How to survive in a downturn economy (part 2)
(In case you missed part 1, go here.)
In the first part, we looked at some of the pitfalls that many companies’ instinctive reactions to a downturn in business may lead to. This part is all about the remedies.
If you play your hand wisely, your company will come out of a downturn in better shape than before it. Here are some hints on how to achieve that.
Strike a balance between brand promotion and short-term sales
While you need to keep your company name or brand visible to your customers during a downturn, do not forget actions that bring you short-term sales. In practice, if you’re now mainly promoting your brand, keep some of that promotion, but try to focus on activities that will bring immediate results.
Focus on existing customers
Chances are that your business follows the 80/20 rule that most businesses do: 80 per cent of your business comes from 20 per cent of your customers. Pay attention to your existing customers. Find out how your product or service could be of even more use to them and modify it accordingly, if possible. If it can’t be modified, find new angles on how your product can serve them in ways that brings them more profits or other benefits.
Use your marketing budget more efficiently
Now is the time to forget about “this is the way things are done in our business”. What you need is maximum return on the minimum of investment.
1. Skip the expensive, embrace the inexpensive!
If you’re now relying on trade papers or television to deliver your marketing message, consider more inexpensive ways. Direct mail works well, whether by ordinary post or e-mail. Instead of costly international trade fair participation, organise your own “shadow” show in a hotel suite at the fair location. Arrange road shows and seminars instead of visiting each of your customers in a given area yourself. Let them come to you instead of you coming to them. (An additional bonus is that when you invite your customers to your own show, they won’t be distracted by your competitors.) In brief, see whether below-the-line activities could bring in the same amount of business as your present above-the-line activities.
Put your own and your marketing department’s time to good use: study what your customers’ challenges are and find ways of explaining why your product is the right one to meet those challenges.
In your marketing communications, do something your competitors wouldn’t even think of. Instead of what is expected of you, do it differently. If you feel your advertising agency isn’t producing what you expect, consider working with a network of freelancers. Their overhead is way below that of agencies, and in most cases, you can work out a lump-sum cost for your assignment instead of hourly rates. Freelancers don’t have their coffee breaks at your expense. Or change your message. Approach your customers in new, more personal ways. Find out what makes your customers “tick” and capitalise on that.
Expect more of your marketing and sales staff. In many companies, “sales” means sitting behind a desk and waiting for orders to come in. Hire a competent consultant and teach your workforce to make cold calls, find new opportunities, upsell, expand on all possibilities they have.
5. Focus on ROI!
Don’t accept your bosses’ demands that x per cent of costs must be cut. Justify the cost by the amount of revenue. It doesn’t matter how much you invest in your marketing if it brings back revenues that exceed the usual. What should matter to you is 1) how much it will cost, 2) how much it will bring in.
Maintaining Share-of-Voice means maintaining Share-of-Market
Share-of-Voice (SOV) means your share of the visibility in the market you compete in. In other words, your marketing and advertising in relation to the entire marketing/advertising cake in your business. Where it really becomes interesting is that keeping your SOV above your Share-of-Market (SOM) will in the end result in growing market share. One percentage point of SOV over market share will bring in 1 additional percentage point of market share each year. In a nutshell, if you are more visible than your competitors, you stand to improve your market share, downturn or not! An added bonus is that visibility during a downturn will position you as a solid, reliable business partner among your customers.
Survival in depression means success in an upturn
To summarise: if you continue marketing consistently, with innovative solutions and lower expenses, you will not only survive through the depression, but come out of it in better shape than many of your competitors. Perhaps with improved market share, better image among your customers, better business and, most importantly, with better income.