Note: This is part three of a four-part blog series about positioning your consumer reporting agency (CRA) or background screening company to survive and thrive through the current economic turbulence and the turbulence sure to come.
Previously, we looked at ways to improve efficiency to maximize your resources and time during lower volume periods. Today we’ll explore innovative strategies for growing your background screening business amid a challenging economy.
These days, most CRAs and background screening companies might be thinking more about survival than growth.
Certainly, the largest CRAs in the industry don’t expect much growth in 2023. As noted in our recent industry outlook, big names such as First Advantage and Sterling forecast negative to single-digit growth. Many economists say a recession is imminent, while others say a sector-dependent “rolling recession” is already upon us.
Nevertheless, the ancient proverb “necessity is the mother of invention” has proven itself true time and time again. When the economy takes a turn for the worse, smart businesses find new opportunities and revenue streams and emerge from the economic turmoil stronger than ever.
Your CRA or background screening company does not have to settle for merely enduring the hardships of 2023 and 2024. The following four innovative strategies will help your business thrive during the current downturn, setting the stage for stratospheric growth once the economy recovers:
1. Explore Novel Revenue Streams Supporting Public Safety
As experts in person-risk data, CRAs possess core capabilities that may be of value beyond employment decision-making, especially regarding criminality.
Crime is generally perceived to be on the rise in the United States, and governments and community organizations are searching for solutions. Your CRA can provide the data that helps these organizations make their cities, towns, and workplaces safer.
“What about supporting chambers of commerce through analyzing criminal activity in a given area, identifying patterns of criminal activity or behavior for police departments, or comparing criminal activity across different areas or different businesses, assisting with development of crime prevention strategies?” Jones proposed.
These ideas might seem “really out there,” Jones admitted. Still, they are really not that far removed from the typical risk assessment activities CRAs routinely engage in — only for different types of end-users.
2. Work With End-Users and Vendors to Reduce Costs
If you’ve been following economic projections or read about the expectations of the big three publicly-traded CRAs, your first instinct was probably to wonder, “How can we reduce costs at our CRA?”
While cost reductions are a natural first step for dealing with downturns, “Think about how you can reduce costs intelligently,” Jones advised the webinar attendees.
For example, you could begin by asking your customers about the key features they require in your products.
“Are there things that can be deprecated from that product that can save you some money but don’t really have a material impact on the product?” Jones asked. You may find you can sell a more streamlined product for the same price.
On the other side of the production cycle, you might be able to secure some savings from your vendors — especially those with whom you have long-standing partnerships.
Your vendors may share a sense that “We’re all in this together,” Jones said. He recommended speaking with your vendors “to understand how you may be able to get better bulk pricing from them or better solutioning from them in order to drive down your costs.”
3. Create New Products and Services Around Existing Employees
Demand for traditional background screening may decline as hiring tails off, but new hires aren’t the only group posing a risk to employers.
“What are other solutions that you can provide to employers to help manage the risk of existing employees?” asked InformData Chief Product Officer Greg Jones during a recent webinar for CRAs.
As Jones pointed out during the webinar, as employers make decisions about their workforce CRAs can assist by providing insight into employees to ensure they are retaining their best resources
4. Innovate Everywhere
Innovation can be a powerful tool for combatting the effects of a recession — and there may be more opportunities to innovate within your background screening business than you realize.
We tend to think about innovation in terms of the big swings, like when Apple released the iPhone and created an entirely new product category. But, said Jones, “Sometimes innovation is just optimization of a really messy process.”
“Everybody wants to talk about building a new house, but people don't necessarily want to talk about emptying the dishwasher,” Jones said. “Innovation can be figuring out a better way to empty the dishwasher.”
So, where can your CRA find newer, faster, better, more cost-effective ways to “empty the dishwasher?”
We have already provided some essential efficiency tips in our last article. In the final article of this four-part series (coming soon), we’ll focus on the critical areas of revenue, client relations, and labor management.
Check back soon for updates (or subscribe here).