That's the quandary facing marketers today. As I see it, you have these options: discounting or go to the database. Sadly, the first throws away hard-won profit; fortunately the second secures your future. These are the times when genuine Customer Relationships will be put to the test. Are you ready to cuddle up or will you have to rely on cutting costs?
On the steamy East Side of Chicago, when the heat is coming down on the Mafia mob, the tradition is that they “go to the mattresses”. In short – they go into hiding and keep their ugly mugs off the street. Sitting around in string vests, they play endless hands of poker while one of the brotherhood cooks up meatballs and spaghetti for dinner. It’s a smart wise-guy kinda’ move - and they do live to fight another day - which is the purpose of the exercise.
In marketing terms, it is safe to say that the heat is coming down at present. Events at the World Trade Centre and further afield have only served to consolidate a shrinking marketing position. Confirming the predicted economic forecasts, the purchasing public is staying away in droves while bracing themselves for hard times ahead. In short, it’s bloody hard work to make a business Rand these days. And once made, it’s worth diddley-squat.
Sitting, as I do behind an ad-agency desk , it’s easy to decipher the writing on the wall. After the client’s H.R. and entertainment budgets have been slashed, the next victim is usually advertising spend! Advertising is always a soft target and frankly, one of the easiest to rationalize the cuts: “The public aren’t buying so why should we advertise”? “ If we put the same money into discounting the product, then at least we’ll keep the factory/shop turning over and layoffs can be kept to a minimum”.
Well, I believe that there’s a lengthy argument against this kind of thinking - but I’ll leave that to Reg Lascarus and the other illuminati to explain. In short, nothing lasts forever. Not even a recession, and those that have kept a presence in the media are traditionally the first to benefit when the public mood swings positive again. Yet those who do not learn from history are condemned etc.
Instead of advocating on behalf of holding ad-spend, I would prefer to argue in favour of beating a retreat to the mattresses theory of marketing.
When the heat is on, there is one sure-fire refuge from the storm and it is hidden away in your database of loyal customers. That list of people who like doing business with you and who have faith in your product or service. We shall presume them to be those people who you have been especially nice to during the good times.
Mixing my metaphors while doing a trash job on Shakespeare along the way, it is clear that “Now is the winter of our commercial discontent… made glorious summer by our database of loyal customers.”
If you pause a moment and think about it, your best customers probably still need your product or service. Because of the economic climate, they might want less of what you sell, but they still need some of it. After all, that is why they are your best customers – providing somewhere in the region of 80% of your turnover and profit.
It’s time to cozy up to your dearly beloveds. Forget trawling for new business. It’s just too costly an exercise at present - and besides, the market (with a few exceptions) is shrinking. Only the very brave or the very hungry go fishing in a storm.
I see this as the time for your investment in a CRM programme to pay for itself. When the loyalty that you have been building during the “Seven Good Years” kicks in and helps you survive the “Seven Lean Years”.
If you don’t have a strategically planned CRM programme with a database intact I suggest you don’t hesitate. My advice is that you should immediately begin discounting your product or service. It’s probably all that will help you through this recession. I say this because the few still spending customers out there are probably hugged so tight you won’t get close enough to whisper in their ear.
On the other hand, those businesses that did the CRM spade-work, invested in their customers and paid attention to their requirements have little room for complacency. Never overlook the fact that even the most loyal customer is under some form of financial pressure. In today’s commercial climate, where the opposition is fighting to keep afloat, it’s every business for itself. Your customers will be exposed to lower prices, offers of dedicated service, improved quality or whatever deal it takes.
Leave nothing to chance. If you contacted your customers on a weekly basis before, it is now advisable to accelerate the tempo to perhaps twice a week. Monthly contact should shift to weekly. Who knows what the competition is offering?
With prices in mind, grab hold of your calculator and figure out how you can cut your costs and the prices you offer. Firstly, because your opposition will be doing so right now. Secondly, because your customer needs you to do it anyway.
The smart move is to work directly with your customers in this price-paring process. Sit down and discuss their requirements. Discuss ways in which you can help each other. Find ways to do things cheaper, smooth cash-flow and ease frustration. Your customer relationship will emerge that much stronger if both parties appreciate that the other is enduring their fair share of the pain. Remember win-win!
“But we don’t have a database of loyal customers.” Well, shame on you! In this day and age, when the “information is power” mantra has been bandied about ad nauseum, not knowing your best customers intimately is positively criminal.
Profits should be passed on to the shareholders during the good times – that is a grounding principle of the free market economy. But only once the business has made an investment in customer data which will protect the business and the shareholder on the rainy days that would surely come.
You don’t need to listen to the hail on the roof to know that there’s a storm brewing out there.
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