Tomorrow will be a critical red flag day for those seeking signs that central banks will recognise that smart companies need a boost to effective demand.
Tonight, US Federal Reserve chairman Ben Bernanke will head to Jackson’s Hole to disappoint those that are hoping to see the printing press roll out billions of stimulus dollars. The Romney-Ryan campaign will announce its plan to get the USA back on the road to greatness. And Angela Merkel is on her second trip to China begging for a bailout of the Euro crisis.
In Australia we can expect the mass media to begin a campaign to stress public service cuts, deficit fears and demands to enable easier and more rapid staff dismissals. There is no doubt that Wayne Swan faces a very difficult time developing his mid-year financial statement.
Business confidence is currently being held hostage to deflationary policies and hysteresis generated by ideological economic models that do not reflect consumer expectations. Customers have been saving since the GFC and shifting their expectations, waiting for the recovery that never seems to arrive whilst parties make claims and counterclaims about the need for austerity.
There will be a call from certain interested parties (led by the shock jocks) for the unemployed to accept lower-paid jobs and lower unemployment benefits. They believe that we need to drive sole parents and the long-term unemployed into the vacancies that could be created if we could get skilled workers to move into the mining industry.
Here are five keys to recovery to counter those who are talking down our expectations:
1. Build your contacts
Build upon contacts with existing customers and let them know what you are doing to meet their market pressures. Build a loyal herd of followers that form the base for your overall costs of doing business.
According to marketing guru Peter Drucker:
- your business has a 1:14 chance of doing business with someone with whom you have never done business;
- you have 1:4 chance of doing business with someone with whom you have had a relationship but have stopped; but
- you have a 1:2 chance of doing business with an existing customer.
2. Leverage adjacent marketing and sales strategies
Because everybody is "feeling the heat", develop relationships with other companies to pool resources, share special “get-this-with-that” promotional offers. Devise a strategy to offer your customers more service, special offers or other incentives because of your relationship with other smart companies.
3. Special offers
Offer lead generating special deals and bonus offers to customers who are prepared to make referrals and become advocates for the business. Loyal customers can offer testimonials and confirm your business as a specialised niche value proposition. But, at the very least, you need to get a thank-you note for bringing new customers to the door.
4. Remember brand image
Avoid cutting consumer relationship management and research efforts. Millward Brown has presented evidence showing that budget cutting is liable to reduce consumers’ ‘bonding’ with your brand.
Brand image and brand usage – two crucial elements in ‘bonding’ – suffered considerably when brands ceased to spend on communications for a period of six months or more. This was particularly true in the more price-sensitive product fields. During a budget cut-down, the brand will benefit from the marketing investment of previous years, but this needs reinvestment for the recovery period.
Make the shift from mass-marketing to micromarketing and online brand promotion to strengthen and deepen your pool of customers rather that wasting funds on a shotgun attempt to hit passing ducks.
Remember that there is a time lag between households and business-to-business decision-making that has to be encouraged to consider inventory requirements. Diverting marketing expenditure into short-term price promotions usually damages the brand values and is also likely to be unprofitable.
As leading edge marketing agency Ogilvy points out, historically, recession businesses have tended to switch budgets from brand media advertising into direct marketing and other digital media channels seen as more measurable where customers’ budget-switching between channels occurs.
Instead of taking notice of a politically motivated “blame the victim” mentality it is time for small and medium enterprises to establish an alternative, positive agenda. Business leaders need to create their own drive for expansion and listen to their customers’ call for quality services and valued offers rather than focus on the impacts of the political divide.
Dr Colin Benjamin is an entrepreneurship and strategic thinking consultant at Marshall Place Associates, which offers a range of strategic thinking tools that open up a universe of new possibilities for individuals and organisations committed to applying the processes of innovation, creativity and entrepreneurship. Colin is also a member of the global Association of Professional Futurists.