It Is Time To Recession-Proof Your Business
Do you know how to recession-proof your business?
I am probably one of the few business owners who actually likes a recession, in some cases, prefer it over a booming economy. I know that may sound crazy, but when you really consider the advantages and disadvantages of both a great and poor economy, a poor economy can be extremely advantageous to a strong company. A good company should always be ready and prepared for anything from an economic downturn to a true economic recession.
A significant percentage of companies hiring The DiJulius Group for customer service consulting have gone through incredible growth in the past few years and now need to fix their company’s customer experience. They have lost their way, strayed away from their core values, and need to regain the soul of their original startup.
Nothing Ruins A Company’s Customer Experience Faster Than Rapid Growth
Rarely does a company go through rapid growth without having their customer experience suffer significantly? As a result of a booming economy, cash flow is strong. Companies experience rapid growth and thus, need more employees. Couple that with the Great Resignation and you have an “employee market”. An increase in job opportunities causes an increase in employee turnover as employees seek and get “better offers”. In the next 6–18 months, you may start to see The Great Layoff.
Imagine your company growing, expanding, and needing more employees—a lot more, maybe hundreds more. How picky can you be when you need 400 new employees within the next few months? Locations have to be opened. Demand for your product and services is exploding. The pressure is on to get people hired and trained.
This is where most companies start compromising their hiring. Even worse, they may start fast-tracking new employees through training. That’s a mistake. What has always made you unique is the people you hired, how well they were trained, and the great customer experience your company delivered. In other words, the key attributes customers look for. If you give in to compromises, you will have high turnover and low morale and your customer experience will be so inconsistent it will become a liability instead of your strongest competitive advantage.
In these jittery economic times partly stemming from the Covid-19 pandemic, companies are compromising by keeping underperforming employees and hiring new employees that they typically would turn away. The higher percentage of new employees always leads to a dramatic decline in customer service. Growth + high turnover = businesses trying to serve more customers with fewer people. Never a good combination.
Of course, growth is great when done right. But don’t succumb to the growth trap. You can’t compromise your hiring, training, and the customer experience your company delivers. Getting hired at your company should be extremely hard. It is only fair to your existing employees that you stay extremely selective on who gets allowed in. People need to earn the right to be a part of your culture and legacy. Your goal should be that every long-term employee considers their decision to join your company as one of the best decisions of their life.
A Downturn Is A Terrible Thing To Waste: Managing Uncertainties, Finding Opportunities
Hidden opportunities can be found in preparing for a recession. The success stories of the past decade were born from the financial crisis of the Great Recession (2007–2009). Companies were forced to reinvent themselves, out of desperation for survival, and creatively found new revenue streams and opportunities by revisiting the fundamentals so heavily focused on during the early years. Today this process can include:
Reinventing Yourself – We all enjoy it when the economy is booming, which I like to call the “busy bus.” At times it seemed like a new business would just fall into our laps, with very little effort. As a result, it made many companies content and overconfident, no longer fearful of a cash crunch. They lost focus on the fundamentals of business such as their culture, employees, customers, and the experience they should consistently provide.
Working Harder – Success should be hard. It should require long hours, creativity, and sleepless nights. Obtaining new business should be about researching the company and the decision-makers’ hobbies and interests. Keeping existing customers should require regularly connecting with them, obsessing about their satisfaction level, and genuinely thanking them for their business. Such world-class service actions result in a continuing relationship builder.
New Revenue Streams – This is where the biggest opportunities are now being reported. Businesses having difficulty selling their stale products and services have invented new revenue streams with many times lower, yet many times more profitable, price points. What at first looked like a bad time ended up being the ideal time. Companies have been able to connect more deeply with current customers and at the same time, increase customer acquisition. More importantly, they provide solutions to customers’ needs. These new revenue streams, which would never have been created in normal economic conditions, now represent a larger percentage of their revenues.
Customer loyalty is every company’s greatest asset in any economy
Experience is your Marketing – Providing an experience versus making a sale, means quitting going after new business. Adopt the actions of a customer service leader and redirect your marketing budget to focus on the loyal customers who are trying to give you more of their business. Go deeper with them, build stronger relationships, anticipate their needs, follow up, say thank you spontaneously, and fix what needs fixing. Fight for everyone in your customer base and watch your cash reserve grow.
Staff “buy-in” – When there is speculation about an economy turning, that is the best time to act and make the necessary changes. Educate and remind your employees about what happens during a down economy. They may have been a victim of the Great Recession and almost certainly knew someone who lost a job or had to take a significant pay cut. Employees have become more willing to cooperate during tough times, banding together and making sacrifices to step up and fight for the future of their company and their careers.
A Recession Is Like A Business Enema
Less Competition – Even a turkey can fly in a tornado. In an economic climate where demand is up, leadership becomes more focused on optimizing sales and can become careless about the details. Even poorly run businesses will flourish in a great economy. The American Customer Satisfaction Index reported consumer happiness dropped in 2017 and has not risen since. Now when the economy softens, the tornado stops and a lot of turkeys start falling. Poorly run businesses are exposed and eventually go away. This means significantly less competition for the surviving businesses, and an opportunity to polish your marketing strategy and pick up market share.
Employer Market – The current rate of employees quitting is the highest it has been in the last 15 years. When the economy slows, the pendulum swings from an employee market to an employer market. More talent becomes available for existing businesses to choose from and they can build their culture on purpose versus adding warm bodies like many have done recently.
Efficiency Back in Style – If you act as if a recession is coming, you start finding more cost-effective ways of trimming fat, reducing downtime, increasing staff productivity, and eliminating positions and people upon whom you were compromising. These are things we all should have been doing all along and are critical steps in a recession readiness plan.
In times of uncertainty, whether the recession is far or near, best to be prepared for it and benefit either way.
John R. DiJulius III, author of The Customer Service Revolution, is president of The DiJulius Group, a customer service consulting firm that works with companies including Starbucks, Chick-fil-A, Ritz-Carlton, Nestle, PwC, Lexus, and many more. Contact him at 216-839-1430 or email@example.com.
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