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How to Respond to Changes in Customer Spending in 2022?

We have drafted this article to share with you some strategies that you can implement to use shifts in customer spending in your favour. To know what are these changes in customer behaviour, you can have a look at this article. We understand neither these times, nor realigning your company would be easy, but Metric has your back. We are here to help you tackle these challenges and adapt to shifts in customer behaviour.  Ideal Response to Shift in Consumer Spending with Metric’s Insights Now that we know a few shifts in consumer mindset and behaviour, how can a business manoeuvre their product to do better with this knowledge? Here are a few tips and tricks your business can implement to not only keep yourself afloat but to prosper amidst inflation.  We noticed that all products are not disdained by consumers in an economic crisis. Beauty, home, and sports products saw a hike during covid, local brands sold more during inflation and import bans, and similarly, every crisis is a high time for some category of products. To capitalize on this type of product demand, you may need to change up your marketing. Your business might be offering a product that customers can get interested in. To keep up with consumer spending in 2022, you need to refresh the way you appeal to your target market. Inclusivity, involving customers in advertising, and keeping up with the social trends are some of the ways to stay relevant and desirable for the customer.  Metric provides assistance to new businesses struggling to make the right marketing decisions. The app offers strategic insights based on your business’s financial outlook. These insights facilitate you to make confident marketing decisions to grow your business.  Restricted consumer spending might lead you to a surplus product stock and limited cash flow. This is the best opportunity to offer discounted pricing. However, don’t let the discount lead you to loss. Decide a discount amount that gives profits, specify a discount period and advertise a lot preferably on social and digital platforms. This will not only keep your cash flowing but also lets you get rid of existing stock so you can invest in introducing more crisis-relevant products.  Metric analyzes similar businesses in the region and strategies of other businesses to deal with a situation to provide you customized insights. These insights include appropriate times to offer discounts and sales. Since Metric Insights are data-driven, they have a high chance of yielding the required results.  These changes in marketing strategies might work, or might not. At the end of the day, it’s an inflation period and low demand is assured. Amidst trying new strategies, your business must focus on cutting internal costs. Metric provides accurate data on your financial situation, enabling you to analyze costs that could be temporarily or permanently cut. You can refer to our article “How to deal with Inflation” to see more tips on surviving inflation financially.  Economic crisis and inflation affects business in two ways regarding Speed of Orders. Either the low demand leaves the business in surplus inventory or people shift to your product but you can’t manage the sudden demand and fail. The way to deal with this unprecedented situation is to optimize the speed of manufacturing according to real-time data of products sold. Metric’s cloud-based software provides minute-by-minute data of your transactions thus letting you be on top of your business.  As briefly discussed, a mass shift to your product could be an opportunity or loss based on your reaction. If the price hike makes customers shift to your product in large numbers, and you are unable to entertain the demand ending up out of stock most of the time, you’ve lost a golden opportunity. These are not your loyal customers who would wait for you to restock. These customers are on the look for cheaper available alternatives. In order to keep these customers you have to speed up your production massively and make these converts loyal to your brand.  The purpose-driven customers expect the brands they buy from, to bring value to the world. Small initiatives like employing transgenders, maintaining an equal gender representation in your company, dedicating a part of your profit to a cause, depicting inclusivity in terms of culture, race, gender and social backgrounds, being eco-friendly, promoting positivity, and raising awareness on mental health or other causes are some of the many ways you can show your values and incorporate it in your business vision. Metric can help in this domain by keeping you aware of what your competitors are doing and what are the popular trends these days. You can also benefit from Metric’s network regarding strategically incorporating values into your marketing and vision.  To grow your business you must have a detailed understanding of customers, creating moments that matter for them through personalization. Metric through its advanced analytics to identify the interests and behaviour of your customers. The forecasting models of Metric would enable you to locate the growing buying power of customers so you can timely act to capture demand, win new customers, and reinforce the trust and loyalty of existing ones. Rethinking ecosystems and partnerships are crucial for dealing with the pace of change, complexity, and disruptions necessary to achieve extraordinary impact. Build your ecosystem on a foundation of trust, where systems and processes are integrated to make decisions dynamically.  Whether you’re a product-based business or a service-based, these steps can help you be relatable, reliable and available to your existing consumers while gaining new ones even through crisis. Metric can enhance your growth in more ways than by providing business insights. Head over to our website to know all the features metric app provides, and get on to a growth journey with us. 

