The latest official data shows the UK entered a technical recession at the end of last year.
Gross Domestic Product dropped by 0.3%, a little more than expected, between October and December. As GDP has fallen for two successive quarters, we’re officially in a recession.
ONS figures showed that during the final three months of last year, there was a slowdown in all the main sectors it measures to determine the health of the economy, including construction and manufacturing. Retail sales also reduced sharply in December due to constrained budgets.
A Stagnating Economy The economy has been stagnating for nearly 2 years so, with a low growth/no growth economy, pressure is on SMEs to ensure they retain and grow their customer base.
Although labour demand has cooled and the current sequence of quarterly falls in vacancies is the longest ever recorded by the
ONS, labour supply is still tight.
Recession is a powerful word, and many business owners will remember the global financial crash of 2008 which sparked the
‘Great Recession’. This event was described as the worst economic disaster since the Great Depression, which blighted the 1930s and was the worst economic downturn in the history of the industrialised world.
By contrast, the UK’s 2020 recession lasted only six months, although it did result in the largest fall in the economy on record - at 20.4%.
A Short-Lived Recession
The consensus seems to be that this current technical recession will be short lived and shallow, and that the worst may be behind us. In real terms, however, prices are continuing to rise and there is still an ongoing cost of living crisis so confidence over the next few months may be low.
Tougher times require a realistic but positive attitude: determination and lateral thinking is the way forward. The key to thriving during challenging times is to work smarter not harder.
So how can business best look after customers and nurture staff, finding a way to grow, as we all move through this tricky period?
The Route to Growth
As consumers set stricter priorities and reduce spending, SMEs will want to understand the evolving situation and fine-tune their strategies.
The temptation may be to slash costs but, while it’s necessary to conduct a rigorous analysis of where genuine savings can be made, indiscriminate cost cutting risks longer term sustainability and can jeopardise performance and output.
- Focus on your brand - what’s unique to your company; what do you do best.
- Old habits can die hard, but is there a better way to do certain things?
- Find creative, low risk ways to increase growth.
- Pinpoint priorities and work through to-do lists.
Target Markets
Define your target markets and your customer base as precisely as possible.
Every customer is different and will have their own requirements and unique journey, so it’s useful to segment different client groups to best understand where and how they fit with your brand. This helps you prioritise your actions.
Customer segmentation can be based on demographics, attitudes or behaviours, such as monthly spend or long term loyalty.
Although a nuanced approach should be taken and some customers will move between classifications, when times are tough it makes sense to prioritise segments that matter most – those that drive higher value and grow your bottom line.
Great Customer Service
Determine how much of this market you can reasonably expect to get then put in place meaningful messaging, which is as personalised as possible throughout the customer journey. Show why and how your product or services make the difference.
Remaining flexible and understanding the changing needs of customers through regular feedback and communication, especially during a time of market volatility, helps your business stay current. Reflect this in your customer relationship and adapt accordingly.
The experience your customers have when working with your business is a key factor in success. Ensuring your customers have seamless, satisfactory interactions with you - from when they first reach out, through to the completion of their transactions and beyond - will increase both your retention figures and the likelihood that existing customers will recommend your business to others.
Retain Skilled Workers
With fewer potential workers for employers to recruit, staff satisfaction plays a crucial part in maintaining workplace efficiency and ensuring that experienced, skilled workers are retained.
Nurturing staff is vital. Replacing a single employee can
take up to 28 weeks and cost over £25k in lost productivity.
Building a positive workplace culture where everyone feels supported will help connect and motivate colleagues so everyone’s pulling together, working for the same company objectives.
Staff training also plays an important role in ensuring your teams are functioning at their full capacity and confident to do the work they’re employed to carry out.
Getting the right training programmes in place and
providing a full history and record of that training avoids unnecessary refresher sessions, protects your business with a full audit trail, and helps staff by giving them the resources to recap training at any point.
Holding on to skilled staff is a must during economic downturns so that business owners can invest their time in advancing growth rather than tackling recruitment. Providing career opportunities and rewarding good performance can make a real difference to workforce motivation and help reduce staff turnover.
Effective Team Management
At this current time, it makes economic sense to utilise strategies that can help relieve the daily pressures that come with running any organisation. This is particularly important for small and medium sized businesses so they can improve performance management and free up resources.
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