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Lou Lasday:Work your brand in tough times
In lean times, marketing may propel you far ahead of your competition.
"We need you to come back tomorrow with a plan to cut spending by 10%!" Chances are that at least one time in your distinguished career, you were called into a management meeting with the dire message that things are soft. If you haven't had this experience, that's great. Now, get ready for this type of upcoming meeting. You'll hear that customers are nervous. They are holding back. The next few quarters will surely be anemic and we have to anticipate the cut back. In fact, our accounts receivables are already slowing.
Tomorrow tomorrow
Then tomorrow comes! You file into the conference room with the leadership team. Coffee and note pads are everywhere. Smiling faces are no where. A brief commentary is made by the senior shareholder. The CFO or in-house accountant is sitting to his right with copies of pertinent statistics to pass out as evidence of the down trend. You're told that "this time" it's different. With the new software, we're better positioned to devise projections and create department modeling for discussion. That channel will help in the day's deliberations. This time it will be easier to cut.
Now comes the round robin commentaries. The operations officer says they can't really make any serious cutbacks because on a cost-per-unit basis (if you fabricate) or on a sale basis (if you provide service), you still need to produce the work product. O.K., nothing there but what if we could turn out just one extra unit, document, drawing or plan per employee per day? That might allow a five member "production" staff to go to four; or increase a new business proposal each day with the existing staff. Or, do a better job in pre-qualifying prospects to maximize the existing staff time.
Human Resources objects, stating, "Letting staff go must be a last resort." And, the recruiting and training costs when things get better would make this round trip in-and-out process an exchange of dollars. The finance officer says he actually needs to add an Administrative Assistant to reduce his own 10 hours per day and weekend workload.
Your turn now
Eventually everyone turns to marketing. "Aha"! This is where the big bucks are being spent. Ad space, signage, printing, branding and design. "What are we getting from those ads? Is anybody actually tracking results and what if we cut the space and while we're at it, cut the frequency and color. Are we really going to loose anything if we take a temporary hiatus on marketing spending? That's the place to cut. After all, we're not a Fortune 500 company; we're a Gulf Coast 100 company."
Sound familiar? This scenario is repeated hundreds of times every day, whenever the marketplace is faced with a period of economic instability. And, otherwise increasingly smart and experienced business people are falling into this easy trap and are making a huge corporate mistake.
The reason? Because in cutting marketing spending, your Gulf Coast enterprise would be cutting the one function whose sole purpose would be to sell more of your product or service. Of all the times to stop investing in those activities designed to sell more, it would seem that a period of soft demand or uncertainty would be the worst!
Look at me
Imagine a situation where many of your competitors are cutting back their marketing efforts - reducing advertising media, and public relations activities, scaling back promotions, or postponing mailings, reducing chamber-type involvement, service club attendance, sponsored events or ad specialties. What is usually an incredibly cluttered marketplace in terms of customer or client communication is now, suddenly much quieter. You can essentially have the stage for yourself.
What a great opportunity to have people listen to you in an uncluttered or at least less cluttered environment.
And in fact, writing in marketing Management, authors Michael French and Sabine Demakowski published a study of 450 mid-size companies doing business during a recession. Those who maintained their marketing spending emerged stronger immediately after a recession than those who did not. Return on capital averaged a net of 4.3% for those who actually increased marketing investment; 0.6% for those that maintained their market budgets and - 0.8% for those who cut spending.
The bottom line
During questionable economic times, you'll look for ways to reduce spending and costs. While there is no infallible formula for weathering shaky economic times, think hard and long before scaling back on marketing. You don't want to diminish any effort to help you sell more. Maintain dialogue and service consistency with your customer while your competition is doing the opposite. This may just be your most significant dynamic, strategic initiative to actually propel profits during difficult times.
Lou Lasday, an independent marketing advisor residing on Longboat Key, creates action-oriented Strategic Marketing Initiatives for Gulf Coast emerging companies. A career Direct Response Executive, he has been a general partner of a major national marketing communications firm and Regional President of the American Marketing Association. Mr. Lasday can be reached at [email protected]
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