Gear Up, Not Down: Top 5 Keys to Success in a Slow Economy

Five prudent strategy points to consider for your business when the economy has slowed.

The division president is concerned. Revenues are down. Things had been going so well, but with the state of the economy, the division is feeling the pressure. “The market is just not buying right now, so let’s cut ‘discretionary’ expenses until the market bounces back.” Right decision? Sound familiar? One can almost hear the corporate gears grinding to a stop.

But the marketplace has slowed, not died, and customers and prospects still need to buy products and services. The way to succeed in such an environment is by being finely attuned to the market’s requirements rather than merely bringing an axe down on spending. While there are costs tied to gaining the essential market insights that can help optimize your effectiveness, the costs of inaction could prove much higher.

So, what is the prudent strategy? Here are some considerations:

1. Avoid giving up ground.
Across the board, cuts in marketing efforts open doors for aggressive competitors. When they penetrate your market share you’ll have to win back your own customers when the economy rebounds and you’re ready to ramp up again. A down economy is the time to aggressively capture new, desirable customers. The question is the role you will play relative to your competitors – hunter or prey?

2. Zero in.
A roaring economy can cover a multitude of sins. During the good times customers proved willing to overlook many of those sins. But now they are significantly less inclined to overlook your shortcomings. Instead, customers are much more likely to ensure that they get exactly what they need for the dollars that they do spend. Elements such as pricing, service, targeting and product configuration, if not totally attuned with your market, may direct sales to other suppliers. The issues of competitive differentiation and customer requirements should be paramount.

3. Understand customer-perceived value.
Value does not equal the lowest prices. It is made up of the elements of what you offer that cause prospects and customers to take the behaviors you want them to. You have to know what your customers value and focus in on those customers for whom you can provide that value most effectively. The “essential” elements of value for one segment will be different than those for other clients. Thus….

4. Focus your resources on the niches you can serve well.
Could your company provide to the entire marketplace effectively in a booming environment? It is even more difficult in a downturn. Target those niches where you know you can properly align your products and services to their needs.

5. Prepare for the recovery.
When the market re-emerges from its cave, be the first in your competitive set to greet it. Only through effort and market insights now can you be prepared to quickly take a leadership role when your customers and prospects are ready to take a more aggressive stance in a revived marketplace.

Getting back to our example, the division begins to lose market share as prospects and customers increasingly buy from their more aggressive competitors. A competitor offers a slimmed down version with more perceived value. Another competitor offers a less costly solution.

Unfortunately, the division president’s first indication is an accelerating decrease in revenues. By cutting his systematic market feedback mechanisms, he has pulled the rug out from under himself. And when the market does bounce back, he will find “his” customers in the arms of his competitors.

- June 2008

This content was provided by Chadwick Martin Bailey, Inc. Visit their website at www.cmbinfo.com.