Today’s economy is like a yo-yo. We have been dangling on a string in a “sleeper” recession for quite some time. The world economy continues to spin at the bottom. Everyone has been wondering how long the spin can continue at the abyss before experiencing a collapse of the market. Thriving in the new economy requires a business model that matches the values and spending habits of customers today. It could entail a complete change in the way you do business.
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When I was a young boy I liked to play with my yo-yo. I became fairly proficient at performing fancy tricks with interesting names like “rock the baby,” “walk the dog” and “skin the cat.”
I also could do a yo-yo trick called “the sleeper.” This motion entailed throwing the yo-yo down without bringing it back up immediately. If the string tension was correct, the yo-yo would spin for several seconds at the bottom of the string. The difficulty of the trick was knowing when to pull the yo-yo back up before the spin petered out. If I left it down too long the yo-yo would collapse and die at the end of the string.
Today’s economy is like my yo-yo. We have been dangling on a string in a “sleeper” recession for quite some time. The world economy continues to spin at the bottom. Everyone has been wondering how long the spin can continue at the abyss before experiencing a collapse of the market. It’s hard to tell whether the economy is improving or not because the economic indicators keep yo-yoing between signs of improvement and signs of continued economic decline. The recent combative legislative debate over the debt ceiling just added to the economic confusion.
Survival Requires a New Business Model
Sadly, too many companies have been sleeping too long. At the beginning of the Great Recession some businesses refused to accept the notion that things could get this bad. They responded slowly to the crisis, hoping the downturn would be brief. A significant number of these companies no longer exist because they refused to take the necessary actions to save their enterprise.
Some companies did respond to the crash – typically by lowering prices to continue to attract customers – but they never changed their actual business model. Perhaps they thought the spin at the bottom would be short, and they could pull their prices back up when it looked like the sleeping economy was nearing an end.
Fortunately, a few insightful companies realized early on that the economic downturn was going to last a long time. They wisely learned the trick of keeping their company spinning strongly so there would be enough strength in their business after the long spin to pull the business back up. They changed their business model to survive in a sleeping economy. They adjusted what they do to match the conditions of the new world. And they realized that when the economic spin does come to an end, the world will be much different that it was before. Consequently, they repositioned their products and services to appeal to customer needs and expectations in this new market reality.
Changing Priorities of Customers
The world has changed and any company who refuses to change their business model to match the new world is in danger of petering out. Customer behaviors have changed forever and they will not return to where they were before the recession – at least not in this generation.
The majority of customers have changed their spending habits. They now perceive their discretionary money in a different light. They have a completely different view of the value they expect for the money they spend. Customers are putting a lot more thought into their purchases to make sure what they buy is the best possible value for the price. They are less impulsive and more cautious about how they spend their money. They want to be assured that they are spending their money wisely.
If your company wishes to survive in the new world you must change your focus to align with the changing priorities of your customers.
For the most part, companies in the past focused on providing tangible and intangible products that appealed to the excessive and indulgent nature of their customers. Manufacturing companies produced cell phones, computers and other electronic gadgets with more bells and whistles than a person could possibly use. Casinos built massive, opulent resorts with every amenity imaginable to immerse guests in a sensory experience that appealed to their base desires. Restaurants sold the sizzle instead of the steak, emphasizing presentation and ambiance over the quality of the food. Customers spent thousands of dollars for an “experience” or access to products that would make them feel hip or cool. People paid far too much for far too little and flashed their materialistic possessions as indicators of their social or economic status.
What Customers Want Today
Today’s value-conscious customers want more than window dressing. They want ASSURANCE that what they are buying is worth the expense. They must feel confident that the investment of their hard-earned money will provide something of significant value. They need justification – or an excuse – for spending their discretionary money at a time when saving their money may seem like a more prudent action.
No longer are name-brand products or the “premier resort destination” the automatic purchase choice of many customers. People are evaluating their options and scrutinizing which choice gives them the biggest bang for their buck. They’re reviewing previous customer comments for assurance they are making the right purchasing choice. They are seeking to connect on an emotional level with products and services that match their current values.
Customers also want assurance of the RELIABILITY of your products and services. They want to buy products that work. They want whatever they buy to perform at the level promised. And, as the old throw-away attitude diminishes, customers are looking for products that last longer and won’t have to be replaced in a few months with a new generation product.
Customers want service companies to actually deliver quality service. They expect your employees to be friendly, efficient, knowledgeable, attentive and helpful. They want their hot food hot and their cold food cold. In many cases customers expect even higher levels of service during tough times because they expect you to truly compete for their business.
They expect you to stand behind your products and services and guarantee you will deliver what you promise. And if, for some reason, there is a problem with your delivery, today’s customers expect RESPONSIVENESS from your employees who quickly address their concerns and to fix the problem.
In tough times customers expect you to have EMPATHY and understand what they are going through. Very few people in this country have been untouched by the tough economy. Many people have lost their jobs, their home and even their possessions. They’ve downsized their lifestyle significantly. They’ve postponed their retirement. Those who are still employed may be underemployed, having had their hours or their wages cut. Some families may have more than one wage earner who has been affected by the downturn.
Consequently, when these customers do spend their money on a vacation, at a restaurant, bar or theater, they expect your employees to show APPRECIATION for the investment the customer is making. Stressed out customers expect your employees to understand their need for escape, relaxation, rejuvenation and a life free from the hassles of their daily grind. If they purchase a product from you, they want that product to be easy to use and not add any additional burden to their life. If they have to interact with your employees, customers want the experience to be pleasant and problem-free. They expect your employees to be totally focused on ensuring they have a good experience patronizing your business.
Aligning Your Business Model to New Customer Demands
It’s time to pull the yoyo back up and regain control of your company’s economic future. Innovative Management Group can help position your company for success in the new economy based on the realities of the market conditions you can expect over the next 3-5 years. We will help you:
• Define your strategic focus and outline your strategic intentions
• Reclaim your brand identity or redefine a new one based on the new market realities
• Identify your value premise and unique product differentiation
• Determine which of your current products and services match current customer needs
• Identify new products and services needed to create customer demand
• Align your marketing strategies and tactics with the new world
• Ensure consistent product and service delivery to create customer loyalty
• Engage your employees in making the changes necessary to succeed in today’s competitive world
• Ensure the commitment of your executives, managers and employees to focus on the things that matter most
During difficult times your company needs to stay focused, or refocus if your current strategies and tactics are ineffective or no longer appropriate. Now is the time to identify strengths, weaknesses, opportunities and threats. Tough times require clear, creative thinking to minimize the weaknesses and threats and take advantage of the strengths and opportunities in order to drive value to your business. It is a time to rediscover the fundamentals of the business — the critical success factors that will keep your organization spinning successfully for many years to come.
Good leaders make good decisions in tough times. Call Innovative Management Group today to help you maintain or regain a strong competitive position in a weak economy. §
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