Many of you are seeing business pick up in the last few months after the Pandemic caused a sharp recession and dropped your business to its knees. Well, the next problem seems to be right around the corner. Increased inflation, the ever-present virus, supply shocks and global uncertainty from the war in Ukraine are threatening economic growth and damaging consumer sentiment.
The history of recessions shows that they are a natural, though painful, part of the business cycle. Recessions typically last several months. It is rare to have one recession followed closely by another. An unexpected pandemic shock caused the 2020 recession. Government spending made the 2020 recession one of the shortest on record. That same government money had led to higher inflation than what the economy could support.
Inflation is an essential part of economic growth and is actually good for business. We need the price of goods and services to increase so that we can hire more people and buy more tools to expand and prosper within our own businesses. The question now is: Are prices rising too much for consumers to keep up with?
The Pandemic continues to affect us with supply shocks from China’s continued pandemic controls and another unexpected event with the invasion of Ukraine and the world’s immediate economic actions against Russia. It’s not yet clear if the economy will fall into a recession, but it sure feels like it. We are often in a recession before it’s official. Everything is more expensive, from necessities like groceries and gasoline to services. Inflation means everyone is raising their prices due to all other costs increasing. Are the services you provide one of those expenses that can be delayed or canceled until this is over in a year or more?
Companies are tightening their budgets in anticipation of another downturn in the economy. This month paid direct response ads that encourage consumers to take action are taking a hit due to inflationary pressures. We have social media companies reporting decreased revenues due to a lack of advertisement spending. The headwinds likely extend to all digital advertising. The stock price of Snap and Pinterest plunged in May. Facebook, Twitter and Google stock prices are all down. Is this the canary in the coal mine for the economy?
They say the Macro environment has deteriorated further and faster than we anticipated. The debate is on. Some say the higher-end household income spend will prevent the slowdown from turning into a full-fledged recession.
The economy ebbs and flows through cycles. In a business dependent on consumer spending, you need people to continue to spend, and they will. Your business is a staple for a segment of consumers. It’s a question of achieving a steady-state to maintain your business through the slow periods and be on top of the game to thrive in periods of growth.
Dry cleaning and related services cater to higher household incomes. Being a leader in the dry clean industry, you know how to manage expenses and save on costs. To keep your customers coming back, you thrive on providing customer service no matter how the economy is performing. Providing excellent customer service is what keeps you in business. Face-to-face customer service comes to you naturally. Being in a traditional service industry, you have a couple of go-to techniques to impress your customers.
Customer service is the most crucial aspect of a business. Dry cleaners like to know their customers and have some of the best customer service skills in the traditional sense. Having a personal relationship is what keeps your customers loyal to you. Your persistence pays off. But managing personal connections is stressful, especially in a declining market. Maintaining a personal relationship with all your customers is time consuming and maybe impossible. The next best action is to send personalized messages to your customers using tech. But, getting the right messages to your existing and potential customers is easier said than done.
With so many challenges, it’s time to switch from being persistent to consistent. Persistence implies working through challenges and difficulties, while being consistent implies evenness and steadiness. Transformation is not easy if you do not know how to manage change. The right tech can manage change for you and provide consistent, personalized messages.
With the right tech tools, you measure changes with your customer base. You can transform your data on known interactions with your customers into actionable marketing plans. You are prepared to highlight the gaps and pain points and possible improvements to the quality of your business’s customer experiences. Today’s technology is both a blessing and a curse. Tech is a curse if you do not know how to use it properly, but technology can help you move from being in a persistent cycle to a consistent state.
You have learned from 2020 about what should have and could be done to be ready for a downturn. Economic activity doesn’t stop when the economy shrinks. I would like to hear from you about your recent business experience between a pandemic recession and an inflationary recession and what you plan to do to manage your piece of the pie!