LAUNCHING A NEW product when consumer confidence is at an all-time low is daunting enough for large companies. But for small businesses, if the product doesn’t take off, it could be devastating.
“Even if what you’re offering is packed with value, consumers just aren’t willing to spend money on anything nonessential these days,” says Jeffrey Cornwall, the director of the Center for Entrepreneurship at Belmont University in Nashville, Tenn.
Even if you think the timing may be just right for introducing a new product or service, offering a perk or two to customers can’t hurt, says Cornwall. Here are four incentives you can offer to improve your chances of landing new clients or customers during tough economic times:
When cash-strapped customers aren’t familiar with your company’s products or services it’s likely they’ll resist committing to a lengthy contract or be willing to put down a costly retainer. To accommodate such concerns, be as flexible about the terms of your business arrangement as you can afford – without overstretching your business’s budget, says Gregg Landers, director of growth management at CBIZ MHM in San Diego.
Instead of holding people to year-long contracts, consider offering contracts for shorter periods of time or do away with the time commitment entirely. Allowing customers to cancel their service or return an item under certain circumstances and within an allotted period of time can also help. Hyundai Motor America recently pledged to allow customers to return newly-purchased cars if they wind up unemployed within a year. In January, the auto maker posted a 14% year-over-year sales gain, a boost the company largely attributes to the offer.
During an economic downturn, it’s vital to ensure customer’s interests and allay their fears, says Landers. One way to do so is to guarantee your product. “If you’re trying to enter a new marketplace and you’re not really well-known, [offering a guarantee] is a way to get customers comfortable to go with you,” he says. Just make sure your product is fairly foolproof before doing so, or else it could cost you.
Smaller, less expensive offerings
Offering an entry-level package comprised of fewer products or services is a good way to attract customers who can’t afford larger orders, says Landers. Another idea is to unbundle certain packages and sell your products or services individually.
Diaz Nesamoney, chief executive of online video ad firm Jivox started unbundling his company’s products just after launching a year and a half ago. “We started noticing that we were losing the customers who only wanted one or two of the services we offered,” he says. Instead of charging between $250 and $500 a month for a suite of services, the company sells its services individually. “By giving them an option to pare down now, perhaps as the economy gets better they’ll spend more,” says Nesamoney.
One of the most proven methods for inciting customers to buy your company’s products or services is to simply charge less. Ultimately, that means figuring out how to produce your products or services at a lower cost so your business can afford to do so. To win over an early client, Christopher Mason, managing director of Branding Brand Communications , a marketing and public relations firm in Pittsburgh, knew he’d have to do more with less. So instead of charging the typical $250,000 industry service fee, he charged just half that amount and opted for a percentage of the client’s sales. “If you’re a start-up company trying to get your brand out there, you have to think harder and be willing to work for every penny,” he says.