As we move into the recession of 2008 we, as small business owners, need to concern ourselves with what people will still buy during a recession. People are worried. The companies they work for are considering cutbacks in head count and bringing in a budget hatchetman in CEO or CFO positions. Due to the inflation that’s occurring along with this downturn, they’re seeing their purchasing power decline. What can we focus upon in order to make more sales during this recession?
First, we must understand that because people are worried by these trends they will spend less vigorously than they did during the good times. They will be bargain hunting and looking for a great deal. The more expensive the item the more time they’ll spend on their buying process. Our goal must be to allow them time to comfortably choose our products while remaining their first choice.
In some cases, I’ve found offering a faux discount encourages sales. For example, I put a base price of $29.99 on a product that I was previously selling at $19.99 and then offer a “limited time” 25% discount. By boosting and then discounting the price I make more but the customer thinks they’re getting a deal.
Another key point to consider is that people will be in maintenance mode. They will be more likely to seek to improve or repair what they currently own rather than going out and buying new things. For example, one of my online stores is in the auto accessories area and it has seen a very nice increase in sales over the past few months while my high end electronics dropshipping operation has seen a significant decline.
Another trick is to repackage. Food companies do this all the time. Place a smaller, and more profitable, quantity of an item in a package. Build value packs that retain profitability while creating the illusion of a good consumer value. Along the same train of thought, link a discounted purchase of an item to a subscription that insures that the consumer becomes a steady stream of income.
During a recession people tend to become value consumers. Find ways to increase the back end value of your products by offering low cost customer services. This helps generate positive feelings about your business and encourages additional purchases. Your competitors who cut back on customer service won’t know what hit them.
The bottom line is that even during a recession people will still have the same needs and wants as they had during stronger economic times. They will still spend money when they get it although they will be more cautious. Therefore you have to tailor your selling proposition around more immediate needs, such as maintenance and replacement products, rather than products that are seen as a luxury or optional.