Finally. We’re starting to see a light at the end of the tunnel.
That’s the general consensus I’m hearing from small business owners across the country. While I concur and join them as we look forward to a brighter future, I keep looking back to the very recent -- and still very real -- recession to see what can be learned from it. As Spanish philosopher, George Santayana, wisely cautioned, “Those who do not learn from history are doomed to repeat it.” For many still reeling from the economy, once is enough.
Perhaps the greatest lessons the recession has to offer us come from the people and businesses who not only survived it, but who succeeded in spite of it. The fact is that over the last several years many businesses, in fact entire industries, actually did extremely well. Companies having to do with the green movement such as renewable energy and clean technology, and those that cater to the aging Baby Boomer generation continued to experience growth despite the recession, while companies specializing in credit counseling, debt and budget management, consolidation and debt settlement grew precisely because of the recession. It all boils down to demand.
While being part of a high-demand industry certainly helps, there are certain qualities that every business can develop which will always be in demand – regardless of how good or bad the economy might be.
Debates over pricing strategies are as old as currency itself. Setting the right price to value is critical because it affects every aspect of a business. Price points are prices at which demand for a given product stays relatively high. But in a recession, where survival is the name of the game, many companies are lowering prices just to cover costs and give themselves a chance to remain in the market. As a result, the majority of the companies in a given industry are forced to reevaluate pricing strategies to maintain product position. In these situations, while it is imperative for a company to reduce overhead and lower costs to account for price adjustments, it must never lower its standards or the value it creates for its customers.
We should always seek to provide more value than what our clients pay us for. Please don’t misunderstand, I’m not proposing that you undervalue yourself or your business, but your clients should always feel that they received more value for their money when doing business with you as opposed to your competitor. Value will always be in demand no matter how bad the economy might be.
How much is good service worth? That was the subject of a recent study in England by the Chartered Insurance Institute and Ernst & Young who found strong consensus that the insurance industry is not providing good enough customer service to its mid-corporate customers according to 69 percent of brokers and 87 percent of insurers that were interviewed. The study concluded that the insurance industry could save 80 million pounds per year, or $121 million, by reducing duplication and improving customer service. Mark Radburn, chair of the company’s Broking Faculty, says: “One of the key elements of the report is the requirement to improve our understanding of the customer’s needs. To make this achievable we would need adequately trained staff and a more professional approach towards customer service. The market needs to work together to improve professionalism and challenge ourselves to deliver ‘world class’ customer service.” Service quality will always be in demand, especially in a difficult economy.
At the end of the day, business is all about the relationships we form through the exchange of value. People prefer to do business with people they know which is why repeat and referred business is so effective and yields a higher rate of return over time. In our current cut-throat economic environment, relationship-based businesses tend to fare better than industry averages due to increased customer loyalty. Additionally, research shows that a relationship-based approach to sales boosts performance and increases the likelihood of residual sales. Relationships always will be in demand regardless of the economy.
The pendulum of public perception toward business has swung away from the decades-long greed that culminated in the recent sub-prime mortgage debacle toward a more socially responsible view of business. Now more than ever customers are attributing a higher value to socially conscious organizations and many businesses are finding that in addition to all the right social reasons, social responsibility is good business. The great Sir John Marks Templeton said it best, “Those who do good do well – in any economy.”
Manny García-Tuñón, executive vice president of Lemartec, an international design-build firm headquartered in Miami, can be reached at email@example.com.