Grow Your Business in an Unpredictable Economy
Even the best value proposition does not make your business recession-proof. How can a business double-down in times of economic uncertainty? Begin with your data and then focus on growth. Here are six ways to grow your business in an unpredictable economy.
Want to Survive a Recession? Start With Your Data
- Map Your Metrics to Your Mission
Businesses of all sizes should be using data to grow – and be intentional about it. It is easy to overlook how to properly choose the right KPIs to drive growth. It is vital to map your metrics to your mission. The whole company can drive change to meet your objectives by bridging your daily operations with your financial goals. Begin with your strategic objectives and then break it down from a tactical point of view.
Choose a key expense category and identify an operational metric for it (variable expenses are usually the most important):
- Why is this expense critical for your success?
- How can an employee use this metric daily or weekly? Assign their name to this line item to build accountability, effectiveness and productivity.
For example: When you set your budget and/or forecast, most employees cannot control the numbers, but they can control operations that drive those numbers. If you are a salesperson, you cannot control whether the revenue doubles in the current year, but you can control how many cold calls you make each day. A salesperson can control the inputs that will result in the financial outcome that you want to see. Do these touchpoints have value to your key initiatives? If not, prioritize ones that do.
- Make Routine KPI Monitoring Easy With Real-time Reports
Metrics related to your company’s health are also essential to growing your business. Examples of these KPIs include:
Having instant insight into these metrics allows you to make operation decisions faster. When you want to grow your business in a volatile market, you should be checking in with these weekly, or even daily.
Related Read: Optimize Your Data With Real-Time Insight With Live Dashboards and ERP’s like NetSuite
- Identify and Profile Your Best Customers
Finally, a special note on profiling your best customers. You can identify your ultimate customer profile by getting to know your best ones.
Calculating your CAC and LTV normally gives you an average for your customers across the company. But the reality is you will have a chunk of customers that have a really long lifetime and then there will ones that churn very quickly. Plot out those customers that have been with you the longest. Are there similarities that you can pinpoint to profile them? Use that profile to know where to invest your time pursuing the most valuable customers.
The biggest mistakes entrepreneurs make with their analytics is being satisfied with averages, ignoring the drill-downs and forgetting about cohort analysis. Cohort analysis looks at groups of customers over time. It is behavioral analysis to examine segments of customers individually and the metrics that are related to them, including churn, CAC and revenue, for example.
Metrics narrowed down from a cohort of customers tells you sooner, rather than later, if you are making the right kind of progress. If you lump all of your customers together, you are just getting an average that tells you nothing.
For example, startups aim to make a service or product better, with the hope that newer customers will stick around longer than those customers that fall under the legacy category. The average churn may look great, but if they drill-down and all their newest customers have churned within the last three months, they should be asking what they are doing wrong and fix it right away.
Engage and Strategize to Double-down and Grow
- Deepen Engagement, Cross-sell and Upsell
It costs a business significantly more to acquire a new customer than to sell to an existing one. When you are unsure of the current market, focus inward on your existing customer base and how you can expand on it in order to grow your business in an unpredictable economy.
- Get to know your current customer base: Survey, increase touchpoints, collect customer demographics (i.e., run a cohort analysis).
- Deepen engagement with your current customer base: Build a referral program. This might yield testimonials or open channels to market your product or service.
- Offer more services to existing customers. Fix more of your customers’ problems or offer new products to meet their shift in need.
- Surprise, delight and over-deliver.
One of our clients recently prevented lost revenue: They learned they were about to lose a customer to a competing company, but by initiating a direct conversation with a decision-maker, they not only prevented the client from leaving, but also reengaged with them and upsold more services to them. By both over-delivering and upselling, our client essentially doubled the profit they were about to lose.
- Fine Tune Your Value Proposition
Put your value proposition into words that speak to your target customer base. Focus on what problems you solve instead of simply selling your product. Use your best-performing customer cohort and write your value proposition for them.
- Look for Strategic Partnerships
Establish strategic partnerships – ideally ones that are mutually beneficial — to build rapport and word-of-mouth marketing. I have a passion for helping entrepreneurs succeed, so a partnership with The Junto Institute made perfect sense for our Cloud CFO team. We sponsor the Institute and provide mentorship hours, and in return, we receive unique opportunities to promote content and our services to the incubator’s network.
Economic uncertainty does not have to be the end-game. Use these six tips to grow your business and weather this recession better than most.
Our value proposition? Our Cloud CFO Services help entrepreneurs with high-growth companies scale profitably. We take care of all things financial, so you can focus on growing your business. Get in touch to book your free consultation.
For more information, contact Chris Arndt at email@example.com or at 312.494.7014. Visit ORBA.com to learn more about our Cloud CFO Services.
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