Last week’s installment focused on staying above the mud level in these tough times for households. The focus this week is on business.
By GLORia NDORO-MKOMBACHOTO
Escalate customer intimacy and adapt your value proposition
During tough economic times, uncertainty heightens among both your internal customers (the employees) and your external customers (your clients). Communicate often.
Communicate sincerely. Communicate genuinely. Your clients will have razor-sharp focus on their budgets and interrogate every purchase decision they have to make. This is the time to genuinely unpack and understand their concerns and limitations without embarking on indifferent high pressure selling tactics.
It is the time to listen, reflect and where necessary, adapt your value proposition, for value is the hallmark of any buyer-seller relationship.
We worked out the numbers. A non-franchised restaurant owner in the neighbourhood convinced me — a once a day, full-meal eater— that if you live alone or as a couple, it is cheaper to eat out at least three times a week than to buy food, some of it that ends up getting either stale, expired or rotten in the refrigerator.
It is even better if it is a restaurant around the corner from you, where you can always organise delivery, portion control, variety and associated discounts. There was no pressure. We unpacked the logic without myself feeling there was any high pressure selling tactic. That is customer intimacy.
I witnessed a similar concept last Saturday in Mbare at a restaurant I had visited to eat beef trotters, offals etcetera. The regulars at Chandi’s Kitchen were there to support their “sister” because many of them shared the same totem with her. Mostly vendors from the Mbare main market, they are also allowed to order special food not on the menu. Besides the great quality of the food, they support Chandi’s Kitchen, because of the flexibility of the menu, portion control and pricing. This is an adaptable value proposition.
Trim the fat as you remain mindful of why your customers choose you over the competition
Once upon a time, a couple I used to know never allowed themselves to fly economy. The husband was of the mindset that, when the curtain closes in front of you, you would always wonder what is happening at the front. So it was better to always sit in front, in business or first class so that the curtain closes behind you!
In challenging business times, executive management ought to alight from that kind of inflated ego and fly cheaper, in economy. Better still, fly low-cost airlines and save. With low-cost airlines, enquire ahead of time of the hidden add-on charges because often what might seem like an affordable, value-for-money fare, is not that, at the check-in point.
As you cut out the fat, do not be tempted to alter the product characteristics which will affect quality. Your customers will never forgive you for that.
Growing up, many of us who were middle-class urbanites thrived on Dairibord products. The favourite in our household was their granadilla yoghurt. Somewhere along the last four decades or so, I am certain Dairibord changed their formulations.
I remember a large number of people in my generation complaining that they had migrated to Kefalos because whoever came up with the new formulations at Dairibord, either never tasted their previous yoghurts or is not a yoghurt fanatic at all. In essence, Dairibord forgot the palate of their older customers, preferring the new. In such instances, when customers shift due to changes in product quality and taste, it is very hard to win them back.
Reassure employees and navigate solutions together
In tough economic times, the truth always sets you free as executive management. Communicate the business challenges to employees while reassuring them of your plan to win.
Most importantly, devise a feedback mechanism where you pose business challenges and they input their solutions. Often, consultants are hired to gather business solutions in the heart and minds of employees, which they end up presenting as their own because there is no feedback loop institutionalised within the organisation.
Grab the opportunity to bring in new work horses
Tough economic times is an opportunity to retire the old often protocol-driven oldies and replace them with fewer but younger work horses willing to impress their boss as gratefulness for getting the job in the first place.
Shut down unprofitable non-strategic entities
That way, the bleeding stops and you focus all your energies where the real potential is.
Manufacture as opposed to buying and selling
There is little to no foreign currency in the marketplace. It is not sustainable to continue buying forex at ridiculous rates being charged in unofficial markets. We have become a country of traders and in an ideal world, we should have more people manufacturing what we are importing.
Every time we take our hard-earned forex to buy things to sell locally, we are creating jobs in those foreign markets. Costing is key in production. There is no point is producing at a higher cost than importations.
Never compete on price
It is an exercise in futility. Many food manufacturers who sell to retailers are currently cannibalising their margins by doing this — an unfortunate scenario. Meanwhile, the cost of packaging is escalating. There is only one loser here, the manufacturer.
Answer the phone
I am shocked at how many calls are left unanswered at my bank and many other places I would be enquiring for services. Unanswered phone calls are missed opportunities. Why should a customer beg to do business with you?
Work on the basis of the Pareto Principle
The Pareto Principle is named after economist Vilfredo Pareto. Essentially, the principle states that 20% of the invested input is responsible for 80% of the results obtained.
There is persistent evidence that 20% of your customers will give you 80% of your business. It is also a well-established fact that efforts to win a new client will be six to seven times as much as the efforts to get an existing client for repeat business. It goes without saying that every business must have a mapped out strategy for new business development, but the thrust to make existing customers repeat their orders must be increased during tough economic times.
Be accommodating to fresh ideas
Tough economic times represent an opportunity to be open to fresh ideas and abandon outdated management principles. How about identifying jobs that lend themselves to being done virtually and then leasing out the space that becomes available? How about creating a franchise model set up for selling your products, while in the process creating new business owners from the existing employee pool, thereby cutting back on your fixed overhead, etcetera?
Staying above water is key imperative in tough economic times. Many businesses are slipping under water everyday. Like I said last week, when you get to the mud level, you are in serious trouble for mud is thick, mud is slippery, mud is heavy and mud sucks you in, like quick sand.
Once your business slips and falls, often it is tough to straightjacket it again. As a business, you do not want to be under water, for whatever reason, let alone debt, because being under water signals, business failure.
l Gloria Ndoro-Mkombachoto is an entrepreneur and a regional enterprise development consultant. Her experience spans a period of over 25 years. She can be contacted at email@example.com