The economy is making the headlines lately, and not necessarily in a good way. While it might be a busy time for some HVACR Distribution companies, we know the good times won’t necessarily last. The most successful HVACR Distribution companies will be the ones that prepare for an economic decline.
While some people have been anticipating an economic decline for a few years now, the signs are starting to appear. There’s a lot more volatility lately. And on December 24, the stock market saw the largest Christmas Eve drop in history. Yes, the market bounced back in the following trading days, but that big drop is one of several indicators that we could see an economic downturn in 2019.
The question you should be asking is: “Is MY HVACR Distribution company prepared for this economic shift?”
Many aren’t. And it could hurt in the same way that it hurt back in 2008’s “Great Recession.” Fortunately, there are 5 Recession Insulation Strategies you can do right now to get ready:
Recession Insulation Strategy #1: Choose Not To Participate
Yes, this one might start off a little crazy, but it’s a powerful psychological “hack” for you, your employees, and your customers. Simply decide to choose not to participate in the recession. When you hear your employees or your customers talking about the declining economy, assure them that your company isn’t participating in the recession in the same way that others are. You’re NOT tightening your belt; you’re NOT cutting back. Rather, you’re continuing business as usual and are expecting to be busier than usual.
Communicate this to your employees to give them confidence, and have them communicate it to your customers.
Recession Insulation Strategy #2: Ramp Up Your Service
You may choose not to participate in the upcoming recession, but your customers might be making cutbacks. This could include consolidating their suppliers and deciding who to continue using. Be the company that they choose to continue using by increasing your level of service.
Increasing your service does not necessarily mean increasing the number of products that you sell; rather, it’s all about increasing the value you provide to customers.
- Speed up order-taking
- Speed up delivery
- Get to know the people who are ordering and make them your allies
- Make recommendations
- Add value
Don’t just drop off your latest catalog or deal sheet and hope they’ll buy; become so service-oriented that they would HATE to lose you as a supplier.
Recession Insulation Strategy #3: Help Them Get More Customers
What do your customers want? They want more customers themselves, right? You will become an invaluable supplier by helping them get more customers.
This may not seem immediately feasible but here’s one simple way to start: bring in a home services marketing expert for a lunch-and-learn or after-hours training session, and invite your customers to come and learn how to get more customers.
Do this regularly, and your customers will come to see you as not just a supplier but a key part of their entire business!
Recession Insulation Strategy #4: Educate Your Customers On How To Make More Money
There’s a good chance that your customers are using some of your products and services but not all of then, and, they’re probably not using all of your products and services as extensively or effectively as they could be.
Could they add a new product to their existing offers to make more money? What if they were able to use the products they already bought from you in a different way to make more money?
Most customers likely have untapped opportunities here that are low-hanging fruit for you to help them “squeeze the lemon” to make more money.
- Create educational material that helps them see all the possibilities, including tips sheets and how-to videos for their techs
- If possible, do a ride-along with your best employees’ techs to watch how they use your products and to advise on more efficient ways to deploy what you sell
- Sit down with their sales teams for demonstrations and show how your products and services can be used in the sales process to close more customers
Recession Insulation Strategy #5: Lock In Your Customers With Long-Term Purchases
When your customers are thinking about which suppliers to continue working with and which ones to stop working with, one of their decision-making factors will be who they are “locked-in” with. You can solidify a long-term relationship with your customers in a few ways to lock them in and keep them loyal to you no matter what the economy does. Consider the following:
- Offer discounts for larger orders up-front, even if they take delivery later in the year. That way, you generate the income now, and you can deliver later, but your customer is locked-in because they have already purchased
- Offer discounts, bonuses, and other incentives for customers who buy a certain amount. This is a lot like the “buy 10 coffees, get the 11th free” that you might see at your local coffee shop. If the incentive is attractive enough, customers will stick with you through the 10 purchases to get that 11th free.
- Membership plans that offer discounts and incentives over and above what you normally give. Make these annual membership plans automatically renewing and treat your members with the highest level of service
I’m no economist, but the signs are clear to me: we will likely see a downturn or perhaps even a recession very soon. When economic downturns occur, it becomes an “only the strong survive” situation. Is your HVACR Distribution company strong enough to survive? These 5 strategies can help to solidify your relationship with your customers and position yourself as an indispensable supplier that they rely on no matter what the economy is doing.