During good times they spend money on any new fad or idea that they hope will rapidly grow their business. In dark times, like what we are experiencing at present in certain economies, they go into their shell cursing all of those supposed great ideas.
Cutting back drastically on marketing is a bad idea. When times become good again, the market will only remember those who were always present. Stopping spending on marketing altogether is the ultimate sin a retailer can make.
If you treat marketing as an investment, instead of an expense or a gamble, you start to make smarter decisions. Yes, there is risk involved. The more aware of where your retail business is at in the business life cycle or economic cycle, ensures that you spend your marketing dollars on higher return investments.
With less people walking through your doors, the worst thing you can do is spend more cash in the hope that this trend will dramatically change. Holding sales events to drive customers is also a bad idea, because you reduce margins along with increasing the volume of transactions. Higher volume of transactions means more stock to process and more people to process the sales; this leads to higher wage costs and low gross margins which equal death.
Now is the time to move most of your marketing dollars from customer acquisition and brand building activities to customer retention strategies i.e. your customer loyalty program. Here are some of the things you can move your dollars into;
- Increased floor coverage especially in peak times: I can hear you now "This is not marketing spend". Yes it is. Sales and marketing is the same thing - they both try to get more customers. Having adequate floor coverage increases conversion rates and also average customer spend.
- Commission for sales staff: I have seen commission programs being implemented that have doubled conversion rates overnight, and at most a couple of months. If you want to change the behaviour, change the motivation.
- Loyalty program: Sign up as many people as you can. If you can have 25% of your business being repeat loyal customers you can ride through any economic cycle. Your friends remember you in good times and in bad.
- VIP events: A quick way to inject some much needed cash in the business, and also to reward those who are loyal to your business. Make sure when you have a VIP event, that you extend the invitation to 2 of their friends (helps increase your database).
- Commission/prizes for loyalty program sign ups: Reward your team for building one of the best assets your business can have.
- Retail strategy Incentives for the profitable loyal customers: Even if you have a large and healthy database, within this is are sub groups of profitable, break-even and loss making customers. Focus on the profitable that drive your business, and give them incentives to spend more within your stores.
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