The dreaded “Januworry” comes around once a year, and it’s not only a long month for consumers, it’s equally tough on small and medium enterprises (SMEs). Many small businesses get off to a shaky start at the beginning of the year, but with a bit of careful planning, you can make sure you find your feet and hit the ground running as 2023 gets into full swing.
Understand how macroeconomic factors affect your customers
SME owners are experts on their businesses – they understand the ins and outs of cash flow management, seasonal sales movements and what their business’ biggest challenges are. However, when keeping your eye on the microeconomics of a small business, you can miss out on the bigger picture.
One of the best ways you can equip yourself to beat the ‘Januworry’ blues is to understand how macroeconomic factors will impact the buying power of your customers. The key is to leverage information; understand their frustrations and find strategic ways to solve their pain points.
According to recent reports, significant fuel price cuts may ease economic pressures in January 2023, but high inflation and interest rates will keep South Africans under strain. Depending on the nature of your goods or services, the resulting price-sensitivity will affect your SME in different ways.
Provide solutions for cash-strapped consumers
If, for example, you’re selling groceries or household essentials, be aware that price-conscious consumers are switching to cheaper brands in order to keep food on the table. Over January, you should therefore opt to stock a few cheaper alternatives to popular brands.
This may involve negotiating with your suppliers for discounted rates on bulk purchases of lower-priced alternatives, just as a once-off purchase for January. Alternatively, you could offer markdowns for bundled deals on popular brands or create a rewards system that lasts only for the month of January and reward customers with a free product giveaway when they make their usual monthly purchases.
Cut delivery costs where possible
According to the 2022 South African Digital Customer Experience Report, more South Africans are abandoning their shopping carts when they are prompted to pay shipping or delivery costs. If you can negotiate with your delivery partner (for e-commerce SMEs) to offer free delivery or even make a few deliveries yourself within your local area, that would go a long way in ensuring the completion of your customer’s journey with your business.
Focus your marketing efforts on communicating quality
In a price-sensitive market, value is king. “Value” relates to how your customers perceive the worthiness of your product or service. What’s key to remember here is that “worth” can be thought of in monetary terms, but also in terms of what the product adds to a customer’s quality of life. So, if you can’t afford to compete with your competitors on price over this time, push messaging around the quality and the long-term value of your offering, and bring this messaging into all channels of your marketing strategy.
Bring urgency back
Creating a sense of urgency is something marketers always emphasise as a way to drive sales. Over the festive period, this may have been a strategy used to boost revenue ahead of special days such as Christmas. But, what about the after-Christmas shopping slump, when customers have grown weary of the frenzy and tell themselves they can always “buy your product or service next month”?
January is the perfect time to host flash sales, pop-up stores, limited time offers and last-of-season promotions as a way of mitigating the “I’ll buy it later” rhetoric. This is the ideal time of year to sell excess or old stock that might not have moved fast enough during the year – offering these products at reduced prices for a very limited time might be the best way to simultaneously boost sales and refresh stock levels.
Ben Bierman is the managing director of Business Partners Limited.
BUSINESS REPORT