Converting Magazine

Mark Spaulding

How NOT to participate in the recession #1
October 1, 2008

The financial crisis is scary, and the threat of a really serious recession if the lack of credit continues or worsens is growing. But that doesn't mean this all has to have a bad ending. Not according to NAPL and its Executive Brief: "Choosing Not to Participate in the Recession." By way of the trade group's chief economist Andrew Paparozzi, senior economist Joseph Vincenzino and research associate Kong Wang come eight action ideas to help your company come out of an economics downturn stronger. This post looks at the first four ideas; look for the remaining ideas in my next post.

1. Take Financial Actions:
In a credit crunch, credit is reserved for the most creditworthy. To be in the best financial position, NAPL vp and senior consultant John Hyde recommends the following:
A. Have a short-term cash budget. Project collections and cash week-by-week for the next month.
B. Line up a back-up bank. Have an option in case your relationship with your current bank sours.
C. “Scrub” your accounts receivable aging. Are too many 90-days past due? Are too many
concentrated among troubled customers? Look at receivables the way a potential lender will.
D. Use vital few metrics analysis. Be prepared when a lender asks to see your company’s financial vital signs. More info: www.NAPLPerformanceIndicators.org

2. Create a Cost-Reduction Task Force
During downturns, we often have to cut, but the key is not to cut indiscriminately. Make sure to listen to the people in the trenches before cutting. They know where the fat is. Consider marketing advisor Philip Kotler’s advice: “The first thing I would do…is to appoint a cost-reduction task force, to develop a recession business plan. Please don’t let it be only in the hands of the finance department. They will cut everything that counts—and tell you to stop marketing, when marketing is the only prop that you can turn to sustain demand.”

3. Step Up Marketing
In looking at cutting expenses, frequently one of the first cuts is in marketing. This can be a critical mistake. Instead, consider focusing more time and attention to your marketing with these four steps. Pay particular attention to Point D.
A. Contact past clients: “Miss you” cards.
B. Referral programs and incentives for current clients.
C. What more can we do for current clients? Always easier to get a bigger share of a current client than to develop a new client.
D. Review current marketing programs for ROI. If they weren’t effective when the economy was
strong, they aren’t likely to be effective when the economy is weak. The key is to find new things that work or work more cost-effectively. If your choice is between poor marketing or no marketing, no marketing may be better. Best, however, is good-to-great marketing that effectively positions you for growth.

4. Control the External Message
Clients and prospects are hearing all kinds of things from all kinds of sources—including your competition. The recession will take out a lot of converters. Despite what your competition may be saying, vow that you aren’t going to be one of them. One way to make sure that you are in control of the message is to stay in front of the customer both through marketing avenues and personal one-on-one visits. While others are cutting back on client visits, communication, advertising and PR, you can use communication avenues as a differentiating tool.

Posted by Mark Spaulding on October 1, 2008 | Comments (0)