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Business management

Keeping up with customer demand

It’s hard to predict the future but planning for quiet and busy periods could pay off.

Demand can be bumped up or down by a variety of forces, from economic shocks to seasonal variations or a more predictable ebb and flow. However, managing the fluctuating demand for your business’s services and/or products can take some planning.

Alison Edgar, UK business expert and entrepreneur, comments: “As a small business you have the upper hand of being far more agile than a large organisation, and the ability to bounce back and make and embrace change throughout the business.”

Customers come first

Targeting new customers is top of the list when demand drops. It’s important to communicate expansively at times like this; newsletters, social media or even a leaflet drop could signpost your offering. Marketing ideas include promotions, discounts or bundles, along with cash back or instalment payments for customers. Ensure you aren’t too reliant on one channel: updates to phone privacy settings by providers like Apple or Samsung, for example, could impact your online data on customer habits.

Whatever the challenges on the horizon, satisfied customers will keep coming back. Conduct surveys and ask them where you can improve – this could be chatting in person or digitally. Are they pleased with the speed of your service? Are they looking for evidence of sustainability? Or same-day delivery? Four out of five consumers would share personal data such as date of birth or age for a better experience, with over half saying they would stop buying after several bad experiences, according to a recent PwC survey

Check your reviews and, if recurrent issues are surfaced, put in a plan to address these weak points.

“Prioritising customer satisfaction is not just a good business practice, but an essential lifeline for small business growth and survival,” says Mike Elliff, CEO at payments provider Tyl by NatWest. Invest in additional equipment or tech if this is a pain point.

Top tip: Provide incentives to encourage customers to place orders in advance to spread demand. 

Pricing you back into the market

Adjust prices as demand and supply fluctuates. This could involve using a dynamic pricing strategy, meaning prices are adjusted according to seasonality, competitors and customer demand, although do your research before hiking prices as this may alienate loyal customers. 

Lowering prices so that the product/service is more affordable can boost interest. Bulk discounts for products you can move on quickly, flash sales and discounts could attract – and sometimes maintain – new customers. You could also share discounts by teaming up with other SMEs. 

Prioritising customer satisfaction is not just a good business practice, but an essential lifeline for small business growth and survival.

Mike Elliff
CEO, Tyl by NatWest

Standardise the product line to streamline stock management by evaluating your products or services to see what sells best and provides the greatest margin. Look at the whole lifecycle of the product and avoid restocking items that are shifting slowly.

To restrict supply during the launch of a product, you could raise prices and reduce the amount produced. This should mean slow sales to start with but the higher prices may maintain revenue while managing stock levels. Divert demand to other products by cross-selling.

Find the balance between the increase in demand and sales as a result of discounting with managing stock levels. Is there enough stock to meet demand without overstocking? 

Plan ahead: What are the disrupters? Keep an eye out for future trends. 

Top tip: Point out the obvious – let customers know if you lower prices.

Stock management and delivery

Try to work out if you have enough stock to meet busier periods by inputting accurate inventory management. Is it worth the extra storage/warehousing to meet the spike in sales without overstocking? Use software based on real-time data to manage inventory, although this might be better suited to online sales.

Consider Just-in-time (JIT) inventory management: This involves receiving goods and raw materials from suppliers only as they are needed. It can remove the concern of unwanted stock should orders get cancelled or if demand falls, although some types of business will be more suited to this than others.

Four out of five businesses have seen hiked up costs from suppliers, according to the British Business Bank. Are you ready to switch to alternative suppliers at short notice? Negotiating with suppliers and ensuring your supply chain is resilient  can be worthwhile. Supply chain management software could also enable greater transparency along the chain.  

Aim for a good relationship with suppliers but if this is hard to achieve, and there’s scope for better prices, why not outsource the negotiation. 

Top tip: Look into creating a cash-flow forecast and building a cash reserve  to help with quieter periods or reinvestment.

Staffing solutions to suit slow and busy periods

Liaise with employees to see if they would agree to take holiday or unpaid leave during quieter times or work more flexibly and/or from home when possible.

Another option is to hire temporary staff in busy seasons; for this fixed term contracts could be used. Part-time staff might be willing to adjust their hours depending on demand and, if money is tight, you could use social media to advertise.

Upskill the staff you have and ensure they’re working efficiently. This can solve staffing challenges while motivating your employees. This doesn’t have to be expensive, online learning could be an option.

Look into hiring an apprentice: Employers may be able to get government funding to cover some of the cost of hiring and training. 

Find out what you need to know to foster a robust, resourceful, diverse workforce  to make the most of your staffing needs.

 

Learn more about supply chain management and business planning via our Cost of Living hub.

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This material is published by NatWest Group plc (“NatWest Group”), for information purposes only and should not be regarded as providing any specific advice. Recipients should make their own independent evaluation of this information and no action should be taken, solely relying on it. This material should not be reproduced or disclosed without our consent. It is not intended for distribution in any jurisdiction in which this would be prohibited. Whilst this information is believed to be reliable, it has not been independently verified by NatWest Group and NatWest Group makes no representation or warranty (express or implied) of any kind, as regards the accuracy or completeness of this information, nor does it accept any responsibility or liability for any loss or damage arising in any way from any use made of or reliance placed on, this information. Unless otherwise stated, any views, forecasts, or estimates are solely those of NatWest Group, as of this date and are subject to change without notice. Copyright © NatWest Group. All rights reserved.

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