Posts tagged recession marketing


What to do when customers are pounding you

Jun 4th

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It’s a buyer’s market and you are probably getting whacked with a big heavy customer stick to LOWER PRICES! There’s nothing you and I can do about the balance of power right now. However, I wanted to provide eight ideas for you to eke out some competitive advantage even in an environment of buyer power:
1) Raise switching costs. What can you do to make it excruciatingly painful for your customer to change to a competitor? In one example, I provided a customer with a software solution that my competitors didn’t offer. It made it so easy to do business with my company that even if the other guy came in with a lower price, it was going to be difficult for the customer to rip out that software. I was able to keep the business, even at a higher price.
2) Know your role in the supplier base. Are you the industry leader? Are you a new entry trying to gain share? Is your customer just using you to lower prices against the incumbent? Knowing these answers will help determine your pricing strategy.
3) Look to the long-term. The recession is a war. Are you in a position to win or lose? How are you trying to position yourself for the END of the recession? Is this the chance of a lifetime to build marketshare at the risk of short-term losses? Do you have the financial strength to outlast the other guy? Consider the long-term opportunities amid the short-term pain.
4) Involve the entire supply chain in the bid. Do unto others … if you are being pressed for price concessions, it’s only fair and wise to seek similar help from YOUR suppliers. What can be done to lower your costs of goods sold to put yourself in a better position to compete? Is it possible to strike pay-for-performance incentives with suppliers to help you win share?
5) Engineer the bid to be in your favor. Make sure the customer’s specifications incorporate ALL the value-added services that YOUR company can provide, making it just a little more difficult on the competitor. Here’s an example, in a highly competitive bid for an aluminum contract, I pointed out to our customer that specifying large coil sizes would improve their plant’s productivity. It just so happened that the leading competitor couldn’t manufacture that coil size. Oh well ….
6) Expand the pie. Instead of thinking about bidding on one piece of the pie, can you use this painful bidding process to create a bigger pie for the long-term? Can you trade price concessions in one area for opportunities to participate in other lines of business? Ask the question, “If we help you in this area on price, would we have a chance to bid on another product we don’t sell to you today?”
7) Use this as an opportunity to build loyalty. You are getting beat down by lower prices but your customers are probably suffering too. Don’t dismiss the fact that doing something BOLD to help your customers get through this recession may build deep loyalty to you and your company that will pay-off in the future.
8) Take the emotion out of it. All too often people make regrettable business decisions in the heat of the moment. Make sure you are making decisions based on the cold hard reality of financial advantage, not a personal will to “win.” Let your accountant help you when the emotions are running high! Know your walk-away price and stick to it.
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More marketing for less: Think inside the box.

May 26th

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Constant innovation should be a central part of your business strategy but when the budgets get crunched, there is still plenty of value in the “old-school” marketing basics.

Bargains in traditional media. Marketing dollars are moving toward Internet marketing, but there is still a place for TV, radio and newspaper — and the value has NEVER BEEN BETTER! Newspaper ad sales were down 38% in 2008 – it’s a buyer’s market. More than 90% of Americans spend an average of 236 minutes a day with TV. I recently worked with a customer who was paying $9 for a 30-second commercial on a targeted cable TV demographic.

Focus on existing customers. Up-sell, cross-sell and micro-market to your existing customers. It’s 80 percent less expensive to sell more to existing clients than attracting new ones. How have their needs changed during the recession? There are probably new product and service niches being created with your valued customers. Go find them before the other guy!

Is your website alive? You’ve probably already invested in the website infrastructure and this is a highly cost-effective way to attract new customers. Is your site aligned with current customer needs? Does it have fresh, compelling content? A bold call to action? How is it differentiated from competitors?

Service essentials. Follow up on every lead quickly. 88 percent of people are happy to hear from a vendor after download within 24 hours. Waiting 96 hours drops that number by half. And think about using personal, hand-written notes to cut through the clutter and really delight your customers. Writing a letter … now that is REALLY old school!

Destroy complacency. I see so many customers spending money on advertising channels simply because this is what they have always done. Are your channels still relevant and targeted? Have your customers shifted to another gathering place? Here’s a more detailed article on this topic: http://tiny.cc/9VYRI

Measure what you treasure. It takes no capital investment to make sure the way you measure your success is still appropriate and driving the right actions in your business. Is your marketing plan integrated and measurable?

Re-discover email marketing. This can be an easy and inexpensive way to stay in front of customers, especially if you have a built-in mailing list. This is a tricky channel, but done right, can be highly effective.