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Changes in Customer Behaviour Post-Covid and amidst Inflation

According to data released by the Government of Pakistan, consumer prices rose 13.8% this month from a year earlier. The sudden price hike of fuel and groceries particularly has put us all in a state of panic. Pakistan resides a diverse range of socio-economic classes. While some might not be affected by inflation, some lower their living standards, and others are fighting for survival. One thing that inflation and economic downturns bring is a shift in consumer spending, be it any class. History proves even in severe economic downturns and recessions, some companies are able to gain an advantage.  No two downturns are exactly alike, thus every recession puts marketers in uncharted waters. Although analyzing companies’ strategies that either propelled or undermined their performance through previous recessions and especially covid crisis helps. As a business founder operating in such circumstances, it is your prime goal to identify your customer base, understand the evolving consumption patterns and fine-tune your strategies accordingly.  Before we go on to discuss the shifts in spending behaviours of customers, we must acknowledge all socio-demographics within our country would react differently to inflation and economic downturns. The population of Pakistan consisted of mainly three income classes, that are upper, middle and lower.  A study on the Impact of Inflation on different socio-economic classes A study was conducted in the financial hub of the country, Karachi, surveying people from all three of the mentioned classes. The descriptive statistics discovered that inflation caused a compromising change in the behaviour of consumers from the lower class in terms of the buying capacity and shift to local brands. The study further found little change in both these dimensions among the consumers from the middle class. However, the study did not find any large change in the behaviour of the consumers from the upper class. It concludes that income level is the real determinant of consumer behaviour while inflation is merely a catalyst. Adaption of local products is highest during Inflation The above-mentioned study regarding the impact of inflation on different socio-economic classes shows a shift to local brands among the lower and middle classes. Since the majority of our population lies in these 2 categories, inflation seems like the ideal time to introduce good-quality alternatives to renowned expensive products. Since people are already looking for cheaper alternatives, your product has a high chance of succeeding.  Digital Spending growth among Millennials and High-Income Citizens Once covid became more of a lifestyle than a life threat, the trend of online shopping saw an all-time high all around the globe. Pakistan was no exception in adopting the new-age trends from e-commerce to last-mile deliveries. Though it might have started off as an emergency response to circumstances, the digital future is here to stay. If your company doesn’t have a digital presence that too an active one, your future is arguable.  Loyalty Shake-up A surprising result of the pandemic was an unprecedented level of channel switching and brand loyalty disruption. Gen Z and high earners are most prone to switching brands. Among these, 36 per cent of consumers trying a new product brand and 25 per cent incorporating a new private-label brand as per a report by McKinsey. Most of these converts have continued using these new brands even after the covid crisis. Among other causes including availability, price, and quality, the most common reason for this switching is the reflection of their personal values.  This brings us to our next point, which is purpose-driven consumers.  Purpose-Driven Consumers Purpose-driven consumers, who choose products and brands based on how well they align with their values, now represent the largest segment (44%) of consumers. Society has recently become highly accountable, where celebrities are judged on their opinions and values, and so are brands. Today’s customer chooses brands that depict their values through campaigns or highlighting social issues.  Sustainability The increasing discussions on green living when joined with economic instability, make people more vigilant of the sustainability of the product they are buying. Customers now prefer sustainability over fast fashion. Recycled raw material, zero-waste, increasing shelf-life and re-usable products are most preferred by particularly educated young customers.   Hygiene Transparency Among many things covid taught us, one is the hygiene transparency of services. Though covid has subsided, a new wave can emerge anytime, thus people dining out or availing of other services expect a highly hygienic setup. Restaurants that opened up their kitchens for customers to come and see their working conditions received admiration and popularity both.   Cutback of Non-Essentials  As an individual, the first step we take to survive inflation is cutting down on non-essential items. But the thing is what we consider necessity and luxury. Some brands make their products in a way that builds a narrative of that product being an absolute necessity.  For example, for the longest time, I considered my organic curl shampoo a necessity. The number of benefits it has over ordinary shampoos along with the ads showing what my hair would look like if I stopped using it, I was convinced I needed it no matter what. However, now that I analyze it, it’s all just great marketing that makes me consider an expensive shampoo a necessity. This is the power of great marketing.  Rise of Homebody Economy Surveys showed a huge rise in furniture, home decor and other home-related products amidst the worst of the pandemic. The time people spent at home made them redecorate and equip their houses with more entertainment options. Along with these, there was also a hike in sports apparel and stationery items. When outside activities were restricted people shifted to in-home projects and activities thus increasing the demand for such items.  Similarly, inflation restricts spending on luxury products, services and entertainment. But, everyone needs something to do, and people would probably shift to cheaper entertainment options. This would give rise to some industries, businesses that can provide such items would make money out of this inflation.  Invest in Outdoor Activities The past two years have

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Why Most CEOs are accountants?

