Traditionally, consumers tend not to want the hassle of changing their chosen supplier, regardless of the product. Britons are, for example, three times more likely to get divorced than they are to change their bank. However, as consumers are being forced to rein in spending they are looking to save money in any way that they can.
One of the easiest ways a consumer can end up with a little more cash in their pocket is to switch providers of their staple goods and services, or to change the products that they buy for cheaper versions. Christmas brings with it increased expenditure, and a greater impetus for consumers to save money in this way. It is important, therefore, that you take adequate action to keep hold of your customers over this year's particularly difficult season.
Cutting prices, cutting costsThis year, more than most, many consumers will be motivated primarily by price. Even with the recent VAT cut, shoppers will still be looking for the retailer or supplier that can provide what they need at the lowest possible cost. As such, the market for 'luxury' versions of goods seems to be on the wane.
As a small business, you should look at ways in which you can cut your headline prices as far as possible. Clearly, this is likely to result in a reduction in your profit margin; however, with shoppers less likely to spend money in the first place, your priority should probably be increasing sales volume and maintaining your existing customer base rather than guarding your margins.
While reducing your prices you should also be looking at ways in which you can bring down your own costs. If you can reduce your overheads you have the choice of either becoming more competitive or increasing your margins. The nature of your business will determine where (and indeed, if) your cost savings can be found.
You should adopt the same mindset that you are trying to discourage in your customers: i.e. shopping around for a better deal from providers, particularly if you are paying for utilities such as telephone or broadband connections. Similarly, try to renegotiate prices or payment terms with your suppliers. Paying suppliers a little later, for example, can ease cashflow and enable you to pass on some immediate savings.
Branding and marketingUnfortunately most retailers and service providers are now very competitive on price so it is a less useful tool for retaining customers than during a boom period. Consumers still align themselves with brand, and developing yours will help your business stand out from the crowd. Branding isn't just about having a consistent logo and design; it is about the personality and values of your business.
Your brand should be represented in your marketing, but also in other areas of your business like customer service. This will give your customers an emotional connection that is much harder for them to break away from.
No matter how small your business may be, you can look at ways in which you can adapt the marketing techniques used by huge corporations and make them fit your circumstances. For example, you may consider looking at 'multi channel' marketing. This involves using a number of channels (such as a website, direct mail, posters and so on) to reach your potential customer base. Try angling for features in your local newspaper or radio station. If your customers are primarily from the area around your business base, exposure in trusted local and regional media is invaluable. This can serve to both attract new customers and jog the memory of those who have previously visited but are not regulars.
Online retailersIf you are an online retailer, you should be looking at ways in which you can engage with your customer base. The financial barriers for digital marketing are considerably lower than those associated with offline marketing. For example, sending 5,000 emails is considerably cheaper than sending 5,000 printed leaflets.
Price is certainly a factor online; the ease with which consumers can flit between online retailers means that you must be able to offer a competitive price and an engaging shopping experience. If your visitors enjoy their time on your site, they will be less likely to navigate away and therefore more likely to make a purchase.
In any marketing you are doing, consider offering discounts for repeat customers, or paying the cost of their shipping. Your marketing materials must explain why consumers should use your business; online retailing in particular is an ever more competitive market, and you must effectively communicate the unique selling points of your business in order to stand out.
The entire retail sector is already groaning under the strain of the recession, and it is suggested that sales this Christmas will be well under last year's levels. However, canny retailers offering a reliable, cost-effective experience should be able to hold onto their customer base this season while at the same time laying the ground for growth in the new year.
