The early days of the pandemic seemed to signal disaster for nearly a decade of increasing consumerism – the uncertainty of the outbreak’s extent paired with a steep drop in retail sales invoked concerns and questions about the institutions that had been built during the brick-and-mortar era. But in June, about a month after phased reopenings in states that had initially embraced rigid lockdowns, retail sales rebounded nearly 7.5% -- an encouraging sign that buying behavior hadn’t ceased, but had changed.
Once again, uncertainty has set in. To adapt, businesses need to understand the key changes to consumer behavior and how to create irresistible packages by adjusting prices and delivery methods. Creating a virtual revenue stream is not a new concept, but with another round of COVID cases looking to further disrupt the retail recovery, business owners need to embrace the commitment to understanding the new consumer – and quickly pivot to meet them where they are – with products appropriately priced to keep them spending.
Creating A Virtual Solution for Your Product
Understanding how to virtualize and price your product starts with three key questions:
- What urgent problems are my customers currently facing?
- What products or services do they need and cannot get?
- What would improve my customers’ quarantine experience?
The next step is to think about what your product is at heart and adjust accordingly. Using myself as an example quarantine consumer who’s needs have changed: I am currently in desperate need of a date with my husband, a haircut and a workout thanks to all the baking I’ve done with my kids. Ideally, the businesses I normally spend money at can think about how to meet my new needs:
- Our favorite restaurant can offer date night delivery with candles included with our meal and maybe some fun tips to spice up our date night at home.
- My salon can create a tutorial on how to trim my hair at home and to demo new hair products that can be shipped directly to me.
- My gym can start an online challenge group, hold online classes, and provide accountability so I’ll lay off the homemade cookies.
We’ve been trending towards virtual business options for a few years. This pandemic is likely to push us over the edge and fully into the virtual service age.
How To Create Packages That Sell Now
After understanding how your product or service can be reshaped for changing consumer behaviors, the next step should be to create attractive packages that effectively deliver the service to the consumer. A few key considerations:
- Focus on what will sell right now.
- If you offer a subscription-style service, create shorter contract lengths.
- Offer mini-packages by breaking your full services or products into smaller phases.
- Use product sales to offset the decrease of service hours.
- Do not just offer discounts for future purchase of your services. You will be stealing from tomorrow’s sales, and it won’t quite be enough to cover today.
How To Adjust Your Pricing
With massive layoffs and tepid spending, it can be tempting to default to lower prices to get your core consumers to keep spending. However, before you decide to lower your prices, consider these three questions:
- Can you adjust your payment terms? Accepting a lower down payment or increasing the total number of payments could allow you to keep the same pricing but create more favorable terms for your clients.
- Can you decrease deliverables to decrease your price? If the cost of the service is lower, you can pass that savings on to your clients. Instead of a premium service, you are offering more of a transition service. It will meet the needs without all of the bells and whistles.
The first two strategies are more effective at protecting your profit margin. If you feel you need to simply discount existing services, it’s time for question #3.
- What type of discount will my profit margins allow? Too many business owners discount when they need cash flow. They haven’t looked at their profit margins to see what they can afford to discount. They price emotionally or based on what they think customers will pay. The unfortunate effect is that you are selling, but not getting ahead.
Having a virtual portion of your business can help you remain relevant and provide better product or service for your clients. This is the time for you to demonstrate your leadership as you innovate, meet clients' changing needs and pull your team through this challenging season. Every great challenge creates an opportunity for dynamic innovation.
Photo: Getty Images