Financial background, more precisely accountancy seems to be the starter pack for the perfect CEO portfolio. We say this because one out of every four CEOs is an accountant. The Financial Times Stock Exchange (FTSE) is a British financial organization that specializes in providing index offerings for the global financial markets. A recent survey shows nearly one quarter of FTSE 100 CEOs come from a background in accounting and 55% of all UK CEOs come from a finance background.  The numbers are surprising. No doubt finance is the life blood of a business, but what makes accountants so prone to leadership? When we think of accountants, we picture a person drowned in papers, scrunching numbers, and vigorously pressing buttons on a calculator. We assume accountants are uncreative beings that manage our bookkeeping, handle taxes, prepare invoices, construct financial reports and submit them to the leadership. Turns out we have been majorly underestimating accountants.  Accountants know the ins and outs of a business that enables them to make the most insightful decisions. There are a few skills that accountants inherently possess that makes them the best candidates for an executive role. Let’s see what these qualities are and why are they specific to accountants?  Why are accountants best-suited to the executive roles? 1. Strong Analytical and Financial Skills Starting off with the most obvious skill, accountants have the ability to provide insights from a financially strategic viewpoint. At the end of the day, you want your business to make you rich. Ideas are where it all starts, but smart financial moves are what makes your business profitable. “Being able to translate an idea into a financial impact that would help the bottom line of a business is incredibly important,” ~ Andrew Brushfield, Robert Half Australia director Traditionally, sales and marketing people made the best candidates for executive positions.  However, the global financial crisis in 2008 made the appointment of CEOs with accounting and finance skills vital as businesses have become more risk-averse.  2. Accountants are Innovators The technical accountants tend to be great innovators. Accountants often strive to accelerate the lengthy procedures, automate recurring tasks and increase clientele, such aims lead them to new ways to make their work more efficient.  “If you don’t understand the details of your business, you are going to fail. One of the only ways to get out of a tight box is to invent your way out.” Jeff Bezos Metric – a story of innovation Metric itself is a great example of the innovative mindset of accountants. A team consisting mainly of accountants through their consultation career, recognized the problem of small businesses failing to manage finances due to unavailability of accountants. Accountants have the potential to adapt their practices to suit the modern marketplace. Realising most of these startups and SMEs can’t afford to hire an accountant, they came up with a cheaper yet efficient digital alternative.  The team took the recent shift to mobile devices for research, calculations and operations, as an opportunity. Metric launched an accounting app that automates all financial processes, catering masses that prefer mobile over desktops for professional operations. Metric disrupts the common business models by giving streamlined, cloud-based accounting services for free.  3. Accountants are good with money matters If you research the top skills CEOs must have, you would definitely find risk management, budgeting, financial management, accounting and internal auditing. These are the exact skills finance professionals have learnt during their education and polished throughout their careers. This does not mean a CEO can function without communication skills, teamwork, collaboration or negotiation skills. But these soft skills complement the technical expertise that accountants already master.  4. Accountants are More Adaptable If COVID-19 has taught us one thing, it’s the importance of being able to adapt to change. While most businesses struggled to stay afloat, some greatly prospered changing their business model or services in accordance to the needs of the crisis. Changes in your industry, sector and business can have a profound impact on your strategy, priorities, and decisions. A good CEO should be able to change direction when necessary and adapt their role to the company requirements.  Accounting is a dynamic industry. With the frequent changes in tax laws, financial software and tools, and financial strategies, accountants are bound to quickly adapt to changes. They need to keep up with evolving trends that make them more adaptable to change of all sorts. Experienced accountants remain calm in stressful conditions, having the ability to adapt and determine alternative options to cope with change. 5. Accountants are Good in Decision-making “Decision-making is at the heart of my role. Weighing up data, analyzing consequences, and avoiding mistakes are all part of my job.” ~ Sir Martin Sorrell, the highest-paid CEO in the UK CEOs are on the roll, calling shots, taking risks, negotiating, taking decisions that make and sometimes break businesses. Quality and speedy decisions elevate the productivity of an organization. While taking a decision even in an emergency situation, a CEO must keep in mind the vision and productivity of the company, have the trust of employees, minimize conflict yet be quick. Isn’t this too much to ask?  These emergency decisions greatly affecting the businesses are the daily task of an accountant. Accountants are very experienced at balancing out biases, since they approach their work without bias consistently. Accountants are always consulted on all decisions to better suggest keeping the financial condition in mind. This extensive experience of decision making helps accountants remove the middleman and take up the executive position themselves.  What if you’re not an accountant turned CEO?  If you don’t have an accountancy or even a financial background, are you destined to fail in your business venture? Most definitely not! Even if accountants take up the most executive roles globally, companies without accountant founders or CEOs run equally fine. However, not having an accountant guidance in your business finances is the recipe of disaster.  As mentioned earlier, Metric app is an innovative product by

