Posts tagged ‘recession’

Boost your customer base by lowering, not raising, prices

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.

(If you need help with pricing, or you have other marketing needs, contact me at Aximum Marketing. I’ll be happy to help.)

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June 17, 2009 at 11:19 pm 2 comments

Success is not defined as the absence of failure

Recessions can bring out the best in people. I know many successful entrepreneurs that started their businesses during recessions, and they said it’s the best decision they ever made. Some have developed companies that generate hundreds of millions of dollars in revenue. Admittedly, though, a lot of those people say their companies are surviving, but not thriving. Many will chalk it up to the economy, or changes in the marketplace, or the cost of raw materials, or increased competition. Some of these factors may be true, but after consulting for several of them I realize that there are reasons why they haven’t achieved the level of success they wanted. Here are some of those reasons:

  1. Not knowing your limitations. We cannot know everything, nor can we do everything. Realize that you have a well-honed set of core skills, and focus your efforts to take advantage of them. Here’s an analogy that all you baseball fans will instantly understand: have you ever seen a National League pitcher try to swing a bat? It’s one of the more painful sights you’ll ever see, because it’s beyond the pitcher’s limitations. Let your batters do the batting for you while you focus on your pitching.
  2. Not understanding the difference between market sizing and market segmentation. In other words, don’t bite off more than you can chew. You can read all about this from my previous blog entry on the subject. Business is hard enough without trying to conquer the whole world all at once.
  3. Not seeking help from experts. Whether it’s a marketing company like Aximum Marketing, or a full-time employee, recognizing the need for a particular skill that your company doesn’t have is not a sign of weakness or ignorance. Not only can experts give great advice and a different point of view, but they can free you to do what you do best. Again, whether you buy a piece of equipment, or office space, or specialized experts, they will all maximize your return on investment.
  4. Not avoiding the temptation to act in haste. It’s easy to get ‘happy feet’ when you’re not achieving the results you want. However, it will be best to fully think it through before pulling the trigger. Having fellow experts (see #3 above) can act as sounding boards, enabling you to make better decisions.
  5. Not understanding that marketing is an investment, rather than a cost. “I can’t afford to spend money on marketing right now.” If I had a nickel for every time I heard this, I’d have a boatload of nickels. I’ve spoken to many clients who initially look at marketing as a cost, but after I help them focus on their goals and run some numbers with them, they soon realize that all quality marketing activities have an expected, measurable, positive ROI. If you could invest $100 on marketing activities, and receive $1,000 in revenue, how much would you be willing to invest? Every penny you can get your hands on? That’s the beauty of an investment.

Success is most assuredly not defined as the absence of failure. We all work hard, and we deserve to maximize the reward for the effort we put forth. If you avoid the five pitfalls listed above (and I’m sure there are many others you can think of), you’ll unleash your potential and take your business to new heights, whether it’s a startup, a small business, or a multinational corporation. Aximum has some great success stories that illustrate this point very well, and we’ll be happy to help you thrive, too.

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May 26, 2009 at 1:42 am Leave a comment

“Field of Dreams” marketing

Build it and they will come.

If only that were true.

Too often, marketing and product teams fall prey to what I call “Field of Dreams” marketing. Whether it’s a slick new website, or a shiny new product, or a fancy new advertising campaign, many companies will rely on their internal ‘tribal knowledge’ and fail to research, survey, measure, and test new marketing/sales/product ideas. There’s an assumption that, if there are enough people that believe in it, it will inevitably become successful. Even worse is the idea that so much time and money has been sunk into something that there’s no turning back. These thought processes can prove fatal for companies, especially during a recession, when cash is tight and customers are hard to find.

I have a dirty little secret to share: using good processes on the front end can actually help save you time and money on the back end. So how can you avoid stepping on the Field of Dreams? There are several things you can do to sidestep the pitfalls… let’s focus on the three examples above:

  • A slick new website – good websites are expensive, and if they aren’t done right they can actually act as a barrier to customer acquisition (for more on websites, read my entry “Your website is your strongest sales tool“). Ask your customers about your ideas to change the site. Develop a clear plan for what you want your site to accomplish. Hire an experienced expert.
  • A shiny new product – CEOs and VPs love to use their “instincts” to determine the next generation of products and services. Resist the temptation or the results can be disastrous. Use honest-to-goodness focus groups, advisory panels, and marketing research to complement the internal knowledge.
  • A fancy new advertising campaign – alas, marketing teams just love to develop new ideas for communicating to a company’s audience, but that can be dangerous if kept unchecked, leading to groupthink marketing or even worse (yes, that’s a real McDonalds ad). Remember your audience; if your communicating with software developers, for example, you wouldn’t want anything over-the-top or cheesy because they would resist it like the plague.

You get the idea. By applying best practices, like the Aximum Marketing Success Cycle, you can make sure your efforts are focused and on-target. Just keep your eye on the ball and you’ll be fine.

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May 18, 2009 at 4:07 am Leave a comment

Social Media success story

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.

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May 13, 2009 at 3:51 am Leave a comment

David’s 2009 predictions – part 2

crystal_ball

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.

Coming up next week… another episode of “Phoning It In”, so stay tuned. Have a great weekend.

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January 30, 2009 at 8:08 am Leave a comment

David’s 2009 predictions – part 1

I see... yes... wait...

Yes, I know that 2009 has already begun, but I also realize you were probably tired of reading predictions from pseudo-pundits back in December, so I decided to wait a few weeks before publishing mine. Do I have greater prognosticative abilities than anyone else? Probably not. But I am a keen observer of human nature (being the third of three boys, I needed to stay on my toes or risk getting slapped in the head by my older brothers), so I believe these predictions will come true. At the very least, I will try to provide an entertaining read.

We shall revisit these next January to see how close I got. In the meantime, here’s Part 1 of my 2009 predictions:

1. The recession will end by the late spring.

Most economists agree that the recession actually started in December 2007, not in the fall of 2008. There have been 10 post-WWII recessions which have lasted an average of 10.4 months, the longest lasting 16 months. If the current economic downturn lasts 16 months, we’ll be back on the road to recovery by April. Chin up.

2. MySpace is so 2008. Twitter is so 2009.

Can Twitter change the face of social networking, 140 characters at a time? Perhaps. So far, I’ve had very good initial success with using Twitter as a supplement to other marketing activities. Its appeal is the ability to enable personalized, instant communication between customers and companies. Sure, you can’t engage in deep, content-rich conversations, but that’s not the point. You can always link to other sources for that. If you’re looking to join Twitter, create an account and follow me – I’ll walk you through it.

3. Microsoft will buy Yahoo!

Conditions are a lot more favorable now for a purchase of Yahoo! than they were when Microsoft made its initial bid in mid-2008. In hindsight, I’m sure Steve Ballmer is thanking his lucky stars that CEO Jerry Yang turned down his $44.6 billion bid. The current market value of Yahoo! is 60% lower than the bid value, and the company continues to struggle keeping up with Google. Combine a lower stock price, lower market share, recent layoffs of 1,500 employees, and the ouster of Yang (undoubtedly for putting his ego ahead of his stockholders), and it’s more a question of ‘when’ rather than ‘if.’ Sorry, Yahooies, but as much as you hate Redmond, you’ll call it home in 2009.

I’ll bring you Part 2 of my predictions next week. Have a great weekend!

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January 23, 2009 at 2:04 pm Leave a comment


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