and are underpriced compared with their market value
5. People first
People are the most important asset in business and the number 1 priority for businesses to focus on during the pandemic in terms of their safety and wellbeing. The service-profit chain shows that employee satisfaction is the foundation for profitability and growth. The culture of an organisation and its values are critical therefore to the success of businesses. The pandemic has caused us to re-think organisational design, operating models, capability requirements and ways of working. Multi-skilling and flexibility are important areas to optimise as we focus on employee satisfaction and fulfilment.
6. Power positioning and niching
Position yourself in the marketplace so that your audience sees you as standing out. Have a strong supportive message. The pricing strategy needs to be in line with your desired positioning. The ideal is an offering that is niche or differentiated with its own, unique value, so that people do not focus so much on the actual price point. This also makes it more difficult for customers to compare your price to similar products or services.
7. Service and customer experience excellence
Providing exceptional customer service is an important differentiator, and a way of ensuring repeat business which equals profit. Review your customer end-to-end journey and ensure that every interaction has a seamless, consistent and excellent service experience. Amex research shows that consumers are willing to spend 17% more to do business with companies that deliver excellent service. Identify if you have any moments in the customer journey, where clients are ‘leaking out’ due to insufficient processes, and fix them.
8. The right partnerships
Collaborating with partners that share the same values and goals can be highly effective and efficient. Create an ecosystem with the right people and organisations involved. Together you can be stronger and thrive by saving on costs and generate significant revenues collaboratively.
9. Stay close to the market and connect with the customer
Stay abreast of future trends and think through the implications for your business in terms of how to evolve to stay ahead of the curve and adapt where possible. There is a wealth of information you can tap into. E.g. Trading Economics, TrendHunter.
Continuously communicate with your customers to understand their changing needs and what is their pains and gains. Review and adapt your value proposition and messaging accordingly to stay relevant.
Be visible to the customer and show you that you care – research shows that brands remaining visible during challenging times are more likely to survive and thrive. People buy from people they know, like and trust, and these relationships need to be nurtured online and offline.
Marketing and sales are the lifeblood of businesses so these need to keep flowing during tough and good times. Your message will need to shift, and your online marketing will be dialed up. Through measuring performance of marketing, you can test and learn what is working and tweak accordingly to maximise ROI.
10. Find ways to increase profits
Businesses should always be evaluating for ways to streamline costs efficiently and generate additional revenues. There are two sides to this equation to unlock value:
- Growing revenue can be done by generating more £ from existing customers as covered in tips 1 and 2 – it is always easier to sell a second product to an existing client, rather than sell to a new client. This is the other option – attracting new customers to sell too using marketing strategies. Test and refine to bring in the ultimate ROI on marketing effectiveness.
- Decreasing costs is the other side of the profit equation. Review your business to see if costs can be re-negotiated with suppliers and reduced. Areas where costs can be trimmed could be travel expenses.