Marketing in a Downturn
It’s Tough Out There
Marketing in a downturn? Marketing in a recession? Who cares what you call it. The market’s still terrible no matter what’s on the label.
Everywhere you look there are more gloomy headlines. Credit crunch, recession, negative GDP, depression, growing unemployment, government bailouts, growing bankruptcies, shrinking order books. Even the optimists are saying if it is over any time soon, we won’t feel the impact for a good while yet.
So, when things get this scary, we have two simple options, primordially encoded into our DNA. Fight or flight.
I don’t know about you, but I never was much for hiding under the duvet and hoping it will all go away. I prefer to take action. So then we’re left with the big question – as marketers; aside from stripping out all unnecessary costs, what action can we take?
The answer is easy. This will be the fifth recession in my working life (using the
It’s a three part approach - I like to think of it as an interconnected triangle (but you can think of it as a pyramid, or a baseball diamond or any business buzz shape you want in order to remember it) – and it goes like this.
A GBO - Glimpse of the Blindingly Obvious - as my old mentor used to say? Probably and especially now I’ve said it. But let’s take a brief look at each of these points in order, because even if this was obvious to you there may be some points in the detail (you know; where they say the devil is... and why’s the devil there by the way?) that you still need to think about. 1. Take Market Share Let’s face it, there aren’t many growth markets at the moment (and if you are fortunate enough to be in one then why are you reading this? Get out there and make money you fool!). So where is your growth going to come from? There is only one place where you can look to gain growth – that’s from your competitors. As markets shrink so the supply side consolidates. In fact supply side consolidation has been going on for many years now without the help of a recession. In my work I have been fortunate enough to meet and interview senior purchasing VPs from organisations such as Dupont, Kappa Smurfit, Bosch, Kraft Foods, Crown, P&G and many, many more. They have all said that one of their key priorities was to reduce their supplier base. Makes sense. Reduce your supply base and you reduce your costs, increase your leverage for the negotiating table, and ensure your quality of supply. All the current recession is going to do is accelerate this change. So you need to make sure that you are the supplier they consolidate around. You have to go all out to take share from your competitors. Now that doesn’t have to be at the expense of margin. Price is, of course, a key criterion, but it is never the only one. In fact these same purchasing VPs say over and over, independently of each other, that quality, reliability, service and relationship are all key parts of the supplier selection process. But you do need to have a thorough understanding of your competitors and what they offer. Then you have to find out what their customers like about their offer, and, more importantly, what they dislike. And what they would like but your competitor doesn’t deliver. So you need some decent competitor intelligence (if you don’t currently do competitor intelligence then you should – come on my Competitor Intelligence course to find out how. I run it for Frost and Sullivan so simply click here to find out more. What? Did you think there wouldn’t be any ads? Come on guys – I’m a marketer). Now, once you know all of this and have made sure that you can deal with the dislikes, deliver on the likes and the stuff that they want and don’t now get, then go market to them. Use the strength of your brand (assuming you have a brand with some strength), use your differentiation, use value (price and benefits remember) and, of course, power packed persuasive communication to get all of this across to them and share will follow. 2. Retain Your Existing Customers Obviously, if you are working even harder to grow your business in these challenging times, the last thing you want to be doing is filling a bucket which has a hole in it (to reuse a convenient metaphor). So the next important element in this mix will be a customer retention programme. Of course your existing customers love you and value what you supply them. It goes without saying. Otherwise why would they be doing business with you? But, if it goes without saying, then just watch out, as your customers might do just that – go without saying - as your competitors try the supplier consolidation approach too. Now more than ever you need a full blown retention strategy and plan. Don’t take their loyalty for granted. Work at it. That means knowing why they buy from you (in my experience a surprising number of organisations large, small and medium sized don’t have a real and substantial answer for that question when I ask it), what they buy from you (again – something many organisations collect too little data on) what they like about you, what they don’t like, what they want you to do more of and what they want you to stop doing. It means knowing why they select you against the competition and how they reach that buying decision. It means knowing which of your customers are contributing real value to your business (and believe me from my research it often isn’t the ones spending the most). It means knowing why the ones that ‘defect’ are leaving you and what they have in common. And it means knowing who the ‘at risk’ customers are in your current customer base. And after all of this, it means working out strategies to keep them buying from you. Once you have the strategy in place (and you are actioning it, not keeping it in a draw and getting back to putting out the daily fires – go on let some of the burn!), then you will be well on your way to ensuring that your customers stay with you. If you’ve already got answers to all of these questions and are dealing with all of these customer retention issues then you can afford to pat yourself on the back, feel very smug, and wonder why you’ve just wasted 5 minutes reading this (don’t start on me – I didn’t make you read it). If not then you’ve got work to do. But before you rush off to beat your marketing team up for not having the answers to these questions take a look at the 3rd leg of the triangle. 3. Increase Customer Value Once you’ve started taking share and are now growing your business because you’re working hard to hold on to every one of the existing customers that you value, you’re now in a position to grow in terms of revenue value as well. In fact, a good part of your retention strategy might involve selling more to your existing customers. Not selling more of the same mind you. No, selling more involves selling more of other products, services, and solutions (or whatever your business calls the things that your customers buy), not simply increasing the average order volumes of what they already purchase. Here’s an interesting question (well I think it’s interesting and I’m writing this). How many of your existing customers know all of the things that you provide that they might want to buy from you? Thought so. It’s what I call a ‘banker’ question. If you’re a consultant then you need at least one question that you can pose early on in the first meeting that convinces the prospective client that you are a living business genius. It’s a question that makes them go – ‘oh boy, that’s a good one. We need to deal with that.’ So that’s one of mine. (OK so there’s a bunch of you reading that saying, ‘is that the best you can do?’ Sorry, but, without the possibility of a two way conversation here then yes, it is. Give me a call or drop me a reply and I’ll see if I can do better.). If you did like that question then here’s my next one. Where are they buying those things at present? And another. If you have a good relationship with these customers and they like what you supply already (and they’re trying to reduce their supplier base don’t forget) then why won’t they buy these other things from you? So here’s a quick win. Sit down now and work out how you tell all of your existing customers about other products, services, and solutions etc. they could buy from you that they are not already buying. It’s quick, it’s cheap and it’s easy. And you know what? Some of them will turn around and say the most annoying thing. They’ll say ‘I wish I’d known that before. I could have spent so much more with you!’ And do keep in mind that by doing this, of course, you are also actioning a part of your retention strategy. So that’s it. Three interrelated ideas to get your marketing going and your business through this recession. And hopefully, ensure that you don’t simply survive in these challenging times, but that you actually are one of the few who can say you’re prospering. Here’s to it and do let me know how you get on. I’d love to hear about your success. Click here to respond. If you found this useful and would like to read more about Coussins Associates, about our take on the market, or about the services we supply click here to get to the main web site or click on the logo at the top of this page.
