Most business professionals I know have been conditioned to think of inflation as highly negative, driving up their costs, and reducing customer buying. I see it as an opportunity to find new ways to attract customers, make long-needed changes to improve productivity, and lower your own costs of doing business. We all need a shock from time to time, to get us thinking ahead again.
For example, in my discussions with business owners, some have already used inflation positives to update their inventory values, take advantage of reduced mortgage rates, or simply making the price increases that they have long needed. Others have seized on the opportunity to restructure their business for the future, eliminate marginal processes, and find new growth partners.
For the rest of us, here is my prioritized list of key strategies that I believe every business leader can benefit from as a starting point in making the current inflation economy less of a negative impact on their business, or maybe even a pleasantly surprising positive:
Solicit follow-on revenue from existing customers. Now is the time to reach out to satisfied existing customers for repeat business, as it is less expensive to generate more revenue from your past customers than it is to land new ones. I recommend using digital channels, including email and social media, personalized, if possible, with promotions.
Keeping customers coming back is not a one-time thing, but an on-going effort to not let them forget you. You must show your appreciation with a “thank you” for the business every time, offering a reward for referrals, and doing things together in the community.
Respond to new market shifts and opportunities. The recent inflation has made every customer rethink their spending habits and needs. While they are looking, you can benefit with new services or an expanded product line. Maybe it’s time for you to expand online, through Amazon or similar platform, or open a new store in a new growth community.
Also, you must focus on business model innovations that cut costs for your customers, such as self-service, un-bundling your pricing, and selling directly to the customer. Innovation is not all about break-through technologies and big financial investments.
Outsource functions outside your core competency. I see a new resurgence of outsourcing alternatives from outside the country as well as inside, driven by freelancers caught in the squeeze. Look for functions that may be performing poorly in your business due to lack of skills or necessary tools. Selective outsourcing can save you real money.
With free world-wide Internet access, outsourcing no longer requires the extensive travel, translation, and communication costs once associated with remote work. Through the use of Zoom and similar video tools, they could be your employees working from home.
Run experiments on new sources of revenue. In times of inflation, customers will react positively to a new repair or support service, may be more amenable to a rental capability for major items, or ready to sign up for a subscription service. I recommend sampling one or more of these opportunities, without a major investment on your part.
For example, Amazon and Jeff Bezos credit much of their continued growth, even in tough times, to scheduling change “experiments.” Bezos believes that if you double the number of experiments you do per year, you’re going to double your growth ability.
Replace marginal performers with new top talent. Now is the time for those changes you have been putting off to balance resources. Recent downsizing at nearby companies means more highly skilled employees on the market now, so you may be able to trade up and gain in productivity, thus reducing overall costs, while preparing for new growth.
Attracting the right talent and using the right incentives has been shown to dramatically increase productivity. Don’t forget that new generations of workers are motivated by a different set of incentives, including culture, flexible schedules, and constant feedback.
I understand that inflation is putting pressure on all of us, businesses and customers, but as with all challenges, there are potential benefits as well as pain. I’m just suggesting that looking for positives is more productive than focusing on the negatives. After all, running a business is all about maximizing your satisfaction, as well as your financial returns. Make it a win on all fronts.