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The Essential Guide to understand Revenue Recognition

It is often said founders have to wear more than one hat. If truth be told, as a startup founder you would initially be juggling all hats at once. Successful executives know everything about the business they run especially the finances. Yet, most aspiring entrepreneurs seem to be allergic to accounting and rightfully so. Founders are creative people, they shouldn’t be bothered with boring accounting matters. Honestly, even if it isn’t the most interesting topic when you’re starting a business, the success of your business relies on competent accounting.  No matter what business you run, or what your size is, finance is the lifeblood of your business. While Metric helps you manage every aspect of your business finance and accounting, we still want you to know the basics of accounting. Not only does this equips you to understand your financial reports better, but also empowers you to present your business in a better way.  Today, we’d be diving deep into the concept of revenue recognition. Since this is specific to accrual basis accounting, let us first find out what accrual accounting is.  Accrual vs Cash basis Accounting An accounting method is based on rules that your business must follow when reporting revenues and expenses. Cash basis and accrual basis are the two main accounting methods. The key difference between the cash and accrual methods relates to the timing of revenue and expenses recognition. Both the methods have their benefits and drawbacks.  Cash basis accounting Cash basis accounting recognizes revenue when cash is received and when expenses are paid. To further simplify it, according to this method your revenue is the amount that has already been paid to you, the pending payments and expenses don’t count. The reason solopreneurs choose cash basis accounting is because it’s: Accrual accounting Accrual accounting recognizes both revenue and expenses when earned, not when received or paid. What this means is that, when you have delivered a service or product, the decided payment is already recognized as revenue even if you haven’t received it yet. This method provides a much more accurate summary of your business. How? This example would explain it better.  Accrual Accounting provides a more accurate representation of a company’s finances  You see two profit loss statements in the pictures above. The one on the left uses cash basis accounting thus not received cash is not shown. Thus the net sales appear to be zero while the cost of goods sold is $2000. This statement shows a loss of $4000. This is not an actual loss but the payments are pending.  On the other hand, the picture on right uses accrual accounting. It shows net sales of $12,000 for the cost of goods sold $2000, though the payment is not received yet. This statement shows a net profit of $8000, which is accurate once payment is received. This is how this method shows a more accurate picture of the business finances.  Accrual is considered a better approach for larger companies with more employees. Businesses that extend credit to customers or use credit with their suppliers can attain a more accurate picture of their overall financial health with accrual accounting.  How does Metric simplifies accrual Accounting? The only reason businesses hesitate to use accrual accounting is the time and effort required to track and maintain the records. It requires frequent check-ups, tracking of accounts receivable and payable, detailed bookkeeping and manage prepaid and deferred assets.  Metric does all these tedious tasks for you, and lets you enjoy the perks of accrual accounting. The app lets you see your incoming and outgoing cash on a daily basis keeps a cloud-based real-time dashboard for you to view your financial health, and handles invoices, accounts, bills, payrolls and taxes for its customers. The metric app automates and streamlines the process which reduces errors and staff costs.  What is Revenue Recognition?  Revenue recognition is an aspect of accrual accounting that specifies when and how businesses “recognize” or record their revenue. The revenue recognition principle says that revenue should be recorded when it has been earned, not received. When you provide a product or service to a customer, the amount of the created invoice is recorded in your revenue, this is called revenue earned. When you actually receive the payment, that is the revenue received.  To ensure uniformity in all financial reports, all companies must abide by a defined accrual accounting and revenue recognition practice. However, different countries and industries had their separate set of rules, which created disjointed and fragmented revenue recognition standards. This made it challenging to fairly compare the performance of companies globally. To solve this problem, FASB and IASB created joint regulations called ASC 606 (in the US) and IFRS 15 (internationally), which set a new, shared framework for recognizing revenue across industries and business models. Requirements for Revenue Recognition Model The joint standards outlined in ASC 606 and IFRS 15 require that companies adhere to a five-step revenue recognition model. Set credit terms for your customer. When you make a contract with a customer, prepare the invoice that mentions the service, charges and credit terms. Credit terms indicate the number of days the customer has to pay that invoice. A customer agreeing to those credit terms is obliged to pay within the stated number of days. A contract can be a formal written agreement, as is often the case with service-based businesses, or a receipt for a point-of-sale purchase at a retail store.  There should always be clarity and transparency regarding your performance obligations to the customer. The term “performance obligation” refers to a “distinct” product or service that the seller has agreed to deliver. The exact transaction price for the product or service needs to be finalized and presented to the client before recognizing revenue. Along with the direct charges, the right to return and potential discounts also come under transaction price.  Assign a price to each performance obligation in the contract. Base the prices on relative standalone selling prices like the

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