Before we jump in…
If you haven’t read it yet, please do check out my recent article in Family Business Magazine on how to scale the trust inherent in a family brand. And drop me some feedback if you are willing! I’d also love to hear what topic you’d like to hear about next!
Insights from the Experts at the Family Business Conference
There are few things that I do professionally that bring me back to my “why” more than the Family Business Conference hosted by the Prairie Family Business Association did this year.
Over 300 family business leaders gathered in Sioux Falls, South Dakota and the atmosphere was truly buzzing. Any time you gather people who share the same challenges and passions, connections are forged deeply and quickly, and this conference exemplifies this. There were families who had been coming for years, but newcomers (marked with red lanyards for their nametags) were also plentiful, and they were immediately wrapped into the community and the energy.
One speaker remarked that they were grateful to see that the conference didn’t only talk about “family issues” … it supported family businesses as the complex organisms that they are. The conference covered general business health topics like pricing, family health topics, such as succession planning and governance, and personal development with inspiring leadership stories.
I wish you could have been there with me, so I am doing my very best to hit on what I thought were the big headlines so that you can hopefully get at least one of the dozens of “aha” moments that I saw attendees experience.
Funnily enough, pretty much everyone was talking about brand strategy and positioning… the economist, the pricing expert, the family businesses telling their stories. Well, at least that was what I heard! To me, it all comes back to brand.
You are discounting too much and not pricing high enough.
Right, Meghan. We would if we could, but our (industry/customers/channels) don’t work that way. You would not be fighting me on this if you had heard Casey Brown speak. She took the “power of 1%” concept to another level, focusing it specifically on pricing and driving home that a small increase in price is one of the most effective levers you have to affect your profitability.
A few things that Casey said that you should think about:
- When your customer voices price sensitivity, they are really voicing doubt in your promises. So don’t drop your prices! Address their real fear instead. She used the example of Hyundai in the last recession. While other car manufacturers were running specials and massive discounts to boost tanking sales (to no effect), Hyundai addressed the customers’ root fear with a genius move: a guarantee that if you lost your job within 24 months of buying a car, they would take it back. Their sales rocketed. Without discounting or other promotions.
- Not all products and services are created equal. There are some products or services you sell that likely do need to be very price competitive. There is a ceiling for them, and your customers will notice. They are the gasoline or milk that you sell. Everyone has a good idea of what they cost, and they will shop around for the best deal. But, there are also products or services that you sell that are NOT as price sensitive. Your customers don’t notice increases and buy them out of value, convenience, or something else. You can increase costs on those by a few percentage points and not risk any customer loss, or even pushback.
- Being different allows you to raise your price. But people need to understand that difference and its value to them, clearly and consistently. A smart, clear positioning strategy is also a pricing strategy. Which is also a profit strategy.
- Charging more does not make you a jerk. You deserve to get paid for excellence. And you can’t maintain excellence and continue to provide it if you don’t get paid for it. You need to be able to reinvest in your operations, your people, and your customers.
How does this relate to brand strategy, you ask? Branding is connecting the value that you create with what your customers value. So, whether you are making the case for your value, or getting to the root cause of a customer’s price concerns, you need to be connecting those two things. An effective brand strategy decreases price sensitivity.
If your business is in a strong financial position, you have real opportunity in this economic climate.
We heard from Alan Beaulieu of ITR Economics about the economic outlook for 2023 and beyond. I am definitely one who can glaze over when economists start speaking, so Alan was a breath of fresh air with his humor and enthusiasm. This time, I paid close attention, and these were my takeaways…
- We are going to have a mild recession in 2023-2024, but for most sectors, you will start to see a recovery and organic growth by the end of 2024 and into 2025.
- Because of this projected timeline, NOW is the time to invest in the business, because by 2025, you will be too busy serving customers and running the business to work on growth initiatives. So, anything that increases your ability to capture sales and market share when the upswing comes will be a smart investment.
- Inflation is decreasing, and the Fed should stop raising interest rates by the end of the year. Alan stressed the importance of protecting profit margins, and recommended that companies focus on competitive advantages as the cornerstone of the profitability strategy.
- Labor has been such a wild card for many businesses, and Alan predicted a tight labor market as a new normal. It was interesting to hear an economist talk about the importance of company culture, but he stressed that with Boomers leaving the job market, it will be “all about the culture” as you prepare the next generation.
Economists never talk about brand strategy. And yet here was Alan advising competitive differentiation and being able to attract the next generation of talent by clearly articulating your company culture. Those are two critical components of brand and positioning strategy. So he definitely got an extra loud ovation from me.
- Doug Box shared his heartbreaking story about what can go wrong when there is no shared vision in a family about how the business will work. He shared this quote, which got to the heart of it: “For a multi-generational family to remain together, the family members must find a reason for them to remain together as partners. They must create an inspiring and motivating common vision as an extended family that makes them want to work together.” – Dennis Jaffe, PhD
- Matt Nielsen, third-generation owner and executive for Nielsen-Massey Vanillas, challenged everyone in the room to find people who have already gone where you are trying to go with your business, and invite them to be part of a board of directors or even a more informal advisory board. He was surprised at the quality and expertise of people who came forward to help his business grow, and I bet you would be too.
If you can, definitely plan on attending next year’s event. Between the speakers, the spontaneous conversations, and the opportunities for facilitated family meetings and roundtables, it’s far more than you’d expect from a two-day investment.
If you did go, I’d love to hear what resonated with you. So drop me a line and let me know!