Make Customer Trends Pay Off
An important aspect of any business is identifying and reacting to trends; then laying these trends over your demographics in order to manage for peaks and valleys. This has been a normal approach for me when conducting a financial analysis on turnaround clients.
This week I was invited to speak to the Helena Business Association. They are a great group of business owners across a spectrum of disciplines: accountants, HR professionals, lawyers, retailers and eye doctors, artisans and contractors, a barber shop and an embroidery company as well as some technology and a broadcast radio group. One thing we all agreed on is that their businesses all have cycles and trends. Most have seasonal trends and some have trends that go all the way down to days of the week. I asked them to consider their own company's trends and then we discussed as a group ways to drive traffic for all business in this popular Alabama community.
Let me preface by saying that many of the ideas we generated were great, but you can't put them out there and just wait for the traffic to knock down your door. Unfortunately that rarely works. But for the sake of argument let's consider the local grocer. Wednesday is traditionally the lowest retail volume day and this holds true for retail grocery in particular. Overhead costs are fixed. You pay them whether you are doing lots of business or none. So you reduce your costs and have fewer people on the schedule, right? Well most grocery companies across the country have adopted Wednesday as senior citizens day. Some offer discounts, put out coffee and cookies, and market specifically to this community. Why? Well, seniors are notoriously loyal and generally follow a specific routine which improves Wednesday revenues for retailers.
So here are some steps to follow regardless of what you do:
- Trend your business back for three years. If you don't have three years, use what you have and try to find some industry specific data as a benchmark.
- Apply this trend forward. Be careful to look at days of the week. If last year you had a fantastic 10th of June remember it was a Friday and this year that's a Sunday.
- Map paydays. You may have a major employer that pays off cycle and creates a different trend for you. If you don't know the dates figure on the 1st and 15th as being paydays.
- Look for the valleys and see if there is a demographic you can target during this time. For example, if June is a low month, many families with school age children go on vacation. Target an older or younger group that prefers not to vacation when the kids are at the beach!
- Document your results against plan and you will have the necessary tools to manage the business better during the valleys.
Use these steps to drive revenues or manage costs, both of which can help you improve the bottom line.
GLEN BLICKENSTAFF | Columnist | CEO of The Iron Door company
Glen Blickenstaff is the CEO of The Iron Door company, which makes high-end doors and windows. Glen has a track record of turning around and managing retail, building and financial companies.