Problem: I need leads.
Solution: Work your database.
Debra Templar of retail services firm The Templar Group says the downturn is a good opportunity to work your database and contact those on your database who have served you well.
“Remind them that you exist. Fill them in on any new products or services you’re offering. I recently had a marriage celebrant decide she was going to re-contact her former customers… Not only on the off-chance they may need her services again but because they most likely could have friends and associates who might need her services.”
A bit of database pruning doesn’t go astray, too.
“Get rid of the dead wood and work hard on satisfying the needs of your top 20% of customers (most likely they’re giving you 80% of your business),” Templar says.
“Too many times we run around chasing new business and we forget about the ‘gold’ sitting in our databases. We assume our top customers will always be loyal and we forget to reward them for having got us where we are. They’ve brought us to the party; the least we can do is dance with them.”
Problem: I’ve got no money for sales staff incentives.
Solution: Find other ways to reward your top performers.
Structuring incentives for your sales people is not easy, particularly in difficult economic times when the bonus pool is looking decidedly shallow. Colin Benjamin says that the obvious strategy is to move towards short-term sales commissions, but he says this can create a competitive and poisonous environment among your sales team and can lead businesses to focus too much on the short term.
His solution is to use non-financial rewards in the short term, such as flexible working arrangements or time off for a special occasion. Then, depending on whether sales targets have been made, sales staff should get financial bonuses at the end of the year.
Problem: My company can’t afford to carry inventory.
Solution: Use the 80/20 rule.
Organisations that were selling out of inventory in the boom have found themselves with a problem – to free up working capital, there has been a need to run down inventory levels. Of course, this creates another problem – selling stuff that you don’t have is a good way to annoy customers.
Benjamin says it’s time to employ what he calls the 80/20 rule. Concentrate on the 20% of your products that bring in 80% of your revenue and make sure that you always have these products in stock. You should be able to run down inventory levels across the rest of your range.
Problem: Where should I aim my marketing campaign?
Solution: Narrow your focus with micro marketing.
Brian Walker, principal and founder of retail consultancy The Retail Doctor, says the days of the mass marketing campaign is fast diminishing. For example, sending a catalogue or flyer to every home in your area just won’t work – instead, you need to target your marketing to the people who you know are actually interested in your product.
He suggests any such campaign will need to be multi-disciplined; online, direct email marketing, and advertisements in appropriate media. A campaign based around a loyalty or rewards type program can be particularly effective, as you can be certain you are targeting those customers who want your goods.
“It’s about protecting the margin as best you can,” Walker says. “Think of ways of giving them a reason to come to you.”
Problem: How do I make sure my marketing gets people buying?
Solution: Call your customers to action.
Luke Bayliss from Sumo Salad says that companies need to focus on marketing that will deliver them a solid return on investment.
“In these times you’ve got be careful where you spend your money. It’s easy to not get a return on your investment and effectively waste your money, which is what you don’t want to do right now when you’re trying to stockpile cash,” Bayliss says.
“We’re focused on return-on-investment type marketing, call-to-action type marketing messages that drive the revenue of the business.
“Call-to-action is something that gives consumers a specific reason to buy. Not necessarily a discount, but points of differentiation like a special flavour for the month, or a new product. Simply from a marketing perspective, it’s just about being pro-active and getting out there.”
Problem: It’s expensive to buy media space for marketing.
Solution: Negotiate with media buyers and grab a bargain.
During a downturn, many businesses are making decisions based on fear that the economy will continue to deteriorate. But Chad Polley, marketing manager for video games retailer GameTraders, says that businesses should do all they can to communicate with ad agencies to pick up good deals while the time is right.
“With the decrease in advertising spend across the country, media buying costs are coming down and there are some great deals to be had,” Polley says. “During tough times consumers are more conscious of value and tend to spend more time at home, and TV spend can become increasingly effective.
“Cement relationships with your media partners and advertising agencies, work with them for mutual benefit. If their business doesn’t survive, you will be forced to find new partners, which could take significant time to get them up to speed.”
Problem: How will I know if my marketing campaign is getting a good result?
Solution: Measure, measure, measure.
Researching your customers may seem boring, but Debra Templar says it is the only way you’ll start making progress in the downturn.
“You’ve just run an ad and an additional 100 people have come through the door on day 1 of the ad. Your marketing has worked – irrespective as to whether or not they have bought your product/service. You could easily have 100 people through the door and sell to one of them,” she says.
“You don’t have a marketing problem, you have a selling problem. Before you run the ad again, you’d better get up to speed with sales techniques, otherwise you’re going to get the same results again and again. The marketing worked, you and/or staff didn’t.
“The flip side of this is when you have 10 people come through the door and you sell to eight of them. There’s nothing wrong with your sales and service skills – but the marketing wasn’t the most successful. Measure, measure, measure – so you know where to put your future marketing spend.”
Patrick Stafford is a freelance journalist and a former deputy editor of SmartCompany.
