Has your business started with a bad start to the year and you’re experiencing lower-than-expected sales and increased costs? Despite your best efforts to boost revenue, have the challenging market conditions have made it difficult to get back on track? Starting the year on a rocky note can be a major challenge for any business. But it’s important to remember that it is never too late to turn things around. To salvage your year, it is essential to take a comprehensive approach that addresses both the immediate and long-term challenges facing your business. This may involve cutting costs, expanding your product offerings, or reaching out to new customers, not to mention monitoring your cash flow and profits to ensure that you have a clear picture of your business’s financial health. By staying proactive and taking advantage of opportunities as they arise, you can overcome a difficult beginning to salvage a bad start to the year for your business.
At Pricefx, as a provider of modern pricing software, we have spent the last dozen years or so answering all manner of pressure points from our customers including assisting them to manage their pricing solutions through tough times of sudden and extreme change. The more volatile our customer markets are the more they see the value in using our solution and as a result responding rapidly to market changes to maintain margins and market share while others stumble.
In this article, before we provide you with a range of strategies to help lift your business off the canvas after a rocky start to the year, it is important to define exactly what ‘bad’ means for your company. We will also look at how pricing software technology is inherently designed to enhance your business outcomes whether you are confronted by the economic decline of a recession, or the runaway price increases of inflation.
Define What a ‘Bad Start’ Means for Your Business
A bad start to the fiscal year for your business can mean several different things, depending on the underlying economic conditions.
For example, during a recession, your business may experience decreased demand for your products or services, which can result in lower sales and profits. Additionally, rising unemployment and decreased consumer spending during a recession can put pressure on your organization to cut costs and reduce staffing levels.
On the flip side of course, during times of inflation, your company may face higher costs for raw materials, labor, and other inputs, which can eat into profits and make it more difficult to maintain competitiveness.
To help mitigate the impact of economic headwinds like recession and inflation, many businesses are turning to automated pricing software, a tool that works to optimize business outcomes in good or adverse conditions.
In good times or bad, pricing software provides your business with a tool that works towards your company’s business goals no matter what.
With that being the case, companies with pricing software are generally seen to have an unfair business advantage over those without it.
How Pricing Software Can Help Navigate Good Times and Bad
There are very few types of software that can help your organization to achieve your overarching business goals during good times and bad, but pricing software is one of them.
When it comes to inflation, for example, it is a crucial tool to use in understanding how far you can raise your prices before customers start to leave. On the other hand, during a recession, it is important to use a tool like automated pricing software to determine which customers are still doing well and willing to pay more and which ones you may have to treat more carefully or even reduce prices to retain their business. It is a delicate balance, and you need a tool that can notice the slightest nuanced changes and differences.
Automated pricing software can provide product and customer segmentation to a very granular level and analyze historical data to understand the right signals. It allows you to build the pricing elasticity for each segment and understand the willingness to pay for every customer and every product.
Pricing software is a unique tool that not only helps increase profits but also saves money.
It even helps organizations make tough decisions by understanding the profitability of each customer and identify those important and difficult moments when it may be necessary to discontinue serving certain customers as they are not making your businesses money.
What’s more, pricing software is a multi-faceted, multipurpose tool that can help you solve several of your high-end, front of mind problems simultaneously.
Pricing software technology allows businesses to adjust their prices in real-time, based on market conditions, competitor pricing, and other factors. By automating the pricing process, businesses can ensure that their prices remain competitive and aligned with market conditions, even during periods of economic turbulence. What’s more, automated pricing software can help businesses to quickly respond to changes in the market, such as fluctuations in demand or supply, without having to manually adjust prices, which can be time-consuming and error prone.
What Else Can You Do to Help Your Business Recover from a Rocky Start to the Year
So, now that you know how pricing software technology can help you irrespective of economic conditions, good or bad, you will want to learn what else you can do to resurrect your fiscal year.
Okay, so everyone reading this article knew that this one would be coming. Yes, it is cost-cutting. However, more many businesses (off the back of a couple of years of Covid, supply chain disruptions, labor shortages, rising fuel costs and the impacts of the Russia-Ukranian conflict) prices are already rock-bottom and there is nothing left to cut.
However, there are some creative methods of cost-cutting. Diversifying sales channels is one of the major ones.
Diversifying sales channels can reduce the dependence on a single channel, spreading the cost burden across multiple channels.
