Are you worried that an economic recession is on the horizon? You can bet every business owner is.
Certainly, the last two years haven’t been easy on the economy. The COVID-19 pandemic took almost every business to the cleaners. The Russia-Ukraine conflict is adding salt to an already wounded economy.
Officially, the economy is not in a recession, but there are signs of a downturn. During economic turmoil, consumers reduce their spending. This directly affects businesses.
To ensure your business stays afloat, it’s important to focus on customer retention. In this article, we’re sharing some of the strategies you can use to retain customers during an economic downturn.
Reach Out to Your Customers
The first practical step is to establish communication with your customers about the economic situation.
Let them know that you’re worried about the economic downturn, and acknowledge that it will likely influence their future spending on your business. Most importantly, reassure your customers that your business is open to making changes to accommodate their budgets.
Also, use this as an opportunity to ask for feedback on how they would want your business to meet their needs during this time.
Take a Flexible Approach with Payments
Every business owner wants customers to make payments on time, or once an order is delivered. Some will even require customers to make upfront payments.
Regardless of whatever billing strategy you use, during an economic downturn it’s wise to be flexible; otherwise, you will lose loyal customers.
A flexible approach could mean giving customers more time to make payments or developing personalized payment plans. For example, if you’re a subscription-based business, don’t cancel a customer subscription on the renewal date. Extending the service by a few days is a show of goodwill and can make a big difference in your quest to retain your customer base.
Revamp Your Loyalty Program
Roughly 90 percent of businesses have a loyalty program in some form. If yours has worked great over the years, you might be tempted to keep it unchanged.
However, during harsh economic times, consumers want the greatest value for their money, so your loyalty program might not be enticing enough. This is why you need to revamp it.
Some of the most successful loyalty programs embrace personalization, which is what you should do when refreshing your program for customer retention during a recession. Know the kinds of rewards your customers want and redesign the program with their needs in mind instead of offering the same rewards to everyone.
Increase Customer Retention to Beat an Economic Downturn
Shaky cash flow is a leading cause of small business failure. Yet, it’s exactly what’s bound to happen to most businesses when consumers cut their spending during an economic downturn. But if you’re able to maintain a high rate of customer retention, you will be in a good position to achieve cash flow stability and save your business.
Do you need more small business advice? Stay tuned to the business section of the blog.