How to Encourage Consumer Spending

Sustained consumer spending is vital to a business' success.

During an economic slowdown, businesses may struggle to stay afloat because consumer confidence and spending power wane substantially. While some companies may be deemed too big to fail and receive government bailouts, other corporations aren't so lucky and have to rely on business strategies to stay in the black. Some businesses may reduce prices on their merchandise drastically but this isn't always the best move because customers may come to expect sales prices on all shopping occasions. It's better to come up with some creative marketing ideas to keep the customers you have happy, while at the same time enticing new customers to come through your doors.

Instructions

1. Analyze the data. What areas of your product line have sagging sales? Focus on what needs attention the most so as to not blindly throw solutions at the problem. Study the figures to ascertain the "when, why and how" of the economic downturn and its direct effect on your business. Then, craft an action plan on how to address those issues. For example, if business-suit sales are down because of a poor job market, run an advertising campaign that focuses on how they're necessary to look sharp for a job interview.

2. Offer VIP memberships or frequent-buyer cards that allow for discounts or other shopping incentives. These types of programs not only reward the loyalty of your regulars but also track their spending habits. Knowing what your shoppers tend to buy can help you cater to them better. You can sell specialized merchandise not found in other stores but that resemble the types of products your customers already buy, and you can keep popular-selling items better stocked so customers don't look elsewhere. Another promotion that could increase foot traffic involves offering customers a discount or small gift if they bring in a friend who ultimately signs up for your store's loyalty program or makes a purchase of a predetermined amount.

3. Limit the availability of certain products. If the customer sees a non-essential item that they know will be there indefinitely, they may hold off on purchasing it, especially if they lack discretionary funds. However, the allure of limited-edition items can turn a non-essential product into a must-have for people. Alert customers to this merchandise with signs that say "available for a limited time" or "limited quantity in stock."

4. Know your demographics and focus your advertising on them. For example, if you own a hardware store, place ads in home-improvement and home-and-garden magazines. During a down economy, it's better to focus your ad revenue on customers who are more likely to shop at your business, as opposed to placing ads in periodicals that may not cater to that base.

5. Make your customers' shopping experience special. Your products have piqued their interest, and now it's time to make your store stand out. Provide complimentary refreshments at the door or services such as free delivery or free gift wrapping. These customer-service initiatives will give people more reasons to shop at your store, plus, you'll stand to benefit from positive word of mouth.

6. Utilize social-networking websites such as Twitter and Facebook. These sites make it easier for you to reach your target audience for free. Post deals online that will encourage people to follow your Twitter feed or Facebook updates. The majority of people today spend a vast amount of time online thanks to smart phones and laptops, and once you've built a following, they'll be eager to keep an eye out for the special first-come-first served promotions that you offer.

References

• Retail Touch Points: 8 Key Tactics to Encourage Consumer Spending