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As a new decade emerged in January, the United States celebrated 127 consecutive months of economic expansion. Despite this ten-year heyday in the rear-view mirror, many leaders in the business world expressed a grim outlook. In February, a study reported in the Harvard Gazette revealed that business leaders saw the U.S. as unprepared for an economic downturn.
It wasn’t long after this report emerged that the domestic COVID-19 outbreak cemented what was already suspected: Many businesses are ill-equipped to face an economic crisis. The situation has many in the business world wondering, “How many stores will actually go out of business in 2020?” While the future is largely unpredictable now, retail businesses are doing what they can to increase their chances for survival.
We can’t anticipate the future of the market
The U.S. has experienced 17 recessions since its founding. Many economists account for this ebb and flow of economic success and decline as cyclical market behavior. Even though these cycles are inevitable, they are as of yet, unpredictable.
Unforeseen societal events typically trigger economic downturns. Since businesses are vectors of economic activity, this makes them particularly vulnerable to market circumstances (especially in a global marketplace). Even the most optimistic entrepreneurs must do what they can to prepare for a global economic slowdown. Who could have predicted the Dust Bowl in the 1930s or the subprime mortgage crisis in the 2000s?
Sales channel diversification is a powerful weapon for fighting against economic downturn. Remember when Walmart was the king of everyday retail? With the emergence of a globalized online economy, consumer behavior shifted. Today, American households rely on Amazon the same way the previous generation relied on Walmart. Seeing this shift in their market share, Walmart branched out into the electronic commerce space — to accommodate the new expectations of shoppers.
Do you want to create a future-proof business? One of the best ways to prepare for an economic downturn is by taking an offensive approach rather than a defensive one. Now is the time to adopt practices that diversify revenue streams and drive customer loyalty.
Here are some steps you can take.
Overcome physical limitations by targeting a virtual audience
The Internet has opened up a whole new realm of possibilities for business owners. Through it, they can leverage digital tools that help save money and diversify revenue streams. Doing away with operational overhead is a major way businesses can remain resilient during times of economic downturn. For example, online shopping carts remove the financial burdens associated with running a physical store. For most merchants, offering a hybrid of in-person and online purchasing options can recover some of the in-store costs.
Furthermore, with emerging digital technology, businesses are no longer limited to offering tangible products. Netflix, for example, once mailed DVDs to its customers. Today, the company has evolved to sell a subscription-based streaming service that eliminates product manufacturing and postage costs.
But, there’s no need to “throw the baby out with the bathwater.” Most people don’t realize that even in 2020, customers can still select an option to have DVDs delivered to their home. Netflix still serves loyal customers who prefer the DVD-by-mail experience while including people who don’t. That being said, the singular choice to offer another, more efficient option completely changed consumer tastes. With it, the entire industry changed, and Netflix became an economic influencer with lower overhead and unprecedented, global market reach.
Digital options are more affordable and diverse than ever
Like in the case of Netflix, those in the technology sector have embarked on developing cloud-based Software as a Service (SaaS) products. SaaS products are typically built for small businesses and are designed to be affordable with high return-on-investment (ROI). They simplify day-to-day operations and allow business interactions to be handled virtually and in real time. This technology enables powerful digital resources for businesses, such as subscription-based models, online consultations, affiliate marketing, lead generation and paid content.
Your existing customers are the most cost-effective target audience available. They’ve already demonstrated their suitability by buying into what you’re offering, so consider opportunities that you might not have for getting customers into a recurring buying process. We’ve written about this at great length in the past and provide an abundance of solutions for businesses looking to explore a subscription-based business model.
Major retailers have taken their eCommerce initiatives a step further by implementing subscription-based business models. Walmart and Target are both prime examples of this. While providing value and convenience to their customers, these stores benefit from the powerful impact of recurring revenue.
Target allows customers to set up recurring orders on everyday necessities at a 5% discount with free shipping. In 2019, Walmart rolled out a subscription service that charges an annual membership of $98 for unlimited same-day grocery delivery. Lest we forget Amazon Prime, which has evolved to include a monthly payment option, in addition to their initial annual plan.
Virtual meetings and online consultations are a convenient alternative to in-person meetings. Customers can schedule online, meet in the comfort of their own home, and spare themselves the travel time (and expense). This even works in industries like mental health (BetterHelp.com), where professionals develop long term relationships with their clients over video.
Lead generation is a “high touch” marketing tactic made simple and efficient through the web. The process starts with online visitors checking out your website. Potential customers engage with your website, videos, emails, content or other online assets based on their interests. Customer relationship management (CRM) systems such as Salesforce, capture their information and initiate an automated process called, “lead nurturing.”
In an analog world, the lead nurturing process relies on a salesperson to make follow-up calls to a prospect. Through automation, lead nurturing happens without the need of a salesperson based on a workflow that you set up once according to your preferences and professional insight.
Automated lead nurturing delivers strategically targeted messaging based on a customer’s interactions. These messages are triggered by certain activities (or inactivity) throughout the customer journey and greatly increase the chance of a sale. PowerSync specializes in connecting the world’s most popular CRMs with the best website platforms, to make this process even more intuitive.
Affiliate marketing programs are another “set it and forget it” opportunity for modern businesses to make money effortlessly. Through this approach, businesses leverage the internet to receive commissions when someone purchases a product from a unique link on their article or website. This allows companies to rake in untapped revenue by enriching the market reach of their exceptional partners.
For years, businesses have been creating useful content with the goal of drawing readers in and bolstering sales. Social media platforms like Facebook and LinkedIn have simplified the process. For an affordable cost, users can boost content and choose demographic settings that get it in front of the right audience.
Expand on your current business model
Think back to the Amazon vs. Walmart example. While Amazon redefined the shopping experience in many aspects, Walmart found ways to adapt. Like many other brick-and-mortar retail giants, it joined the online economy without abandoning its physical storefronts. The expansion paid off, too. In the third quarter of 2019, Walmart’s eCommerce division alone grew by 41% year-over-year.
Other big brands like Target and Best Buy have embarked on lucrative eCommerce opportunities. Meanwhile, these brands still recognize the importance of delivering memorable in-person experiences. When done right, one experience can feed the other to create cohesive brand interactions that boost profitability.
Whether they take place through a desktop computer, mobile device, text message or brick-and-mortar store, all interactions are connected. In fact, omnichannel marketing is an eCommerce buzzword that stems from this concept. It describes cross-channel communication that provides a seamless experience. This fosters a positive brand perception that can lead to higher sales volumes, even in the face of economic downturn.
Choose the right electronic commerce platform
Choosing the right platform to build your online store on is one of the most important decisions you will make. If you are convinced that joining the eCommerce industry (or beefing up your online efforts) will help protect you during an economic downturn, it’s time to get going.
Many successful merchants have chosen Adobe’s Magento platform for their eCommerce websites. Magento offers abundant features and flexibility. It is especially appealing to subscription businesses because of PowerSync’s mPower subscription management extension that provides a comprehensive solution for handling even the most complicated recurring orders.
Partner with an experienced eCommerce developer
Breaking into electronic commerce requires more than just setting up a product page on an eCommerce website. When launching an online store, it is well worth the investment to partner with a knowledgeable developer who understands the ins-and-outs of the eCommerce business.
PowerSync develops highly configurable merchant solutions designed for growth. We have worked with many businesses to help them discover avenues of digital profitability to help their enterprise withstand the test of time. We mitigate stress and offer a real and tangible strategy that will give you the best chance for survival when an economic downturn strikes.
Schedule a time slot on PowerSync’s calendar for a complimentary consultation to discuss your business strategy.