Diego Norte occasionally emails me articles to use online. Most of the time they are full content and I like the ideas he has for selling. Here’s a clip from a recent one about a business model that is fairly recession proof.
- Recession Proofing by Diego Norte
Our business model is already fairly recession proof. The basics that make it that way are the very foundations of what we teach.
Choose a true market. A true market is something that over 50% of the population are interested in and are willing to pay for. True markets include:
There are many others. As long as you are working a true market, a recession might result in fewer sales, but you will still be very viable.
People will always buy those things. They will always be interested in nicer houses and cars, looking better, having better relationships and living longer.
In October 2008 when the stock market crashed though, we did see a sharp blip in several areas. Customer who were in a true market started telling us that they had absolutely no sales for days during October. We even saw a reduction in sales for about two weeks.
There is one thing that we did that immediately corrected that blip though.
We deleted our order data in TestiVar for all price testing. We kept all other TestiVar data.
The method to do that is very simple. You simply change your template and rename the variable used for the order button. Then you go in and add all of the different priced order buttons again using “Add Variable Version.”
Why did that help?
In a recession, customers start to pay attention to price. Their priorities about what to purchase also change.
TestiVar would have eventually figured that out, but it would take months to overcome the historical data TestiVar had gathered over the prior many months.
By resetting this one variable, we were able to quickly find out that most of our products should now sell for less. A few of our previously less popular products were now selling better at higher prices though.
The net effect in the end was nearly a push. Sales and profit returned to the prior levels even though the pricing of most products was reduced and the pricing of only three products was increased.
Price testing is extremely important during a recession. TestiVar is the only multivariate software I know of on the market that does painless price testing. You simply enter several order buttons and send them to different thankyou pages with different priced hard coded. If you are using TestiVar, you can also just use a single thankyou page and set the pricing on the URL line with a ?p=1000 parameter (if the price was $10).
We looked at what our profits would have been without taking this step to reset pricing. They would have been down about 22%.
I strongly recommend that you get every single one of your products under price test. If you did your price testing prior to October 2008, I recommend that you reset the pricing data by renaming your order variable and reentering the prices to test. It could (probably will) mean a 20%+ increase in your profits for 10 minutes of work.
Thank you Diego. You lost me on some of the technical jargon, but nevertheless, solid information. The author, Diego Norte, is the creator of the Glyphius software. It’s copywriting software that improves profitability using statistical analysis to mathematically study profitable ads.
So, now that you have a model that specifically identifies recession proof markets, what will you do with the information?