When markets stop growing - even start shrinking - retailers have to focus with even more vigour on keeping their customers. Chasing after new customers in these times is expensive and the marketing methods and results are frequently unquantifiable. Budget needs to be diverted from 'getting' to 'keeping' customers.
Keeping customers means serving them better. How? Simple: ask them. Listen actively and act on what they are telling you. Stop defections at the critical points of departure (or before.)
This approach shouldn’t be viewed as a one-off activity, however. Companies that want to maximise the benefits of listening to their customers should build an ongoing voice-of-customer program, ensuring that the organisation’s people and processes are aligned behind this effort, ready to act upon the insight.
In his article “Recession: The Mother of Invention?” Steve Prokesch, Senior Editor at the Harvard Business Review, suggests that the first step companies must take is to “test their assumptions about customer needs” – this means rethinking what data to collect and analyse, and really looking at the company from the customer’s viewpoint. The only people that can tell you how their needs and spending habits will be affected are the customers themselves.
So, economic downturn is not a time for executives to be paralysed by fear, but rather adapt to capitalise on the more subtle opportunities it brings. It’s about shifting the emphasis in businesses' focus. And any tools that help address downturn strategies should be invested in, and invested in quickly and enthusiastically. Coming out of a recession with a set of fiercely loyal customers that you’ve built a strong relationship with is a good place to be.
Most markets are not going to be growing for some time. Keeping customers more effectively will grow market share and improve customer loyalty, with significant long-term benefits to brand perception and profitability.