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More marketing for less: Profile customers

May 14th

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Here’s a simple but important tip for getting more for your marketing money: profile your best customers.
The term “profiling” has negative connotations from a social perspective but for your business, it’s one of the most effective tools for determining where and how to conduct your business. If you have a grasp on what type of people are most likely to purchase your products or services, you can seek out the location and the marketing plans that give you the best opportunity to reach those people.
The number of ways to sort your customers is endless and really depends on the needs of your business. Here are just a few of the ways you can segment your most profitable customers:
1) What do your best customers have in common?
  • Are they in a common industry?
  • Do they seem to have the same role at their company?
  • Do they face a similar problems or challenges?
  • Similar buying patterns?
  • How do they use your product?
  • Do they belong to similar clubs or charities?
  • Do they have the same interests, attitudes and habits?
2) How did you attract your top customers?
  • Website?
  • Advertising?
  • Conference?
  • Networking?
  • Cold calls?
You may be surprised at the results! Once you’ve divided customers into sub-segments, consider the implications for your marketing strategy:
  • Are your initiatives aligned with the profile of your best customers?
  • If your customers strongly share certain characterstics, how can you adjust your message and channel to better appeal to these folks?
  • If one marketing channel seems to be working better than others, do more of it and cut the rest.
If your business is down due to the recession, this might be the perfect time to step back and do some introspection on your sales and marketing strategy. While there are many sophisticated techniques, databases and CRM software applications aimed at helping you organize this information, even a small business on a budget can do effective customer profiling with little expense.
Here’s one simple analytical method available to almost everyone. Most small businesses use Microsoft Outlook to organize emails, contacts and calendars. In the “business” edition, it’s possible to set up searchable, custom fields to collect detailed information. If your profiling needs are simple, you can even search words you’ve added to the “notes” section of the basic Outlook edition. Start logging the source of new customers in their profile (like “cold call” or “website”). You can then enter these terms in the search function and, with the push of a button, generate a list of customers who share these characteristics.
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Most painful marketing mistakes — Part 4 "No value proposition"

May 7th

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Painful marketing blunder number 4: No unique value proposition. The pain factor on this one is VERY HIGH because you’re probably going to spend a boatload of money before you discover that you’re failing.
To illustrate my point, let me take you back, back, back in time to the heyday of Kmart. Here was a company that predated Target and Wal-Mart but lost the retail leadership position it enjoyed because it lacked a clear value proposition.
Kmart pioneered the idea of everyday low prices but could not keep up with Wal-Mart’s dominant global supply chain technology. So it abandoned that idea and tried to sign on designers and celebrities to provide exclusive clothes and home products to compete with Target. This confused its core customers (seniors who wanted to find the latest in polyester) and loyal Target customers wouldn’t be caught dead in a Kmart.
So, it spent a fortune on bigger, newer stores (remember Super Kmart?) that were Target-like but still selling crap that nobody wanted … at prices higher than Wal-Mart.
The company’s last gasp was to leverage the chain’s iconic “blue light specials.” In the 1990s, it created “Mr. Bluelight” (pictured). The company said, “Mr. Bluelight does not just represent a sale or clearance anymore. With Mr. Bluelight, we are making the shopping experience fun. We know there are more people than ever today who see shopping as an escape and a reward, and we are giving them the entertainment and excitement they seek.”
What??? The best thing they had going for them was the blue-light clearance and now they are abandoning it for yet another value proposition: Kmart is FUN and EXCITING? My gentle readers, how’s that for creating a clear value prop for consumers!!
LESSONS LEARNED
So what can we learn from Kmart’s demise? If you’re starting a business, you must conduct upfront research to find your clear points of differentiation – what makes you UNIQUE in the marketplace? Why do customers should buy from you? The prospect’s unmet need your company will satisfy? Once you have that strategy, you need to stick to it with a laser-focus.
If you have an established business, your unique value proposition should be already well-understood – at least your customers understand it or you probably would not be in business! Still, you need to constantly check your strategy, adjust, re-invent yourself and defend your position, like Wal-Mart.
I see many people getting into business who think they can take on existing businesses and simply convince prospects they have a better product or service. They announce to the world, “We might not be first, but we’re going to be better.” That might be true, but if you’re late, and you have to battle well-established competitors, bring a bundle of cash baby! Was Kmart really going to challenge a Wal-Mart that was rolling in cash? Never! A well-managed company is going to defend its marketshare ferociously until you are broke. So, once you have your niche, DOMINATE it.
CAN YOU ‘SPLAIN IT?
Another pitfall is having a great value proposition but not being able to explain it simply. Can you explain what you sell and why you sell it in 30 seconds? Sometimes that can be excruciatingly difficult, especially if it’s a new category or a new technology that requires education. The biggest marketing successes come with simple, but powerful explanations of the product offering.
Here was Wal-Mart’s value proposition: “Everyday low prices. Always.” Compare that to Kmart’s: “Home of the blue light special.” Wal-Mart had a clear point of differentiation and could tell the story in four words, and later ONE word, “Always.”
This economic recession is an excellent time to re-evaluate the relevance of your value proposition. Your customer needs are probably changing. Make sure you are innovating to stay aligned with the new unmet needs that are being created all the time.
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