In this slow economy, different companies have various strategies to help them get through. One I have noticed is to cut all the experienced, senior people in favor of replacing them with people who make and know less. This strategy could work if the next generation of hires is really good but in general this is a terrible move.
Another strategy is to cut outreach to customers – otherwise known as PR and marketing.
But if we are in an economy where customers are spending less, doesn’t it also follow we all need more customers to match the earnings level of previous years? So if last year 100 customers spent $20,000 each and they now spend $15,000 you would need 133 customers this year to make as much profit. And if the $15,000 the customers are now spending results in lower margins, you need even more than 133 customers.
The good news is, in a recession, the companies who focus on gaining market share by at least keeping consistent levels of PR and marketing tend to take share from the rest of companies. I came across an article from the New York Times today which ends with a survey that says more that 85% of customers will try new products in this recession. This is very good news and a similar sentiment was raised to me last month by Arunis Chesonis the CEO of PAETEC.
Here is an excerpt from the article:
“There’s a saying: ‘When times are good, advertise. When times are tough, advertise more,’ ” said Dan Beem, president at Cold Stone Creamery in Scottsdale, Ariz., the ice-cream chain owned by the Kahala Corporation. “We want to stay with that philosophy.”
The question worth asking is, what are you doing in this slowdown to offset reduced spending and the slowing speed of contract signings? If your answer is cutting back on customer outreach, the next obvious question is where will you and your company be in 6-12 months? Are you at this very moment inflicting a wound on your company by making sure your future customers are not being put in the sales pipeline?