By Tracey Rauh Solomon
Professor of Marketing Michael L. Barretti, Suffolk University's director for the Institute of Executive Education, was a longtime businessman before moving into academia in 1997.
He began his career after serving in the U.S. military with Polaroid company, then moved into the medical device industry.
Barretti has experience with difficult economies, having been through downturns in the early 1980s, the early 1990s and the dot-com bust.
"In each occasion I was responsible for running a small to medium sized business," he says. "So I've learned some lessons."
Q: What are some of the things you have learned over the course of your career that can benefit business owners today?
A: One lesson I learned very early on is that in periods of down economic times, you've got to increase your customer's awareness of your business. What is going on right now is a change in consumer behavior. People are reacting to news reports, and we all know consumer confidence has dropped. That is having a direct effect on how people approach decisions.
With respect to big ticket items, for example, people are making lifestyle decisions. Do I invest in a new car, or an appliance, or do I hang onto that money in the event I lose my job? Or maybe I have lost my job and I really need to preserve my resources until times get better.
When you are faced with a situation like this you have to be different than your competitor... because there are other businesses out there that do the same things you do.
Q: What are specific ways to accomplish this?
A: One way is through more promotion. Promotional activities draw traffic and if customers like the activities, they will keep coming back. Another way is to advertise more heavily to demonstrate that you are different from your competitors. A third way is to be more proactive and maybe adapt your message to customers.
This goes to a whole question of values. As customers adapt to what is going on in this economy, their values may be changing ... We are in a situation where people are concerned about how they are spending discretionary money. What they may normally have spent money on they may not now. So you have got to be able to say to your customer: "This is why you should be buying from me or using my services." It applies to small businesses as well as large.
Q: How can a business person come to understand these values?
A: It's hard to do. It's hard to understand. Particularly for small businesses that don't have the resources a large business has to really understand what is going on with their customers these days. And yet you have to do it.
One real simple way is to ask your customer, "Why are you coming here?" We need to gather information to make logical decisions. And very often we are so focused on today's transaction that we're not looking for the information that is going to help us with tomorrow's customer. It's not just today's transaction, it's tomorrow's transaction and the day after's. It costs more to acquire a new customer than it does to keep an existing customer.
Q: What are four boiled-down points that encapsulate what a business owner should be thinking about today?
A: Number one, understand your customer, understand they are adapting to difficult times right now. Number two, differentiate yourself. It's not enough to say, "I'm the best." You have to demonstrate you are the best and show why.
Number three, treat your customers with respect so they want to come back to your establishment. And number four, customers are not just going to come. You have to advertise.
I am very upbeat about this. This economy is going to change. And it's going to go back to being as good as, if not better than, it was before. And if you are not putting your brand out in front of that customer, those customers are not going to be there when things get better. They will be at your competitor, who has done it.