recession winners and losers

Part 1 of an occasional series

During the high flying days of economic expansion (don’t worry, they’ll be back), many companies in your sector resisted long-term strategic planning, differentiation approaches and wise investments. They were raking in cash and living the good life. They were warned it wouldn’t last but somehow believed the good times were more the results of their leadership and marketing prowess.

the winners

A few actually were correct. They hired the best in-house sales talent they could afford and brought in outside marketing professionals to augment their efforts. These businesses realized marketing and sales efforts are separate, albeit related, functions. Marketing is the “lead the horse to water” part, while sales is the “make him drink” part through excellent closing skills. The more savvy ones did not rely on their own habits and experience in making judgment calls, but rather on hard facts and research. They also stepped out of their comfort zones to learn how to reach younger consumers through mobile and Web technologies.

Today they are actually gung ho and investing in marketing like never before because they know they will build market share while their competitors cut back. Hard facts from every other downturn since World War II bear this out.

the losers

Ah, but others 1) did things the “way they always have” (“if it ain’t broke, don’t fix it”), 2) were too proud to delegate to someone who might know more about branding, strategy or changes in consumer habits (for some reason some leaders believe they are inadequate if they lack marketing intuition or need to delegate in this area), 3) copied what everyone else was doing.

adding insult to injury

Still others believe they score by buying someone else’s easy, secret formula or cutting costs to bare bones.

A now-former client heard a pitch at a trade show that for $35,000 plus expenses, the company would receive the “proven” success plan. They shelled out the bucks, dismissed market research and planning and are now teetering on the edge of insolvency. Another bought the $100,000+ piece of “proven” hardware that would boost sales and revenues with no heavy lifting. The machine is about to be unplugged and the only heavy lifting was moving the $100,000+ out of the assets column. In both of these examples (what are yours?), the culprits were a lack of original thinking, wishful thinking or the belief that only some far away source is an “expert.”

Jeffrey Gitomer, author of the “Little Red Book of Sales Answers,” writes:

Wake up, Tinkerbell. There’s no magic wand. There’s no secret formula. There’s no lotion or potion that will make sales faster and easier for you – unless your potion is hard work.

Then, there are the choppers. They counter intuitively cut offerings to those customers who are still spending and reducing advertising and marketing costs to the point of their institution’s invisibility. Gitomer offers a thought, “High-level people want to make a profit. Low-level people insist on saving money.”

Writer Greg Mazurkiewicz offers additional food for thought:

When you think about it, it’s not surprising that common sense still applies in the business world. When you present the image of a loser who’s forced to cut back, you’re perceived as a loser. When you present the image of a winner who keeps chugging right along, you don’t lose.

I wonder how many more years and how many more recessions will pass before most companies learn that cutting advertising in bad times is a bad idea? I suspect that most businesses will never learn. That’s because it’s a knee-jerk reaction to cut, and most follow the common, knee-jerk reaction of the majority of their peers. The smart companies ignore the pack, stay the course, and make more sales and more dollars over the long term.

Short-term thinking very often gets companies into trouble. You may maximize profits this quarter, while you restrict profitability for the next three quarters. If you’re in business for the long haul, why wouldn’t you take the long view? Just remember, when you cut to the bone, you may very well bleed to death.

planning ahead

Consumer habits are changing partly because of increasing fuel prices, the housing crisis and volatility in the stock market and, partly, because of technology. You need to understand how these forces are affecting your customers and clients and plan accordingly.

Today’s younger prospects are tomorrow’s buyers. While they may be harmed by fuel prices, they may well benefit from lower housing prices. For better or worse, most are not playing the stock market…yet, and continue to spend on name brands and luxury items. If you aren’t reaching them through the technology they rely upon, your business is doomed to a grueling and slow death as your existing base ages and dies off.

Eric Spahr, in an April 2008 Advertising Age article, said:

It’s tempting to give in to the knee-jerk reaction and start shifting advertising to coupons and marking down prices or, worse, freezing the marketing budget entirely. But instead of focusing on cost and pricing, we should turn our attention to better understanding how this major change point is affecting consumers. We need to determine how they are adapting, how their behavior is changing and how we can help shape this behavioral shift.

Will your business or institution be a recession winner or loser?

COCO+CO. launches DSI to help smaller businesses compete online

Smaller businesses are not fully benefiting from the marketing potential of the World Wide Web. COCO+CO. has launched its “Digital Strategies Initiative” (DSI) to help local and regional businesses find and affordably target prospects online.

Large conglomerates are responsible for the bulk of the $22 billion spent on Web advertising in 2007. These companies found and targeted their customers, but local and regional businesses have not likewise been able to identify where their prospects gather online or affordably reach them. Additionally, they don’t know where to turn for video, audio and other technologies to develop effective online campaigns.

COCO+CO.’s Digital Strategies Initiative involves negotiating smaller advertiser “zoned” access to popular destinations, identifying locally owned Web sites with large followings, determining which technologies are most effective and repurposing content for multimedia use. COCO+CO. will partner with as yet unnamed industry leaders to undertake the initiative. Over time, investment in the effort is expected to exceed $1 million, said COCO+CO. President and CEO Tim Coco.

“Smaller businesses are seeing declining sales and lower margins because they cannot compete against the large chains that effectively use the Web,” Coco said. “Like their counterparts around the world, area residents are visiting popular social networking sites such as MySpace, rich media sites such as YouTube, blogs, podcasts and other online destinations. While large companies can afford the millions of dollars necessary to reach prospects on these sites, smaller businesses have been disenfranchised,” Coco explained.