Marketing In Hard Times
The business challenges we face pale in light of the recent
catastrophic events. The terrorist attacks on the World Trade Center in
New York City and the Pentagon in Washington, D.C. were literally acts of
war. Without question, September 11, 2001 will be an infamous milestone in
the history of the world. The attacks have thrown us into a new cultural
era yet to be defined.
Yet the United States and the rest of the world clearly demonstrate
determination to go on. Intimidation is unacceptable, and life and
business must continue. This courageous resolve does not save us from
facing the harsh economic aftermath. The immediate effects were historic
and drastic drops in the financial markets throughout global stock
exchanges. Consumer confidence has been shaken as uncertainty breeds
resistance to unnecessary spending. Many industries and businesses have
suffered drops in revenue, and layoffs are widespread. The key to
surviving this climate is to avoid the tendency to be alarmist while learning to
cope with this new economic reality.
What effect is this going to have on my business? How can one
respectfully proceed without appearing insensitive or even opportunistic?
How can we market at a time like this? Who is still buying our product or
services? These are just some of the questions that companies are asking.
Added to the state of the economy prior to September 11, this time of
crisis leads to the necessity for some serious strategic planning for
Let's look on the positive side. The attack on America has led to
feelings of community and patriotism. The importance of relationships and
the love of friends and families are reemphasized. Sometimes taken for
granted, these priorities have been reinstated, as we collectively
recognize the frailty of humanity and the pain of loss.
It is the power and the importance of relationships that will also
determine the fate of many businesses. The prior trust and partnerships
developed with customers will save many firms, as we work our way back to
whatever one might define as "normal."
Your best assets and the strongest strategic capability you possess are
the relationships you have with your existing customers. Now more than
ever, you must work on your customer relationship management (CRM)
strategies. As they cope with a heightened sense of mistrust and fear,
people prefer to do business with people they already know; they are less
inclined to make significant buying decisions with new suppliers.
"New relationships are always more costly to obtain, even in
'good' times and especially in challenging periods," says Dina
Hristopoulos, a CRM consultant with Virtual
CRM Solutions Inc. "The opportunity to sustain and grow your
business will be based on your skill and ability to make individual
customers more profitable. You must get a reasonably good idea of the
comparative value and growth potential of individual customers. Look at
the life-time value of each customer or rank them by revenue."
When you are looking to win more market share in a better economic
environment, it is more acceptable to work with customers that are not as
profitable as others. You give up profit and margins to win new accounts.
You're up against many competitors and pricing strategies are aggressive.
In harder times, weaker competitors disappear, but the number of customers
buying also decreases.
You can generate more significant profits for your business by
concentrating on different types of customers and prospective customers.
Know who values your company's services, especially those who buy more
frequently or seek larger deals to avoid wasting precious cash and
resources marketing to unknown prospects. As in our current situation, the
deeper the downturn the more important it is to have this kind of
Marketing campaigns for new customers have higher elements of risk.
Selling to your current customers involves a concrete number and you
possess knowledge of their needs. You have a known market size with them
and simply stimulate them to do more business with you.
This potential profit from your customer base is really "customer
equity." It is often neglected in upturn markets because the market
is expanding. Companies have the resources for both acquiring new
customers and growing existing ones. In good times, it is possible to
spend more money on brand building and company recognition. When you hit
the wall, however, it is time to collect on your investment in brand
building and work with those who have faith in and trust you.
This brings us to what I call customer evolution. In a downturn, you
must aggressively convert unprofitable customers into profitable accounts.
If this is not happening, then you need to cut them free. Use a system for
documenting and measuring the profitability of each one of your
relationships. Utilize CRM software programs that link with accounting
packages to produce reports with these metrics.
Ms. Hristopoulos proposes, "Any firm that has a clear
understanding of its customer equity can almost always apply this data to
improve its immediate sales results and even reduce its marketing
costs." She adds, "You can't leverage your customer equity if
you never measured it in the first place and don't have a system for
In closing, your central focus must switch from winning market share,
or volume sales, to increasing profitability and extracting the most value
from each customer. Meaningful results are more likely from leveraging
your existing relationships rather than starting new ones. Use the
stubborn determination born of this violence to strengthen and reinforce
the foundation of your business success -- your customer relationships.
Martin Wales, the Customer Catcher, is a business development
specialist helping companies win and keep more business with a focus on
CRM. He is a technology-marketing specialist, speaker, and facilitator
focused on maximum results with minimum risk using a company's existing
resources. Contact him at email@example.com.