In the wake of this year’s real estate collapse and the resulting economic meltdown, a slowdown in the video business has gone from “likely” to “near certainty.” For many it has already taken effect. For the rest of us, it’s a daily game of dodging and weaving to keep from getting hit by the malaise.
When we’re in a changing marketplace, we can go in one of two directions: we can make smart choices or dumb, knee-jerk reactions. So how do we succeed in such an environment? Nowhere is the ability to pursue smart choices more easily defined than in a company’s approach to external marketing — how you speak to the world. Most of what’s discussed below are arguments you can present to your clients on why they need to stay engaged, but these points also pertain to you and how you conduct your own business.
“Smart” begins with thinking strategically and executing a proportional response to changing situations. From the marketing perspective, a good first step is to do a reality check. If you’ve spent any time in a retail store recently you can see the world hasn’t ended and the sky hasn’t fallen. Although purchases are down, and there’s no arguing that some chains are struggling, in the overwhelming majority of retail locations, people are still buying and the lights are still on. In fact, here in mid-November as this is being written, WalMart, a retailer with one of the strongest and most heavily promoted value propositions, has just reported a slight sales increase over this time last year. (More on the importance of value propositions later on.)
For the sake of discussion, let’s say one’s business is off by 7%. The dumb reaction is to slash entire budgets, departments, and even business segments — in other words, address a 7% downturn with a 100% cut.
I witnessed one such disproportional reaction during the downturn in the early 90s. The CFO, of a large company, mind you, proposed that to save money the company should eliminate commissions to its salespeople. Fortunately, cooler heads prevailed and this potentially catastrophic sales force de-motivator wasn’t implemented.
Many already know that economic slowdowns afford opportunities that don’t exist in boom times. These opportunities may be as far-reaching and complex as snatching up a weaker competitor or as simple as seeking a lower price or better terms from your vendors.
Opinion on how to respond to a slow economy is divided. Some argue that rather than cut back on external marketing in a recession, companies should increase their advertising, sales promotion and PR efforts. A recent report by the Association of National Advertisers — an organization consisting of big brand-name companies like P&G, Coca-Cola and so on — stated that for 2009 roughly a third of their members plan to reduce marketing expenditures, while a little less than a third plan to increase their budgets. More than a third plan to spend about the same as they had for 2008 — but may reallocate how they spend their marketing dollars. For example, more web ads and fewer newspaper inserts. Surely, there must be some historical indicators as to which strategy is most likely to lead to success.
Indeed, case studies from multiple sources show that companies that continue to market actively during downturns often increase their market share and typically come out stronger after the turnaround. Why? Because their competitors take the knee-jerk approach and slash marketing expenditures as a simplistic way to save money. They focus on short-term savings without taking into account the long-term cost. In doing so they, in essence, withdraw from their customers rather than staying engaged.
Viewed another way, when business is harder to come by, which makes more sense: having a customer see more of you or less? The argument is equally effective whether the advertiser is considering the impact on new, potential customers or on existing customers who are reassured by a demonstration of continued viability.
Effective marketing is based on human nature. We are more likely to do business with a company and a salesperson we know than with a stranger. Outreach in its many forms breeds name recognition, and name recognition breeds business. In my marketing communications company I routinely explain to new clients the primary reason for promoting themselves: when their sales people reach out into the marketplace, the first thing out of their prospect's mouth isn’t “Who?” but rather “Oh, yeah. I know who you are and what you do.”
External marketing activities are a cumulative investment in your image and identity. The image customers have of your company is built up over years. The smart choice during a slowdown is to not let that image fade.
This would be simple enough if your company’s image were the only thing marketing communications needs to concern itself with. In times of declining business such as we’re now experiencing, you’ve got to give customers one or more compelling reasons for doing business with you, and doing so in the near term, rather than later. Simply put, now more than ever, messaging directed to customers must focus on what’s in it for them.
That comes down to pushing the advertiser’s value proposition. Of course if you are seeking out new business it can also be pushing your own value proposition. What are those compelling reasons? Why should a customer do business with your client rather than one of his competitors? Why should the advertiser use your services to sell his product? It may be, “We can save you money because... we can provide everything from creative to execution under one roof… we have the newest technologies so we can do better work faster…” — there are any number of differentiators which can and must be communicated.
Then there’s the biggie, always one of small business: “We can save you money — or help you make more money — because we can show you new ideas.” This could be the ideal message to convey to, as well as for, both new and existing clients. And it all starts with staying in touch with the outside world.
Nick Griffin operates a marketing firm with a strong focus on video and other forms of visual communications.
Reprinted courtesy of CreativeCOW.net. ©2008 CreativeCOW.net. All rights are reserved.