The only thing certain about customer demand is that it is uncertain. Demand forecasting is a widespread and common challenge that many companies face. Business owners from all types of service-based organisations have experienced the extremes of operating over capacity or not having enough work. Both of these scenarios can be costly for your company.
When a business is at capacity, it can end up turning away new business opportunities as it just can't provide services at the required time. This can be costly in terms of missed sales. When a business does not have enough work, they can quickly see the cost of inefficiency - resources that are being paid but not generating revenue.
What's the solution to these extremes of demand fluctuation? It's simpler than you may think. Companies need to be agile and flexible enough to scale quickly. This article will uncover how to identify, plan for, and improve how you handle demand fluctuations for your service business.
Review past trends and patterns
In order to better manage demand fluctuations, you first need to understand the reasons for those changes. Making educated decisions about the future needs clarity on past performance - which in this case is your demand cycles.
For mature businesses, reviewing historical sales data will help determine which months have been the busy periods and which periods are typically quiet periods. If your business hasn’t been in operation for a long time, you can research industry fluctuations or get in touch with industry associations - as you may be able to leverage their experience - or use tools such as Google Trends to review search trend data. For example, if you were to look at "plumbing services" as a search term for Australia over the past 5 years, you would see there's a significant dip around the Christmas / New Year's period. These kinds of insights can give you big hints about seasonal trends.
"In order to better manage demand fluctuations, you first need to understand the reasons for those changes. Making educated decisions about the future needs clarity on past performance."
Planning for fluctuationsYou don’t want to be sitting on a lot of under-utilised staff as it can seriously impact your profitability. When demand for services is low, it's a great time to up-skill staff, get them involved in additional projects, or take on more responsibility. Alternatively, staff can focus on prospecting new customers, researching new markets, or learning what customers like or disliked about previous service experiences. Understanding when these demand fluctuations are likely to happen can help to plan out your resource allocation and maximise their value.
Great communicationConsistent communication with your customer base can be a quick win to acquiring more repeat and new business. Newsletters and email campaigns aren't just for existing customers - they're also a fantastic way of staying front-of-mind for potential new customers. Think about all of the knowledge and expertise you already have within your business. Can you share this through regular blogs, refreshed website content, business guides, and other content that could help attract new customers?
"Emailing out new content to your leads database can be a way of helping potential new customers with problems and issues they may not even be aware of yet. Sharing your expertise will also cement your image as a trusted resource."
Improve your business and systems by exploring new revenue streams, automating manual tasks, and providing customer visibility of services.
- Explore new revenue streams
Be innovative and proactive in the way you provide your services. Delivering a consistently good customer experience can help boost referrals - but what about offering an incentive? For some service companies, offering a dollar amount off your next service for every referral can increase new business while also increasing repeat business from those referrers. Also think about improving your website to provide an online experience that encourages new business, think about offering complementary services that support your main service offering, and investigate events and functions that your target customers are likely to attend.
- Automate manual tasks
Managing services often comes with a lot of manual processes and back-office admin - whether this is using spreadsheets to track bookings, manually producing invoices, calling customers to take payment details, and more. Can your business improve efficiency and save your team significant time by automating repetitive tasks? Service management software can help in automating communications between your back-office, service people and customers. It can also provide live tracking on service appoints, take payments from customers while onsite, and much more.
- Provide customer visibility of service
Another great way to create additional revenue streams with your customers is to create visibility of the services your company has delivered. A channel to communicate with the customer not only builds trust with the customer but also showcases the great service that you are providing and opens the door to upsell opportunities. When customers can see evidence of the work you have done then they are more comfortable paying for more value adding services and products.
"When customers can see evidence of the work you have done then they are more comfortable paying for more value adding services and products."
Seasonal demand can seem like a complex problem to solve - but having the right strategies and preparing for fluctuations can help you stay profitable right through the ebbs and flows. Businesses can prepare by understanding the market, planning for fluctuations and implementing business improvements. With the right technology, tools, and talented people to support your service business, you can boost efficiency and profit even further.
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