SEMA News—June 2020


Spanning the Gap

Tips for Businesses to Weather Short-Term Disruptions and Come Out Ahead

By Douglas McColloch

Retailers are adjusting to variation in consumer foot traffic, developing new ways to maintain their customer relationships, and marketing to take advantage of growing consumer interest in online purchasing.

The sudden outbreak of the COVID-19 novel coronavirus has forced many companies to alter and adjust their existing business models. Brick-and-mortar retailers are adjusting to a reduction in consumer foot traffic, companies are developing new ways to maintain their customer relationships, and marketing and advertising strategies are being refocused to take advantage of a growing consumer interest in online purchasing.

We spoke about these subjects with Dr. Kim Saxton and Dr. Todd Saxton, professors at the Kelly School of Business at Indiana University, who offer practical advice for businesses to best anticipate and adapt to shifts and uncertainties in the marketplace. The following are excerpts from our interview, edited for clarity and length.

SEMA News: Among our member companies, point-of-sale retail transactions account for about two-thirds of total sales. For companies that are going to be impacted by reduced foot traffic, what are some policies and procedures they can put in place right now to help get them through the next six months?

Kim Saxton: Essentially, as business becomes more online, the key is to test more customer data. Now is a great time to go through your sales records, particularly if you have downtime, and identify who this group of really loyal customers are. Try and look at their shopping history and ask, what kinds of things do they buy? How can I reach out to them if they can’t come to the store? We don’t know how long this [COVID-19 outbreak] is going to go on, but people are starting to want entertainment. Is there a way that you could help them pursue their passion while they’re stuck at home?

Todd Saxton: We’re seeing a lot of businesses going through what we call “crossing the chasm” as it applies to their business model. Now is a time that, by necessity, these kinds of traditional patterns and shopping habits are changing and moving from being just a minority of the market to being the mainstream way that business gets done. And unfortunately, this is not likely to be a scenario where the light switch goes on one day and everybody starts walking into retail stores again.

SN: Many of our member companies rely heavily on a customer base with a healthy amount of disposable income. So when consumers begin to pare back spending on their hobbies and focus instead on necessities like food and medicine, what steps can a company take to keep their customers engaged?

KS: There are likely two consumer markets here: Do-it-yourselfers (DIY) and hobbyists. The DIYers are probably more price-driven, and there’s probably not much more you can do for them right now. But at the higher-income end of the hobbyist group, though, now is a great time to reach out because people can’t do anything on the weekends, for example. During the work week, they might be pretty busy, but on the weekends they can’t do anything.

Then you get that middle-income group of hobbyists who don’t have a tremendous amount of disposable income. So what’s the $50, $100, $200 product package that you can offer them instead of a $1,000 package? How can you repackage your product line so it will appeal to them?

Another thing to think of is, car dealers aren’t selling because they’re “non-essential” businesses, but car servicing businesses are still open. So if it’s possible, now would be a great time to reach out to those businesses.

SN: How valuable is advertising in this economic climate? Given the likelihood of short-term economic contraction, should some businesses just pull back on marketing and advertising and try to ride out the storm until conditions improve?

KS: If you know who your customers are and you have their home addresses, direct mail in times like this can be successful because it’s inexpensive and you can even print it yourself. Also, for some people, mail used to be a bother, but now it might be one of the few inputs of the day that you have if you’re quarantined.

TS: Advertising-as-usual is not going to be effective. It has to be targeted. People are hungry for feel-good stories about how companies are making changes to better serve their customers during the current crisis. Companies are leveraging that into advertising and reaching out to local media. When you’re doing something to help people, it’s something that we see getting a lot of traction.

SN: A lot of our member companies—particularly the smaller ones—rely heavily on Facebook and other social media pages. How effective is social media as an advertising and marketing tool given the situation we’re in now?

KS: Extremely, they should definitely be active in social media, Facebook and Instagram in particular.

SN: Some of our members are retooling on the fly to help produce various medical supplies like ventilators, masks and face shields to help fight the pandemic. Could this sort of “product diversification” be something that we should think about integrating into our business model going forward?

TS: Again, this could be a “crossing the chasm” moment, but it’s a major pivot in terms of resources and capability as a longer-term strategy. On the other hand, if there’s a compatibility with your manufacturing capacity and human capacity and you realize it’s a good fit, then that’s something that could be a sustainable part of your business.

KS: It seems that we’re going to want to have more manufacturing of these products in the United States going forward. So having that capability, if it can be managed by the organization, is not a bad idea. And you should tell people about it right now through social media, on your website, with emails to your customers.

SN: Fast forward until we see that business is returning to normal. I’m working on recovering my business, or the local shop in my neighborhood went out of business, and I want to start up a new shop in place of it. What lessons from today should I take to be best prepared for unexpected events in the future?

TS: We would encourage particularly small businesses, with limited resources, to think of “concentric circles.” Who are your closest stakeholders, who are the people that are going to be supporting you? Maybe buy them gift cards or reward them by making them part of your “first wave” of reopening. If you’ve done things like setting up a really good customer-relationship management program during the leaner times, in times when you have more capacity you can broaden that messaging to your next wave of prior customers.

KS: You cannot move forward today without sophisticated online marketing. I think sometimes smaller companies think that it’s too hard or it’s not necessary. But only a Facebook page is no longer good enough for business. You have to have a website. There are types of website building software that are pretty easy to use. If you have a store, Shopify is an e-commerce site that lets you do it all yourself.

People now are going to buy in a multi-modal way, and some people will want to walk into a store. Some people will want delivery. Some people are going to want to do the whole thing online and never talk to anybody. So you’ve got to be ready for all of that.

Sources: Based in Indianapolis, Dr. Kim Saxton and Dr. Todd Saxton are professors at the Kelly School of Business at Indiana University and co-authors of The Titanic Effect: Successfully Navigating the Uncertainties That Sink Most Startups. They can be reached through their website,

Latest Related News

Business, Business Technology, Research
May 2024
SEMA Editorial
View Article
February 2024
View Article
Maximizing ROI at the 2023 SEMA Show
June 2023
View Article