No can escape the fact that things are tough in Calgary at the moment, with a little reprieve looking along the horizon. It’s easy to look at the impact on your bottom line, put your head in your hands and wonder if you’re going to survive. A knee jerk reaction is to put a stop on all spending (necessary or otherwise) and slash your prices. As with all decisions, knee jerk reactions are seldom the best way out of a problem, and have an uncanny knack of making thing worse.
When things are going well with an economy pricing sins are easily forgiven. An overprice here, double price there can easily be resolved and absorbed into the ‘grand scheme’ of things. With sales and profits plummeting, costs spiralling out of control, customers demanding more service and value for their money it’ easy to look to the price cut, no, make that price slash, to keep the doors open and steady sales coming in. Adjusting the price can quell some customer issues, help cover some fixed costs and it can buy you time until the economy gets back on its feet. Price cutting can help, but it’s risky. In the very short term it may help, but what happens with the economy does not recover quickly?
If you have cut prices to artificially increase sales it may affect your profit when the turnaround does come, giving you a distinct disadvantage as others put their foot on the gas and take advantage of the new economy. It can also devalue your service or product and set up the expectation that the correct price is now ‘overpriced’ and open the doors the haggling for discounting. It can also tarnish the reputation your brand has taken years to build on, and could take it years to build back up.
A better approach when the economic storm clouds gather is to scale back your production level, postpone any non-essential expansion and look at all other costs to see if there are savings that can be made. These cost cutting activities will allow you to pursue low-value orders that were previously uneconomical, but can now bring in a steady flow of additional revenue.
Another important strategy to implement is to look at your sales goals. You can’t fight todays sales wars with yesterday’s pricing strategies. When customers had an open check book it was easy to set goals and achieve them. It maybe that you have to sacrifice market share so that you can concentrate on your night value customers. A larger market share does not automatically convert into more profit.
Understand your advantage over your competitors and leverage your customer segmentation. Look at what sets you apart from the rest and which of your customers appreciate that advantage, then construct a strong marketing campaign to those customers. Accentuate value adds or potential outcomes. Play into the strengths of the product or service in a niche environment and centre your marketing around that demographic. This is a productive strategy as often the marketing can be reused when the market takes an upturn, or expose other markets you have not previously considered.
One thing that may be a difficult, but necessary strategy, is to plug unnecessary revenue leaks. We all have sides of the company that are less profitable and when the economy is good we can afford them. When you are looking to make your process lean so that you can keep the door open and have goods to sell, anything that is a revenue drain may need to be put on a backburner. Everybody’s drain is something different, but now is the time to plug it and stem the bleed. You really can’t afford the luxury of carrying dead weight.
On the flip side of the same coin – big up the areas that are producing good profit. Look at your low cost/high return items that give you the most return on investment (ROI) and see what you can do to market them more. These are the types of goods and services that will help you through the downturn, increasing your revenue so that you are prepared for an investment in the company when the upturn (finally!) arrives. Surviving a downturn economy is not just about making sales in the bad times, it’s about being poised to grab the opportunity when the market picks up. A downturn economy is also the chance to learn how to market smart.
Marketing is the lifeblood of any product. You simply cannot make a ‘wonder gadget’, sit in your workshop and expect people to come to you in their droves through your doorway to buy it. You need to have a marketing plan. Not many people walk through your door and say, ‘I say your brilliant ABC ad, and I jumped straight in my car and had to buy one’, so it’s easy to miss how much of an ROI is coming from you advertising. With that thought, when the time comes to trim the excess off your processes, it’s easy to mistake marketing for a ‘low priority’ or ‘low ROI’ budget line. Slowing , or even more suicidal, stopping, your marketing is a massive misstep. If you don’t market – you don’t sell.
A downturn is the time to divert more of your budget to marketing. The more coverage you have, the more effect on sales you will see, especially if it’s a section of marketing that you have no idea about. Digital marketing is the tour de force in nearly all industries and it has so many branches, devices and media that you are not aware of that you may be missing out the very key that will see you through the downturn economy. This type of economy is the perfect tie to explore your options with a marketing agency.
Employing a marketing agency to guide you through the digital media maze is smart marketing. They can also show you what services they offer, which could make your current process more efficient. For instance, social media marketing is imperative, but it takes time and talent to make it bring in inbound leads. If you are taking five or ten hours out of your week to surf social media platforms and seek out conversations to engage when you have absolutely zero interest in it, then you may be wasting money. By employing their professional services you can rest assured that the leverage of your social media is being maximized, and you may also find it’s cheaper than your current set up. You never know until you ask.
Surviving a downturn economy is a worrisome time, but with a few changes, a large dash of hope and a smart marketing plan, you can be in pole position when the upturn economy comes.
