Speculation still abounds about the recession: how much, how long, can we weather it? In prior columns, I have advised to be prepared for anything. And, now that we are in a slowdown, I am convinced that this is a good policy all of the time.
I find it really hard in my business to be disciplined when the economy is booming. Too many companies take a lackadaisical approach when cash is flowing. Sloppy practices do not show as much as when times are tough. This time can be painful or beneficial to your business, depending on how you are reacting now.
Being disciplined, being targeted and being creative are some of the phases of planning that are important during this challenging time. Being disciplined is a priority and tees up any marketing plan for success.
Typically, a downturn prompts businesses to pare back marketing budgets. Please read this column first before those line items are put on the chopping block. In preparing for this column and researching for a presentation I just made to the American Marketing Association, I zipped through at least 80 current articles on marketing and promoting businesses in a downturn. The articles ranged from the Harvard Review to the Economist, from the New York Times to this newspaper. Every expert on marketing during a recession agrees on one thing: those companies that stuck with their marketing survived much better than those who did nothing or slashed their budgets.
I have been a member of a CEO peer group for many years. Most of the businesses have experienced several economic cycles. They agreed that their businesses survived much better when they focused on the top line and sales than when they focused on chopping expenses. Deep budget cuts start a downward momentum not only on revenues, but in your employees' and customers' minds. And, if you are struggling, can your business really survive with budget cuts alone?
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 will stand out more in the minds of your target audience. This projects company strength and stability in a way that supports your business and communications strategy. By the way, companies can take business from weak competitors and position themselves for future growth by advertising more when competitors start advertising less.
Being disciplined is hard at any time, but I hope the following tactics help you weather the economic storm.
1. Stay focused on growth and productivity. Report the top three priorities you're focusing on; be it growth in some segments, overall revenue, profits, cash or efficiencies in the short term and long term. Discuss this throughout your company.
2. Conduct a marketing metrics audit. A key purpose of such an audit is to learn what is and is not being measured and why as well as what data is available and where the data is located.
3. Know your marketing return on investment. Make sure you know what your return on investment is on your marketing/communications activities. What is giving you the best bang for the buck, the best response and the best new customers? You can figure this down to the cost for a sale, hit, call, new customer, etc.
4. Prioritize your top producers to ensure that you are making wise decisions if you have to pare back. If you can't figure out if an activity, ad campaign, etc., is effective, consider eliminating it.
5. Measure what matters. While measuring sales is important, it's also valuable to measure the milestones along the consumer's journey toward making a purchase. One of the current measurements is the Net Promoter Score, which measures how likely people are to recommend something to a friend. It is particularly effective if you can measure them before and after people experience one of your marketing initiatives.
6. Demonstrate value. Activity reports are of little interest unless the results of the activities could be demonstrated and tied to business goals, particularly in terms of revenue generation, pipeline contribution, opportunity development, and market growth. Total media impressions should not be the sole focus of results, as it is important to reach customers in a way that is meaningful or useful.
7. Research and know! We are afraid of things we don't know or understand. There is a lot of help on the Internet and with your agency to gain understanding of what is happening in your industry so that you can react appropriately.
8. Just in case, construct a contingency 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 the top marketing producers. 2. What expenses need to go. 3. How to keep your best customers happy. 4. Put your resources and people to work on other services and products you can offer. Every business should have a contingency plan at all times and I hope you never need it.
9. 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.
10. Don't lower prices, add value. Free shipping, free gift wrapping, longer trial periods, exclusive shopping events, guarantees, short-term sales ...Many companies are tempted to lower the price of their product or service during tight economic times. But lowering your price tends to hurt your brand, unless you can find a way for the price reduction to make sense to your buyer. Create new value propositions that make your prices appear lower. Low price alone isn't the only way to win orders in these times and it may be difficult to raise your prices later.
11.Don't be shy about talking with your employees. Your employees may be nervous too. Investing time and effort in effective employee communication can pay off in a lot of ways: job satisfaction, productivity, new business leads, potential employment pool and more. Most good employees want to know how the business is doing and how they can help.
The reality is that down economies offer a tremendous opportunity for companies to grab market share, learn how to run their companies more efficiently and gain the loyalty of customers and employees. These are defining moments. As the economy recovers, what you do now will put your business in a stronger position than the competition. I hope your company is learning through this downturn.
Marlene Olsen is president of Olsen & Associates, a public relations agency in Reno. Contact her through www.o-apr.com.
