Customer retention during market shifts is a challenge—your business can plan based on strategic predictions, only to confront the unpredictable. But while they present a challenge, market changes can actually strengthen businesses that are flexible, responsive, and diversified. Here’s how to thrive in a dynamic market environment.
What you need to know
- Try to forecast market changes before they happen and analyze their impact when they do by collecting data.
- Prepare contingency plans for market downturns, but try to diversify your products and services so if one part of your business is struggling, your other parts can support it.
- Embrace adaptability as a core business strength and the foundation of company culture.
Identify market changes
While unpredictable changes tend to have the greatest effects, most market changes are predictable. Tracking tools based on big data can tell you a lot about what’s coming for your finances ahead, and macroeconomic changes like interest rate changes are often known ahead of time. Product and marketing decisions by your competitors can also provide insight into their view of the market.
For unpredictable changes, it’s important to keep your business strategy flexible so you can quickly identify what you need to do to adapt. Operating too rigidly during major market shifts can be fatal for your business.
Analyze the impact of market shifts
During and especially after a market shift, an impact assessment can help inform your management decisions during future market shifts.
You can also do a predictive assessment based on potential trends. Use this data to price products and guide strategy diversification decisions, but remember that customer behavior is often unpredictable because it’s guided by so many external factors. Consider what changes in customer behavior will actually affect your business, and take a holistic view (beyond economics) of where those changes come from.
Plan strategically, but flexibly
A key component of strategic planning is small business contingency planning, which involves considering consequences for every scenario. Keep your plans flexible so you can adapt to specific conditions. Without a contingency plan you’ll merely be reacting to market changes rather than adapting.
Leverage technology
Adopting new technology while adapting to an unfavorable market can be tricky. Beyond the upfront cost of transitioning to new applications and platforms, using tech that doesn’t meet your needs can lead to unexpected business expenses, so it’s important to choose applications that’ll support you at every stage of growth.
Invest in market, customer, and social media analytics applications to collect data and inform your earnings forecast. Streamline your operations with project management apps, cloud based services, and automation tools.
Diversify your products and services
Offering a wider range of products and services can mitigate risks associated with market changes. Diversification in small business involves adapting your business model to market needs. You can do that with offerings that complement your primary products and services or by selling something entirely different to your existing customer base.
The first step in diversification is researching the potential market for newer products. Ask your customers what they need. If your product is new, develop a prototype and test the market. You can fund that with a business line of credit to have additional funds available to mass produce if it sells. If not, you won’t have the financial burden of paying off a loan you didn’t need.
Be prudent with your finances
Identifying market changes and analyzing their impact on your small business are two basic building blocks of a financial management strategy, but there are other important—and just as basic—steps to keep track of.
Be sure to maintain cash reserves and repay debts on time to avoid expensive interest payments. Monthly cash flow and income statements can help you identify trends that may require a business strategy pivot.
Build a responsive team
An organization can’t be successful for long unless it’s flexible. For this reason alone, it’s important to keep up with technological innovations and market changes in your industry, but flexibility within an organization starts with your employees.
Having flexible working schedules and conditions, regular training, fair wages, and continuing education opportunities will support your employees as they navigate changes, allowing them to create an adaptable work culture. Allow employees to make decisions about their own work and the company where applicable, as diverse opinions will help you run your business during difficult periods.
Customer retention and acquisition
Gathering data on your existing customers over a long time is important for understanding their changing preferences and economic behavior. Acquiring new customers will also help you find emerging customer segments or trends as they happen.
You should do what you can to increase the lifetime value of your customers, which will keep revenue up over time. A steady stream of new customers will support your company through market changes, especially if your business type relies more on one-time purchases. You should seek to retain and grow your customer base, as a diverse base reduces your dependency on any single segment, increasing your flexibility.
Keep your business prepared for anything with a Bluevine Line of Credit.
