In this third instalment on how to recession-proof your business, I provide nine more strategies. This time, the focus is on developing the right mindset to not only survive but thrive during economic downturn, and ways to maximize your referral network.
Develop a Mindset of Steel
Most of the flooring industry — and businesses in general — adopt a ‘survival’ mindset when the market tanks. They’ll play to survive rather than to win. It happened in the last recession and it will be the case in the next. However, it doesn’t have to be this way. I personally worked with many floor dealers who not only survived the last recession but broke revenue records. Some scooped up the market share left behind by competitors who bit the dust. They didn’t do this by hunkering down to weather the storm. Rather, they did it by being bold and aggressive, and by implementing the following strategies.
1. In the last recession, the landscape was littered with the corpses of failed flooring stores. Assume the next one will be another extinction-level event and plan accordingly. This way you’ll be ready, whether it’s mild, severe or doesn’t happen at all.
2. An effective way to prepare yourself for the worst is to set out to better your best — create a new revenue set point. For example, if your maximum annual revenue has been $2 million, up it to $2.2 million. Then put strategies in place to make it happen. Now you’re no longer playing to not lose revenue; you’re playing to shatter your old revenue record.
3. Create new set points for your margins. When the market starts spiralling downwards, it’s tempting to cut prices. Big mistake. Instead, if your current margins are 45 per cent, your new set point should be 47 per cent. Put sales strategies and training in place to make that a reality.
4. Create new set points for closing sales. If you’re currently closing five of 10 quotes, your new set point should be six. Again, implement sales strategies and training to make it happen.
5. Don’t just limit yourself to these key performance indicators (KPIs). Create new set points for any KPI you want to improve upon during the next recession.
Turbocharge your Referrals
6. Use referral rewards. Every time someone sends you a referral who becomes a client, pay for them to go to dinner or the movies. Also, introduce each new client to your referral reward program by enticing them to your store with a (fill in the blank).
7. When a flooring installation is complete, let the client know you have a gift basket for them. When they stop by the store to pick it up, ask to take a photo with them and then post it on social media, your website and include it in your newsletter. Again, tell them about your referral reward program and then give them a (fill in the blank).
8. Ask clients if they know anyone who needs flooring right now. Write that person’s name on a $200 gift certificate along with a 30-day deadline. Let your client know that if they give it to their friend, they’ll get dinner for two when their friend cashes it in.
9. Promote your referral program in your print and digital newsletter, on social media and your website, and in your e-mail signature line.
Jim Augustus Armstrong is founder and president of Flooring Success Systems, a company that provides floor dealers with marketing services and coaching to help them attract quality customers, close more sales, get higher margins and work the hours they choose. To obtain a free copy of Jim’s groundbreaking flooring industry report, Stop Leaving Millions on the Table, visit FloorMillions.com. Jim can be reached at 530-790-6720 or [email protected].