Problem: There are not enough customers for my store.
Solution: Learn how sell to the ones you get.
Retail expert Brian Walker hates it when downturn-hit clients tell him the reason they are struggling is a lack of customers.
“There’s no shortage of customers, you’re just not selling to them.” He says that on average just 20% to 25% of people who walk into a store actually buy anything, and 60% of transactions have no add-on component. Improve these ratios, he says, and you’ll quickly solve the problem of falling sales.
Walker says retailers should concentrate on pouring sales training into their staff to improve their product knowledge. Shop layout and ambience (music, lighting, décor) is important and stock management is crucial. “You can’t sell what you don’t have,” Walker says.
He also suggests emphasising those little extra things you do, such as a clothing shop that offers an alteration service.
Problem: My sales pitch just isn’t working.
Solution: Understand the difference between a customer’s need and their decision-making process.
Adrian McFedries, managing director of franchise consultancy firm DC Strategy, says that too many businesses spend too much trying to sell a product while ignoring how a customer thinks before they buy it.
“Between 70% to 80% of businesses don’t understand the difference between a customer’s need and their decision-making process – that’s the most important aspect of selling; full stop,” he says.
“How many times have you had a salesman ask you, ‘What’s important to you when you buy?’ They just crap on about functions and features and price, but don’t really ask what is important.”
Taking the example of a mobile phone, McFedries says too many companies will try and sell a broad concept – the phone itself – without addressing the specific customer needs, such as USB connectivity, wireless functions, etc.
“Remember that a customer doesn’t always know what they want. More important is the process by which they make a decision. Your fundamental need may be a phone – that’s not rocket science – but the process by which they decide which phone is the key to your sales strategy.”
Problem: I’m spending too long dealing with customers who never buy.
Solution: Win fast and walk quickly.
Rob Hartnett says timing everything right now. “The economy is very patchy at present. Not only are some industries affected by the economy more than others, there are many organisations that are being more affected than others.”
Sales people must work out who to stick with, and when to move on.
“So you must work with active prospects who are buying and leave those prospects who are negative or shrinking to another time. That is not to say abandon them, just focus on the active accounts that are buying.”
Problem: We’re only attracting rats and mice, not big customers.
Solution: Identify your most profitable customers.
During a downturn, business owners may become so desperate for sales that they throw themselves at anyone who comes along. But Adrian McFedries says this isn’t the right approach.
“Clearly at the moment the key topic for businesses is cashflow. Businesses in this environment have a set cost base, so they have to do what they can with sales. What they need to do is look at their existing customer base.
“So don’t spend too much time on customers that aren’t profitable,” he says.
“Identify the most profitable customers and remember that not all customers are created equal. A lot of customers are unprofitable, and others are a pain in the arse, but you need to spend time on the painful ones and not ignore them because they may the most profitable.”
Problem: My customers aren’t coming back.
Solution: Give them a reason.
When customers are strapped for cash, it’s no surprise they often won’t return to favourite destinations, but Paul Greenberg, co-founder of online retail warehouse Deals Direct, says that you need to give them a reason.
“The best aphrodisiac for a new sale is an existing sale. It sounds obvious, but we hadn’t done it, so now we put an offer on the sale that provides an incentive or deal on the next order.
“So in many ways I see a parcel going out as an opportunity to get another sale. The logic is simple – you’ve got a parcel in super quick time, and you think it’s great, and then when you give them something extra it only helps your business.”
Problem: Should I start selling in a new area?
Solution: No. This is not the time to experiment.
Many businesses see expanding their product range as way to survive the downturn, but some experts are saying now isn’t the right time to be experimenting with your core business.
Chad Polley at GameTraders says that businesses should have a clear focus and shouldn’t divert from a business plan.
“It all comes down to strategy and what you achieve. We focus on the most profitable areas of our business. Continue working on areas of profitability, focus on your core business, and don’t focus on anything new and experimental.
“There’s always going to be times to take risks, and we do, but we’re focusing on the fundamentals at the moment, and that’s where we stand.”
Problem: I am worried about getting through this downturn.
Solution: Remember – basic principles hold true, whatever the environment.
Small businesses may be tempted to change their strategy in a downturn, feeling pressured by ominous economic forecasts and fewer people walking in the doors.
But Richard Uechtritz, chief executive of JB Hi-Fi, says that businesses shouldn’t be scared into changing their marketing plans if they are already experiencing success.
“The basics of retailing, sales and marketing are the same in a downturn. People think you retail differently in many aspects. I see it all the time. People say “we’re retailing for the downturn” – there’s no such thing. Retail principles hold true whether it’s in good times or bad times.
“There is no difference whatsoever.”
Patrick Stafford is a freelance journalist and a former deputy editor of SmartCompany.
