Increasingly, small and mid-sized firms are feeling the pinch to increase business — and often resorting to drastic measures.
The drastic measures: Expensive promotions and giveaways to convert hesitant prospects into loyal buyers.
There’s no doubt smaller companies are feeling the pressure more than ever. In the three months ending last December, a record-setting 46% of firms reported lower sales. That’s from a survey of over 800 small businesses by Washington, D.C. trade group, the National Federation of Independent Business.
While freebies, promotions and extreme discounts can help companies to ride out the recession, there are many inherent dangers — especially for companies without well-defined brands. Offering products for free or at a great discount could lead prospects to associate its value with what they paid for it.
Another option: Find a way to reduce costs without actually cheapening the product’s image. For example, a California-based company was faced with trying to sell a product that was far from a necessity during an economic crisis — a solar hot-water heating system.
Instead of cutting prices and undermining its brand, the firm introduced an installation program with no up front costs. (Installation can reach upwards of $7,000.)
How it works: Customers (homeowners) pay part of the installation using tax credits. Customers can have the firm pay the cost upfront and then repay the company during tax time. They can also bundle the the tax credits into a series of monthly payments. Meanwhile, the value of the actual product never decreases.
