TCFP207: Leading in a Down Economy
Thank you for listening to The Champion Forum Podcast with Jeff Hancher! The key to leading in a down economy is preparation. Leaders often focus on how to protect their bottom line. Great leaders know they must maintain their long-term goals and will ensure that they continue to focus on people rather than just results. This approach sets them up for short-term success and a more robust recovery.
Your customers don't care about your challenges.
Customers will only reward you when you meet their needs and their challenges. This is especially true if you serve other businesses. They will be more focused on delivering to their consumer than ever before. You will gain a substantial competitive advantage if you can help them do this.
Don't rush to drop your prices to keep your customers. Your number one priority should be focusing on the product or service's value rather than the price. With value pricing, you get paid the exact amount you deserve to be paid.
Ex. One way to ensure you are giving your customers the best value is volume pricing or bundling. This strategy allows you to upsell the customer or prospect and drive volume to cover any profit concession you may be sacrificing.
Q: What is your company's current pricing structure? Can you think of a product or service that could be made more cost-effective? What compels you to buy a product that costs more than a similar offering?
Employees don't care about your challenges.
I've seen many employers try to rally the troops by encouraging them to work hard, do more, and do it for less money for the good of the company. This approach will not work. Your employees are dealing with inflation, increased gas prices, prescription shortages, consumer product shortages, higher interest rates, and more. Having empathy and composure is key. If employees feel you are panicked, they will panic and potentially quit. Consider how you can improve the employee experience and focus on recruiting and retaining top talent. If you must make cuts, do it in consideration of the long haul. Identify the individual contributions and skills that will take your company into the future.
Q: What has helped you stay with a business during economic challenges in the past? What employee benefits make you feel the most appreciated? Describe a time when your boss encouraged you to persist through a hard time. What did they say or do that was effective?
Don't Leave Your Business on Autopilot
When resources are scarce, andÍÏç you're trying to tighten the budget, you have to know exactly what you need to succeed. In some cases, this may mean that you stop serving certain customers. Consider what services are the most profitable and valuable to your clients. When you know who you are going to serve, over-serve them. Review your best accounts regularly and analyze how you can help them optimize during a period when they may also be making fewer sales. To truly deliver to your customers, you need to reinforce to your employees that they should communicate clearly and exhibit flexibility, empathy, and adaptability.
Q: What does your company do to support your best clients? What have you found most helpful in nurturing those relationships?
Entrepreneurs and top-level leaders: What are your most profitable services? What are your least profitable? How can you reimagine your pricing or offering model to serve your customers the most value at the best price for you and for them? Consider the risks and benefits of eliminating or reducing your least profitable products/services and focusing on the most profitable.
New and mid-level leaders: This is likely the first time you have had to navigate an economic downturn. Make sure that you are taking care of yourself so that you can project confidence and clarity to your employees. Have conversations with your boss about the company's plans and how they intend to navigate the downturn. Then, when you approach your employees about changes, cuts, or modifications, you will be prepared for their questions and help them feel secure in their job and the company's future.
Involve your employees in the company's decisions as much as possible. Look for opportunities to solicit feedback so your team feels like they are helping the company navigate the economic downturn. Ask them how you can help support them at this time. A friendly competition for a non-monetary prize (like an extra day off) can help keep morale up and inspire a sense of camaraderie.