This is a tough time for most business. Many companies are losing a lot of customers and having trouble meeting revenue commitments outlined in their 2009 budgets, which are usually created in the previous fall season. This is happening, of course, because most people did not realize that the economy would fall into recession in 2009. Executive management teams are meeting in their boardrooms every single day, trying to figure out what to do to stabilize customer retention. Chances are good that two prevailing schools of thought are being bandied about:
School Of Thought #1: Since we are currently losing customers very quickly, we need to make up for that shortfall by reducing costs (which has probably already been done), while at the same time increasing our prices in order to achieve more revenue per customer. If we have lost 10% of our customers, and raise our prices 10%, we could probably close the revenue gap.
School Of Thought #2: We’ve lost several customers during the first half of the year, and we need to focus on keeping those customers while obtaining a few new ones. Along with reducing our costs (which has probably already been done) we need to reduce our prices, providing an incentive for current customers to stay with us and encouraging prospects to become customers.
As a marketer and ardent capitalist, I believe in School Of Thought #2. It looks at the marketplace as a non-finite tub of potential revenue, even during recessionary times. It also views an increase in price as a form of taxation on current customers, which is a bad idea during good economic times and an even worse idea now. I’ve seen many struggling companies adopt School Of Thought #1, only to see them descend into a business death sprial. As customers balk at higher prices and bail out, this leaves an even smaller customer base to provide the revenue stream necessary to maintain operations. The cycle of higher prices and fewer customers seals a company’s fate and failure becomes inevitable.
From a marketing perspective, it’s an even tougher sell. We’re always looking for unique selling propositions (USPs) and differentiators, and I’ve found that raising prices kills off great marketing each and every time. It poisons the fragile relationship with the customer, leaving them bitter and resentful. Another aspect to consider is the fact that, nowadays, customers don’t go away quietly. They use social networking and forums to voice their displeasure, and most of the time it ain’t pretty.
Before you pull the pricing lever, be sure you’ve fully analyzed your pricing model and exhausted other options. After all, if you make the wrong decision, it may be you that ends up paying the price.
Sure, you’ve heard a lot about social media sites like Twitter, Facebook and, yes, even WordPress (I’m being ironic). But there haven’t been a lot of success stories attached to those ‘new marketing’ tools, mostly because a lot of marketers aren’t clear how to measure success. Simply put, success is defined as the achievement of pre-determined goals based on actual, real-life business needs and objectives.
Here’s a great social media success story from my company, Aximum Marketing. One of our clients was trying to elevate his company above the competition during a downtime, while his rivals were scaling back on marketing and overall customer communication. The goals were focused on lead generation, website visits, ecommerce revenue, and industry leadership. By developing a number of different social media programs, we were able to get some amazing results for them. And the real kicker: the initial execution on these initiatives cost only about $5K, and had a ROI of 350:1 after 4 months. Read all the details, as well as my other success stories, and contact me if you’d like to incorporate social media into your company.
Here is Part 2 of my eagerly awaited 2009 predictions… I’d love to hear your comments (after all, I’m not writing this stuff for my health)…
4. Gas prices will remain under $3.
The average price of a gallon of gas in December 2008 was $1.62; in December 2007 it was $3.04. With a recession, layoffs, and less people engaging in discretionary travel, gas prices will remain a lot lower than they’ve been over the past two years. Even with OPEC trying to raise the price by squeezing supply, they’ve been unable to move the needle. Like it or not, world, the U.S. consumer is the strongest component in this equation. One unintended benefit with lower oil/gas prices: Iran’s economy is suffering so badly that they’ve had to virtually abandon their nuclear weapon ambitions. Hopefully North Korea will follow suit.
5. Vista, or Windows 7, or whatever it will end up being, will regain luster and respect.
Worldwide usage of the Windows operating system dipped below 90% for the first time in eons last month. Even with that “bad” news, I can’t imagine how awesome it would be to own a 90% market share of anything. And that’s not going away any time soon. The dirtiest little secret about Vista is the release of Service Pack 1 (SP1) in March 2008, which has made the operating system quicker, safer, more compatible, and more reliable. Essentially, it has helped Microsoft realize the full promise of what Vista was supposed to be. However, with the Jerry Seinfeld/”I’m a PC”/Mojave Experiment TV commercials focused on everything but the word “Vista,” everyone still assumes that Vista is buggy and slow. Maybe they should hire me again…
6. Phoenix will have a white Christmas in 2009.
Sounds crazy, I know. But Las Vegas had 3 ½ inches the week before Christmas, so is it really that far-fetched? Sure, it hasn’t snowed in the city of Phoenix in 18 years (there have been a couple minor dustings since then, but too few to mention) – that just means we’re due for a big one. How funny would it be for all those snow-weary visitors from Minnesota and Iowa to spend their Christmas in a white desert? Don’t worry… it’ll be 65 degrees by lunch time.
7. With shrinking budgets and layoffs, marketing consultants will be more important than ever.
Of course, since I’m a marketing consultant, this is a little self-serving. However, I know that companies are really tightening their belts when it comes to marketing expenditures. I also know that many marketing departments have been forced to reduce headcount. However, they continue to recognize the benefits that marketing can bring them, and if they can’t produce results their jobs are in jeopardy. Marketing consultants bring the best of both worlds; they don’t increase your department’s headcount, and, when you consider the cost of employee health insurance, payroll taxes, 401(k) matching funds, etc., consultants end up costing less money than full-time employees. Below are some of my Success Stories from clients and employers of mine, which should give you a good idea of what you should be looking for in a consultant. Feel free to email me or call me at 480-814-8838 to discuss it further.
I’m David Ducic, and after 3 years of running my marketing consulting business through word-of-mouth I’ve decided to take it to the next level. New company name – Aximum Marketing. New website – coming soon. New ways of reaching out to clients – a great WordPress blog. However, some things will stay the same… my level of service, and my passion for everything marketing will never change!
Why create a new website now? Well, I recently saw a MarketingSherpa survey where 20% of companies plan to scale back on their full-time marketing staff, while 26% plan to explore the use of consultants to handle their marketing activities. In other words, companies will need to lay off internal employees to meet reduced headcount requirements, but still understand and recognize the importance of marketing towards their continued success. Here’s the graph… very interesting.
How companies will be spending their Marketing dollars in 2009
I’m currently getting all my ducks in a row… website (coming soon), branding, messaging, success stories, social networking, can spam compliant database, eMarketing campaign, business cards, and a million other things. Thankfully, I’ve done this many times before when working for other companies.
Stay tuned for more as I get this off the ground. I’m going to have an official launch soon, and an unofficial buildup to the launch to gain some momentum on Twitter, including some fun stuff like YouTube videos (I promise they’ll be entertaining… definitely worth your five minutes of attention). Look for the update tweets, and follow me, if you’d like.
If you have any comments or suggestions, I’d love to hear from you. Thanks!