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Surviving a Recession (Part II) – Marketing Edition
I wrote a short piece about the fundamental strategies and mindsets that I’ve found helpful in weathering the economic ups and downs of the last 25 years. As I noted in my first piece on Surviving a Recession, the 2020 economic crisis will be the third major recession we’ve gone through as a business. Pushing against economic headwinds of any kind is always a challenge. When the entire country takes a sudden jolt sideways, it gets even more interesting.
This piece talks specifically about how to reorient your marketing efforts during difficult times. There is a lot here about mindset and the challenges to your character and commitment that come with any huge shift in the business landscape. There is also a fair amount of tactical advice. I hope you find it valuable.
Be Willing to Solve the Problem
Human capacity for self-delusion is truly remarkable. We have a saying here at the shop, “Don’t believe your own bullshit.” That basic concept has served me well during my entire professional life. All of us approach any problem with a set of assumptions that lead to fantastical thinking.
We had a client once whose social media program was in shambles. Spread across 10 locations with no co-ordinating plan and, frankly, a product of questionable value, they had decided that they needed to produce more and better content to attract new customers.
That all sounded great until we got into the nitty gritty of hammering out a content plan. After rejecting pretty much every idea we brought to the table, various location managers and department heads fell over themselves to suggest things that “people would really like” in a complete absence of data to suggest that it was true (e.g., “Let’s take pictures of our staff at the charity car wash!!!”).
At one point during a phone call, I happened to quip, “Hey, it’s not like The Rock is going to follow us on Instagram. Let’s focus on things your customers actually need.”
Their president actually said, in all seriousness, “Why wouldn’t The Rock follow us??”
I was speechless. The level of delusional thinking behind that mindset was hard to get my head around. It wasn’t simply ignorance of how social media works, it was an active and emotionally charged belief that whatever it was this company had to say was going to be so compelling and interesting that Dwayne Johnson was going to say to himself, “Damn man… I gotta hear more about THAT!”
This sort of thinking pervades many businesses and, strangely, it becomes more prevalent when things get tough.
The business owner who, after a wave of resignations, says she is “done trying to develop people.” The retailer who decides that a market “just isn’t ready” for whatever they are selling. We see it all the time when potential clients walk through the door and immediately tell us what the problem is and the things they are not willing to do in order to fix it.
You have to commit to the survival of your business at the outset and be willing to follow that thread wherever it may lead. When times are good and sales are plentiful, you can bask in all of the ridiculous nonsense you want. When things turn for the worse, decide to do what is necessary or at least have enough compassion for your future self that you get out while you still have the resources to do so.
When Revenue Dries Up
In the first part of this series, I talked a bit about conserving cash and managing your vendors. That part is relatively straightforward.
What is less obvious is how to respond when your revenue dries up during a recession.
First and foremost, you need to understand why your client base has gotten smaller or is spending less money with you. At first it may seem completely evident. The government closes the businesses in your sector, so there is no more commerce. Millions have been laid off, so they aren’t spending on discretionary goods. And so forth.
But these developments rarely tell the whole story and without that story you cannot begin to diagnose the root problem and devise a solution.
During the Great Financial Crisis of 2008, we saw a very interesting downturn in spending by our non-profit college clients. Larger projects like institutional websites were still being built and they still took forever, but there was significantly less willingness to spend money. In addition, other services like email marketing and digital ads started to tail off as well.
It would have been easy to chalk this up to the larger context of market conditions. After all, clients were crying poor and asking for bargain prices. The news was full of doom and gloom.
But the underlying reality was that the market itself had shifted very subtly, but significantly, in a few short months. The number of “digital marketing” firms and consultants exploded as layoffs rolled across the country. In addition, since digital had been a part of the higher ed marketing landscape for almost 10 years at this point, there were plenty of folks with direct experience in the vertical who wanted to hang out a shingle.
Basically, supply began to outstrip demand and that caused prices to fall. It also caused schools to decide to develop teams in-house.
At this point, we were faced with a few viable alternatives: drop our prices and increase sales efforts, raise our prices and position ourselves as seasoned experts, or move into other markets where we had more control.
We ultimately chose the third path.
The moral of this story is not “move into other markets when things get bad”. Rather, if you don’t know the root causes of your revenue decline, then you cannot really develop a set of possible solutions.
Know What You Are Really Selling
We have a lot of friends in the food service industry. It provides an incredible window into almost every area of the economy. Every successful restauranteur I know has a very clear idea of the kind of experience they are selling to guests and they measure their performance against that idea. Every disappointed restauranteur I know has a somewhat vague idea of the kind of experience they are selling to guests and are unable to really measure much of anything (other than the lack of money in the till).
