The local economy how much is it slowing? Is your business ready to react?
I don't want to foster the collective speculation of a slowdown, as many good things are happening here in the Reno-Tahoe area. But, I do want those I know and consult with to be prepared for anything.
Instead of predicting slowdowns in your businesses and trying to find a few line items to reduce, I suggest a comprehensive plan that addresses what you would need to do for a 10 percent, 25 percent and 50 percent reduction in your revenues: 1. How to keep your A-team players and eliminate non-productive staff. 2. What expenses need to go? 3. How to keep your best customers happy. Every business should have a contingency plan at all times and I hope you never need it.
But, for this column, I will only address marketing and communications budgets. It is very tempting to look at these budgets first when making decisions on where to cut. Just last week, my CEO group was talking about slashing their advertising budgets as we move into fall and winter. We all agreed that it is easier to spend less money on advertising than to cut staff and directly impact the lives of people you know and care about. And since you may not have a provable relationship between marketing and the overall bottom line, cutting these expenses is easy to justify. But, the right approach requires more than just cutting costs and coasting while waiting out the slump.
Successful marketing and communications, at any time, requires a combination of insight, execution and perseverance. Here are 10 ideas to think about before you make any decisions regarding your annual marketing budget:
1. First of all, know much revenue/sales you need to clear your present marketing/communications budget. Is it in line with industry standards? If you don't know what the standard is for your industry, ask your trade association. If it is too high or low, then you will have a guideline to make the appropriate adjustments.
2. Make sure you know your return on investment on your marketing/communications activities. What is giving you the best bang for the buck, the best response, and the best new customers? Prioritize your top producers and if you can't figure out if an activity, ad campaign, etc., is effective, consider it on the chopping block.
3. Be judicious with marketing/communications cuts. Reduced activity positions your company poorly in the future as you are not promoting and positioning your company, products and services during this period. That directly affects both consistency and differentiation, two of the most important components to successful marketing that is, marketing that turns into increased sales and profitability.
4. If your competitors are pulling out, you will look taller. Be the one making the noise, when everyone else has pulled back. Marketing dollars spent during a down economy are far more powerful than similar dollars spent during good times, because each dollar represents a greater percentage of the overall marketing expenditure in your industry. While other companies drastically cut their expenditures, your consistency means that you stand out more in the minds of your target audiences. This projects strength and stability in a way that supports any brand strategy.
5. Know your customer. No matter how wonderful your product features are, your salespeople will be disqualified if they cannot convince the prospect that they understand his or her business well enough to be seen as a resource.
6. Stay consistently visible through media relations. In any economic situation, being consistently visible and staying in close contact with media and your industry is critical to any company's success. Not only can a company maintain a strong market presence, it can do so at minimal cost, compared with traditional advertising campaigns. In addition, the credibility of an independent third party (reporters and media) carrying your message strengthens its impact. The first step toward gaining a new customer is being seen in the places they tend to be looking, including industry newsletters, magazines, Web sites, and association reports. If a prospect has never heard of your company, you're going to have a hard time getting their business.
7. You cannot forget to have something timely and newsworthy to say. The days of tossing out a press release and watching the articles roll in are long gone. A public relations campaign, when done right, can create the sense that your company is almost everywhere the prospect looks. It creates a sense of credibility and familiarity. No longer does the sales process has to start with your salespeople saying, "We are a company that does..." or, "Let me tell you why you should talk to us...."
8. Make sure you know who your target markets are and be strategic in your messaging. Producing a crisp set of messages to your audiences can only be achieved by throwing out old assumptions and getting out of the office to listen to your customers with a fresh perspective. Once you understand, and act on, the basics of marketing, you will be able to have the greatest impact on your company's bottom line, and produce the greatest value for your customers.
9. Save for a rainy day. We will invariably be in another boom economy soon. Instead of ramping up your marketing/communications spending because of how good things are going, think about the future. Stock some budgetary allocations away for that rainy day.
10. Nurture your good customers. This is just a good reminder, no matter what the economy is doing. Pull rabbits out of a hat for your real good customers making price less of a concern as they consider their budgets.
As stable companies in the Reno-Tahoe area, we all can weather through a short or long-stretch of economic slowdown. We've done it before. Companies that continue communicating to their customers over the years, even if the overall expenditure is lower, will enjoy very consistent business. That is because steady expenditures enjoy the benefits of consistency contributing to a strong, stable, credible brand while providing marked differentiation during down times, when each dollar spent has a larger impact.
As Warren Buffet once said, "Risk comes from not knowing what you're doing." So, arm yourself with knowledge before reacting.
Marlene Olsen is president of Olsen & Associates, a public relations and marketing agency in Reno. Contact her at 829-2810.
