A number of businesses aren’t too optimistic about Brexit: between Q2 and Q3 2016, overall confidence plummeted 16 points, and “The Smith & Williamson Enterprise Index” found that 14 per cent of the entrepreneurs it surveyed had shelved their plans for growth. The natural reaction for margin-conscious small businesses is to raise prices. But is it a reasonable one?
Again, it’s important to remember that Brexit hasn’t happened, it may not happen for a while, and when it does, it likely won’t be a wholly positive or negative thing. After all, it was predicted that a leave vote would tank the manufacturing industry, but it’s actually at a ten-month high. The simple, boring truth may be that it brings about neither utopia nor the apocalypse. Those who celebrate the absence of EU red tape may also suffer from restricted access to the single market; those who lament the withdrawal of critical international business funding may be ideally placed to leverage new trade opportunities.
There will be opportunities, and there will be frustrations, and the most successful businesses will try to maximise the former, and minimise the latter. So in a time of fluctuating consumer confidence, tinkering with prices in either direction isn’t the best way to accomplish these goals. In a time of speculation and uncertainty, the best thing you can do is concentrate on concrete, documented things: data, habits, behaviours and trends.
The price is right…or is it?
How you do this is, of course, up to you, but strategic use of tools can help. Consider customer relationship management (CRM) software, for example: through much of its history, it has been perceived as a glorified database, and for much of its history, that perception was not exactly wrong. Modern CRMs, however, are more sophisticated, and offer better options to companies than simple price increases.
Customer data can be revealing. Where a buyer’s transaction record provides a quick snapshot of their transactions, a CRM tool will be able to discern whether the customer is positive or negative, committed or tentative, loyal or wavering. This knowledge lets you know who to target, and, in a very broad sense, how to target them. Naturally, you need a little more to go on. Where you can’t undercut a competitor – and certainly not if you’ve raised your prices – you can offer specificity of service, even if you can’t offer the cheapest possible service. In the long run, you may even be able to offer a better deal through up or cross-selling.
But this requires further knowledge. Essentially, you have to understand how a customer’s transactions relate to one another. Business intelligence software is particularly useful here: if you need to know when to create a tailor-made product package or when to send an attractive discount voucher, it can help – especially when financial realities prohibit you from offering low-cost deals en masse. For example, if you’re running a food and drink company and you notice that a key account buys both sesame seed burger buns and tomato sauce in large quantities – but only during the warmer parts of the year – the technology will indicate that a bespoke “barbecue” offer will be a winner for this individual customer during the summer months.
Equally, if customers aren’t buying, the software is typically able to discern the reason why – be it lower budget or an extended flirtation with a close competitor – well before it becomes a more serious problem. Damage limitation is often as valuable as maximising profits.
Beleaguered believers and regretful remainers?
None of this is to say anything so absurd as “CRM systems and business intelligence tools will save your company from Brexit” – not least because there is not, as yet, any real indication of what Brexit actually is. At this juncture, Brexit isn’t so much the issue: it’s the uncertainty surrounding it. To combat this, businesses need to respond in measured, thoughtful fashion: to insure themselves against potential danger by maximising their profits.
Slashing prices or raising them in a blind panic is a poor means of accomplishing this. More than anything, success in the post-EU UK is a matter of attitude. You don’t necessarily have to like it, or to believe that it’s a good thing, but in some form or another, it’s happening. Improving your offering to customers is an excellent way to ensure that you’re prepared for it.
Paul Black is CEO of sales-i.
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