Brand Central Station

Think there’s confusion in the world’s financial markets?  That’s nothing compared to the world of marketing – where uncertainty, confusion and out-right panic are not out of the question.

Economic recessions are tough to understand.  For many small and mid-sized businesses, the national recession indicators manifest themselves in ways that often go unreported by the mass media.  Add to that the general sense of desperation felt by consumers and business owners and managers are often left wondering what they could have done to avoid their difficulties and at a complete loss about what to do going forward.

So, let’s try to take a step back and understand the nature of this particular recession and what options lay ahead for the small and mid-sized business when it comes to evaluating and re-loading their marketing plans for the rest of 2008 and all of 2009.  (Yeah, you heard that right – you better be thinking about a total re-boot of your marketing program starting tomorrow because the only thing you can count on in this recession is that your plans made six to ten months ago are out-of-touch with today’s economic reality.)

Key factors of this recession
Where did it come from and how did it get to be so bad, so quick?  Let’s not play the blame game here.  There were plenty of parties contributing to today’s economic turbulance.  But two factors seem to be primary movers in the recession of 2008: a pandemic credit squeeze and a fossil fuel economic paradigm.

Since this is a marketing blog and not an economic blog, let me sum up these two factors thusly and then tie them to a series of recommendations for action by small and medium-sized businesses looking for a way to get on top of this economic roller coaster:

1. The credit squeeze – manifested as mortgage defaults, out-of-control credit card debt and government bailouts of Wall Street and other key industries, the old recessionary rule of “Cash is King” has never been more true.  Money is tight for consumers and businesses alike.  Marketers need to keep this in mind when it comes to trying to capture market share or build business volume with existing customers.
2. The price of oil – the “go-go” economy of the 1980′s and 1990′s was fueled, literally and figuratively, by extremely low oil prices.  As long as gas and oil were relatively cheap, money could be diverted to other illusions of productivity.  We could afford to produce products off shore because the cost of transport was artificially low.  That paradigm has changed for good and will continue to change even more.  The cost of getting things places will continue to grow as a budget item that everyone (including marketers) will have to deal with.

Your plan of action
An economic downturn like this recession is tough.  No doubt about that.  But it still presents opportunities for small and mid-sized businesses that “keep their head” and think through their budget and marketing realignments before swinging the axe.  Here are some obvious – and not so obvious – things to keep in mind:

1. Figure out where the customers are - a recession doesn’t hit everyone the same way.  Some vertical markets are more affected than others.  Financial service markets, this year, have been devastated.  But healthcare markets are projecting stability (and in some cases, growth) into 2009.  Spending for customer and competitive analysis is usually among the first items cut in a recession (in a little more than seven out of ten companies surveyed), yet careful analysis of a market can identify exploitable opportunities.
2. Make sure your happy customers are exactly that – remember, in good times nearly 80% of a company’s business volume comes from its top 20% of its clients.  In a recession that 80/20 rule is replaced by something more like 95/5.  Small and mid-sized businesses should consider offering benefits and incentives that address the major causes of pain for their best customers during these lean times.  The dividends realized when the economy changes (and it will, eventually, change) could be substantial, yet 94% of marketers surveyed by the ITSMA said they cut spending on customer satisfaction and loyalty programs.
3. Increase the frequency of contact with established customers – call it circling the wagons, if you want.  But you can reduce the violent gyrations of a recession by staying close with your own in-house list of customers.  Electronic newsletters are great for this kind of contact.
4. Re-think your advertising messages – we’re big believers in having a “mission for every message” and that goes double during a recession.  The days of blanketing markets with coupons or creating unmeasured sales incentives are gone.  Take the extra time to think through the sales process and what it will take to move customers through that continuum and your marketing communications efforts will become more focused and “results oriented” making your return on marketing investment easier to measure.
5. Try to stimulate “Word of Mouth” support – it’s the least expensive and most credible form of advertising support around.  Creative promotions in economically turbulant times can create incredible “buzz” that far outlasts the actual promotion. 
6. Feel free to steal – not from your competitors but rather from other industries.  Sometimes the germ of an idea in one industry or profession can release a torrent of new “outside the box” ideas for a small or mid-sized company willing and able to take the risks.
7. Ramp up your online marketing efforts – remember how important it is to deliver “measureable” results?  There isn’t a medium more measurable than online.  Just remember to be deliberate and test everything.
8. Don’t forget your peeps – too often small and mid-sized managers concentrate on customers during an economic recession and forget about their relationships inside the four walls of their own company.  Take time out to rally the troops and get them on your side.  Too often the best-laid plans of a company battling through economic hardships are waylaid by the defection of a key employee or from lack of rank-and-file support.  Don’t let that happen to you.
9. Be smart about addressing spending cuts – rather than making “across the board” cuts to a budget (which is easy to do), re-think how your marketing operation works within the business and find a way to create long-term savings through re-engineered processes.  For example, reduce spending on printed materials by a fixed percentage per year by moving to digital versions of the same documents.  Improve efficiency and cust costs for travel by encouraging more online and other virtual meeting techniques.
10. Share the burdens of marketing programs - before cutting programs and personnel, consider finding partners (either customers or suppliers) who might benefit from sharing the development and management of certain marketing functions.

The keys to managing your company’s marketing efforts through a recession (big or small) are focus and perseverence.  Be careful, thoughtful and strategic in your approach and remain open to outside opportunities when they come.  Remembering the value of cash (when you’ve got it) and the importance of energy conservation – at least in this recession – will give you a leg up on competitors who don’t know what to do next.

Good luck.