By tapping into new markets through different sales channels, companies can increase their customer base and revenue, reducing the cost per customer acquisition. And yes, B2B players, that means you too as B2B channels begin to mirror what is seen in a B2C sales environment.
Additionally, competition between sales channels can drive down the cost of goods sold and improve pricing flexibility, ultimately leading to cost savings for your company.
For example, instead of having all your sales offline, you can switch a substantial portion to online sales, allowing your salespeople to free up their time to service those complex transactions that most need them and offer a better service.
Being able to pivot between the two when times get tough can also be crucial to your success.
For example, if you are in a business that can potentially close all your bricks-and-mortar branches, maintain one flagship branch as your headquarters and transform 99% of your sales to go through your online sales channels after a rocky start to the year, it could be an excellent way to improve your organization’s fortunes.
Embrace the Chaos – Don’t Be Afraid of Change
Think about the last great recession following the global financial crisis of 2008. Businesses that embraced the chaos to redefine themselves were the big winners.
The 2008 global financial crisis had a significant impact on the airline industry, with many full-service airlines struggling to remain profitable. In response to the changing market conditions, many of these airlines decided to adopt a dual-brand strategy, creating a separate budget carrier option to cater to cost-conscious travelers. This strategy allowed them to continue to serve their traditional customer base while also attracting new customers who were looking for low-cost travel options.
The creation of budget carrier options involved a radical change in the business model for full-service airlines, requiring significant investment in new systems, processes, and infrastructure. However, the results have been positive, with many airline groups reporting increased revenue and profits because of this innovative approach. The budget carrier option often operates on a lower cost structure, with a focus on cost-cutting measures such as charging for additional services and reducing the in-flight experience. This allows these airlines to offer lower fares to their customers while still generating a profit, and the success of this model has led to many other full-service airlines following suit.
Singapore Airlines, for example, has taken this idea another step further and has 2 budget carriers under its group umbrella – Scoot and Silk Air.
What is the Moral of the Story for Your Business?
The moral of this story for businesses today is that being flexible and open to change can lead to increased profitability, especially in complicated economic conditions. You may not be an airline but have noted the strategy.
The airline industry’s adoption of a dual-brand strategy in response to the 2008 global financial crisis serves as a testament to the benefits of adapting to new market conditions, demonstrating that businesses that are willing to embrace change and adopt new strategies can not only survive but thrive, even in the face of challenging economic conditions.
Repackage the Change
Whatever the change is for your organization, make sure it will value-add to your business.
It could be something as small as identifying that the demand for your 2lb bags of rice is greater than for your 20lb sacks of rice. Thai and Indian restaurants may have been struggling for the first half of the year as people eat out less, reining in their discretionary spending and preferring to cook their favorite Green Curry or Tikki Masala at home.
With the change to eating at home, you have identified that you can sell those 2lb bags of rice at $3.49, while those 20lb bags only attract buyers at $29.99.
That is $5 of margin improvement per 20lbs of rice, but how many pounds of rice does your businesses sell each month – 20, 000?
It might sound like small grains (pun intended), but that is another $100 000 per month in your company’s pocket, or $1.2 million annually by simply being bold and reimagining your business model through different packaging.
Whatever industry sector that you are involved in, adapting quickly to market forces, can place your company at an unfair advantage over your competition, particularly during times of rocky economic seas.
A New Way of Thinking – Get Proactive – Your Business May Depend on It
Now you know some creative strategies to help salvage a bad start to the year for your organization. For those searching to do more for their business rather than simply ride out the storm when economic times get rocky, then consider a comprehensive and award-winning pricing software solution like Pricefx to help you respond as fast and as creatively as your organization needs to.
Your annual results and long-term life of your business might just depend on it.
If you are already aware that a total pricing software solution will fit your company’s needs, this article below can help you finalize your pricing software choice:
Phil Anderson is currently VP - Global Account Director at Pricefx. Over the past 12 years, Phil has developed vast experience in price optimization and sales effectiveness solutions sales for Pricefx and other pricing software companies. He delights in assisting customers to make their numbers, with data-driven solutions that convert revenue, profit and go-to-market objectives into actionable guidance such as price recommendations and sales opportunities, while driving top- and bottom-line growth. On the weekends, you will find Phil spending quality time at home with his wife and two children, as well as coaching U15 kids' soccer, and generally relaxing with a couple of beers.