The fundamental difference between these two states of affairs is clarity of vision and understanding of what (and why) people are actually buying from you. It doesn’t matter what kind of business you are in. Whoever pays for your services is paying for *something* in particular and that something is why they chose you over some other vendor.
What people actually buy from you can be fairly surprising. We’ve been in the lead generation business for 20+ years. You would think that what all clients truly want is more qualified leads at, or below, an acceptable cost. You would be surprised to learn just how few clients actually care about this first and foremost. Instead, a myriad of other concerns inform their daily buying decisions.
These ‘other concerns’ are what drives most purchasing decisions.
In addition, you will find that different businesses within the same vertical or niche attract customers for profoundly different reasons. Take running shoes. My wife is a tri-athlete/runner type. She buys shoes and other running gear from a local store. Why? The fitting experience, being plugged in to the local athletic community, and the ability to get expert advice on all manner of athlete related questions all factor into her decision. I am the “hey, let’s throw some ribs on the grill” kinda guy. I buy running shoes from amazon. Once a decade. (And I run only slightly more frequently.)
We are both buying running shoes, but we couldn’t be more different.
When Recession Looms, Promises Matter
We always counsel clients to understand that people don’t really buy their product. They don’t even buy the product’s product. Instead, people come to you for the product’s product’s product.
In simple terms, no one cares about what you sell in specific. This is the whole “people don’t buy the drill, they are buying the hole” idea. But it actually goes quite a bit deeper than that and the world’s (and your town’s) most successful brands know this.
The product is the drill. The product’s product is the hole. The product’s product’s product is the emotional pay off that comes with finishing the projects that got this whole hole drilling escapade started in the first place.
(If you are interested, we have an entire course on understanding and using your product’s product’s product to sell more of your stuff.)
Your brand is the promise you make to customers around your product’s product’s product. No matter what business you are in and whether you are consciously aware of it or not, you are making promises that go deeper than “we’ll get you this widget tomorrow”.
When the economy does a rapid about face, the promises you make to your clients are more important than ever.
This means that once you know what and why people are buying from you, you need to make very deliberate and careful efforts to make sure your promise to deliver is kept at every level of your business.
This promise-keeping shows up in small ways as well as large.
There is a restaurant in town known for its cocktails. During the take-out only period of the COVID-19 crisis, they were able to offer drinks on an off-license basis. Sending someone home with beer or wine is relatively simple. How do you take a specialty cocktail and make sure that someone who is driving for 20 minutes has the amazing experience you give dine-in customers?
First, you pare down the menu. Cocktails that required significant “finishing” just before service had to go. They concentrated on the drinks that could be built from cheaters and had low volatility final ingredients.
Next, you package garnish separately. Leaving a slice of lime or a twist of orange in the drink causes an erosion of flavor that would detract from their reputation as a top cocktail bar in town. Sure, we might dismiss it as “okay” because of the crisis, but that would turn customers into ‘charitable givers’ rather than rabid fans.
Finally, package the ice separately and use large cubes. A quart baggie with two, two-inch cubes can survive a 20-minute car ride relatively well.
This approach not only preserved their reputation for a stellar drink experience, but it also provided the unintended benefit of making customers feel like “great bartenders” as they assembled the drink at home.
When you are experiencing a downturn, get clear on your brand promise and work relentlessly to make good on it.
Meet The Emotional Need
One of our clients is a real estate group that sells vacant land to residential customers. Most of their buyers make use of the company’s internal financing and come from sectors of the economy that traditionally are not able to purchase land.
This group of consumers is a constant source of surprise due to the depth of the emotional satisfaction they get from owning land.
We ask potential buyers why they want to own land. Very occasionally, we’ll get responses like “I want to flip real estate” or something like that. The overwhelming number of responses center around things like building a family home, providing recreation space for friends and the community, starting a farm and giving produce to less advantaged people, and similar goals.
The emotional need for freedom and to have resources that will allow them to be generous to others is a consistent theme among these buyers.
In the end, the land is a symbol, and almost a by-product, of these folks’ deep emotional need for the pride of ownership and the satisfaction of being able to provide for others.
Uncovering this need and architecting the sales and marketing process around it is a significant part of this company’s success.
These last two pieces have concentrated on more strategic areas of activity when it comes to getting through a recession. We all love the times when sales are plentiful and margins are fat. But leaner markets give us the opportunity to refocus our efforts on the core elements that made a business successful in the first place.
While we talk quite a bit about concentrating on the emotional connection you make with your customers, this is not a call to starting up a drum circle and chanting affirmations while we all eat avocado toast. Rather, by keeping that deeper need and desire at the forefront of your thinking, you can do a more effective job of using tactical marketing and sales tools to your advantage.