Leadership

Consumer Confidence is Increasing, but Are They Confident in Your Company?

By Stacy Blackman

Updated on: October 6, 2009 / 12:39 AM EDT / MoneyWatch

There are signs such as increased consumer confidence that the worst of the economic downturn may be behind us, and companies are facing some difficult decisions on how best to proceed. If they increase production too rapidly, they could end up with inventory they can't move. Yet companies that are too cautious may miss opportunities to sell more if the economy recovers at a rapid pace.

According to the recent Knowledge@Wharton article "Managing in an Upturn: Focus on Customers and Keep Expectations Low," the best strategy at present is not to ramp up operations too quickly, but to focus on big-picture tasks, especially strengthening customer relationships, which may need some mending in the current environment.

"Some consumers are feeling that they can no longer trust the traditional ways of doing business. This [attitude] will stay with us for a long time," says Yoram Wind, a professor of marketing at Wharton.

Here are a few of the article's suggestions on how to better engage customers:

Look for ways to increase customer loyalty: The article points to credit card companies increasing interest rates on long-time customers as an example of what not to do. "What they are doing is asking for customer disloyalty down the road. If a firm can show its clients that it will help them through these difficult times, they will remember that," says Wharton management professor Olivier Chatain.
Understand on-going recession anxiety: Economic indicators may be improving, but consumers are still dealing with factors such as unemployment and credit card debt. The article points to the Hyundai Assurance Program, which allows customers to return vehicles with no repercussions if they are laid off within 12 months of making a purchase, as an example of a company effectively dealing with consumer worries.
Better connect with customers: For Home Depot, this means putting more sales staff on the floor during peak consumer traffic hours. For others, it might be engaging with customers via social media.

Although the article discusses other big-picture tasks such as research and development and reorganizing that companies can focus on while waiting out uncertainty, it's clear that strengthening customer relationships is a key to making sure your business gets its share of the profits once consumers start spending again.

Waiting in line image courtesy of Flickr use blakespot, CC 2.0