4 Tips for Growing Your Retail Business During a Recession
The number of small business owners expecting better business conditions over the next six months fell by 8 percent, according to the National Federation of Independent Businesses’ December 2022 Small Business Optimism Index Report. This is likely due to the rising economic uncertainty small business owners face. You might even be one of these business owners. It’s no secret that in 2023, entrepreneurs will need to be increasingly strategic and thoughtful with how they run their businesses.
However, it’s important to note that it's possible to do more than just survive during an economic downturn. Based on observations from more than 21 million small businesses that GoDaddy serves, here are four tips focused on how to do more with less to help you grow your business in the year ahead:
1. Prioritize your existing customers.
With limited resources, focus on where you'll get the best return on investment (ROI) — which in this case is your current customer base. In fact, acquiring new customers costs five times to 10 times more than selling to a current customer. By gearing marketing and sales efforts toward existing customers, you can build long-lasting relationships and brand loyalty while simultaneously saving money. This will also benefit your business in the long run once the economy levels out.
2. Encourage your brick-and-mortar customers to engage with your business on digital platforms.
If you operate a storefront, offer incentives to motivate customers to interact with your brand across multiple digital platforms so you don’t fall into "out of sight, out of mind." This could look like providing a discount when a customer signs up for email/SMS alerts or doing small giveaways across your social channels. Interacting with customer across multiple touchpoints leads to further exposure and can help to increase sales transactions.
3. Entice customers to spend just a little more per transaction.
There are subtle and affordable ways you can nudge consumers to spend a little more. Incorporate a “Recommended Products” widget on your website. Experiment with shipping thresholds — e.g., provide free standard shipping on orders of $50 or more and/or expedited shipping on orders of $100 or more. For brick-and-mortar retailers, you can sell products at a slight discount when purchased in a kit or bundle to excite customers and influence purchasing decisions.
4. Deliver long-term and sustainable value to loyal customers.
Find ways to offer long-term value to the customers that are loyal to you, because many consumers notice when brands don't appreciate them. Surveys show 62 percent of customers feel the brands they're most loyal to aren't doing enough to reward customer loyalty, and 68 percent of customers don’t return to a business when they feel the company is indifferent about them.
Like your local coffee shop that offers your 10th drink purchase for free, can you create a simple loyalty rewards program to incentivize repeat customers within your business? Or perhaps your customers would appreciate a special discount on their birthday? Do some research to better understand your customers’ preferences and incorporate rewards that they will respond to best.
During times when wallets are tight, consumers are often more introspective with their purchasing decisions and shop at businesses that reciprocate appreciation. Creating a shopping environment where customers feel acknowledged and empowered, whether through prioritizing loyal customers, delivering long-term value, and taking advantage of various platforms for additional exposure, is a strategy that can help your business scale no matter how the economy fluctuates.
Kasturi Mudulodu is vice president of commerce products at GoDaddy, where people come to name their idea, build a professional website, attract customers, sell their products and services, and accept payments online and in-person.
Related story: Retailing in a Recession: E-Commerce Tips to Weather the Storm
As vice president of product at GoDaddy, Kasturi is a relentless advocate for customers shaping the future of omnichannel commerce — the ability to sell anything anywhere — for millions of small businesses around the world.