Follow the Money
In the turmoil of today's economy--up and down Main Street and across the nation and globe--business owners are scrambling to get a handle on what customers want so they can steer their way back to higher volume and greater profitability. They seek advice from employees, consultants, suppliers and investors. They experiment with price cuts and promotions. They test new solutions on a daily, if not hourly, basis. Sound familiar?
Here's a different approach: Let your customers point the direction. Customers tell you what they want and what they're willing to spend money on. In fact, you already have access to their answers if you simply study your sales records. They'll reveal what people are buying more of and less of from your business. With that information, you can adapt your offerings and promotions so you back your winners, revamp your losers, and meet your market's interests head-on. Follow these steps:
Get specific when analyzing your sales. List the products or services your business sells. For example, a bookstore might sell new books, used books, audio books, magazines, greeting cards, eyeglasses, writing supplies and coffee shop offerings. A restaurant's product categories might include breakfasts, lunches, dinners, happy hours, bar business, group events, catering, to-go orders and gift shop sales.
Once you create a list of revenue streams for your business, tally up how much each category generated in sales this year compared to last year, and this quarter compared to last quarter. By tracking which product lines are increasing and decreasing in sales, you can practically read your customers' minds. Their purchasing activities can help you adapt your business to promote what they're telling you--through their purchases--they're willing to buy.
Draw some early conclusions. Your sales history is almost certain to contain surprises about your customers, and those surprises hold the keys to opportunity. For instance, some pet stores are seeing unexpected upticks in sales of items related to backyard chicken flocks. Nurseries are seeing increases in sales of vegetable garden supplies. In some regions, where retail gift shops have been forced to close, longstanding outdoor or sporting goods stores are seeing a surge in sales of gift items. Where you see shifts in buying patterns, adapt your offerings to address evolving customer preferences. You just might open a new niche and ride a market trend to increased sales and profitability.
Test your premises. Don't focus on what isn't selling in your business; focus on what is selling to your customers, and then test how you could sell more of whatever it is people are actually buying.
You don't have to upend your business to see if a change of course might work wonders. For example, no one would advise a pet store manager to bet the farm on a resurgence of backyard chicken flocks, but if sales receipts show growing interest, why not test the market with well-positioned displays, how-to seminars, and communications that promote chicks, coops, books and related items?
Talk to loyal customers. If you're uncertain whether the sales surge you've seen is a one-time fluke or the beginning of a trend, talk to your loyal customers. For example, by listening to their audiences, symphonies and museums across the country have learned that memberships and season ticket sales are up because--especially in the current environment--customers desire the steadiness of institutions and events that they value, trust and can escape into. Many of those same organizations feature the words of their strongest supporters as they invite more patrons into the fold.
Don't wait for change: Make it happen. Begin today to study what is and isn't selling. Then find one or a few pockets of growth, verify your findings by talking with customers, and take action to adapt your business to changing market tastes and trends. What's to lose? The only way your business will experience different results is by doing things differently. Let your customers lead the way.