Innovation: the key to surviving hard timesDec 01, 2008
While some people believe that people (and the media) are talking the downturn into existence, the realities must still be acknowledged. Major banks and financial institutions have collapsed. Global stock markets are extremely volatile. General Motors – not so long ago the worldâ€™s largest company – has declared that it canâ€™t survive past the end of this year without government handouts. Citibank have fired 35,000 people and BT have fired 10,000.
These things are happening. They canâ€™t be ignored.
We recently asked more than 3,000 small to medium-sized businesses to respond to a survey and discovered that while some are still unaffected by the downturn, the majority are already feeling the effects – in some cases severely. Here are some of the most critical problems and issues uncovered by the survey:
A tougher climate for winning new business;
Lower demand and slowing sales;
Existing budgets being reduced or cancelled;
Longer decision times or decisions put on hold;
Clients reducing their commitment;
Less money available, funding much harder to acquire;
Companies going out of business;
More business needed and soon, or there will be serious consequences.
These factors already affecting a large number of businesses. You therefore need to recession-proof your business and get your marketing house in order right now.
In less than a year buying and consumption patterns have changed forever; demand is dropping rapidly in many business sectors; entire nations are being refinanced.
What worked a year ago may not work any more. Whatever you thought you knew a year ago is probably now out of date. Much that will have been familiar to you (including your own business) may have to go through a process of reinvention and could therefore change beyond recognition in the next few years, if it hasnâ€™t already happened.
Many people in business, faced with a recession, simply batten down the hatches and cut all their marketing expenditure. But thatâ€™s one of the biggest mistakes you can make. A famed study conducted by McGraw-Hill of both the 1974-75 and 1981-82 recessions found that companies that cut their marketing in the 1981-82 period increased sales by only 19 per cent between 1980 and 1985. However, those companies that continued their marketing during the downturn enjoyed a 275pc sales increase over the same period.
Another report titled How Marketing In Recession Periods Affects Sales examined the relationship between marketing and sales in 143 companies during the severe downturn in 1974-1975. It found that those companies that did not cut their marketing in either of the negative growth years had the highest growth in net income during both the recessionary years as well as in the two subsequent years.
Similar conclusions were drawn in industry-specific studies published by the Harvard Business Review. The results of every study I have seen are consistent and clear – companies that continue to market during a recession end up with far greater sales that companies that reduce or eliminate their marketing activities.
Thereâ€™s opportunity in adversity. While recessions can be tough for some businesses, they can also be the catalyst for innovation, which in turn can catapult small, unknown players to world prominence in their fields.
Tough times force people to innovate. Many of the innovations that have transformed the way we work and live in recent years have their origins in tough times. This is when fortunes are made as well as lost. And as long as you donâ€™t carry the enormous baggage of a General Motors, it may well be possible to reinvent yourself and thrive as never before.
Consider Porsche. They were making heavy losses in the early 1990s. Their survival was in doubt. But with their backs against the wall they reinvented themselves and turned the situation around. Who would have thought even two years ago that a tiny car manufacturer like Porsche would today be the largest car manufacturer in Europe and No.3 in the world. Yet thatâ€™s exactly where they are today now that they control Volkswagen, Audi, Skoda, Seat, Lamborghini, Bentley and Scania Trucks.
Take Apple. Only 12 years ago it were written off as a company that had no chance of survival. But instead of battening down the hatches, as so many others do, it invested heavily in research and development and marketing. It revamped their computers and came up with a better operating system and a better experience.
In the USA this year 30pc of all computer expenditure has been on Apple computers. They changed the way the world enjoys music with the iPod. Last year they introduced their first ever phone, the iPhone. Just 15 months later it is already the worldâ€™s biggest selling smartphone.
Apple is today the worldâ€™s most valuable technology company. Its rapidly proliferating retail stores enjoy the highest sales per square foot of any retailer on the planet. As they enter this recession theyâ€™re an entirely debt free company, with $25 billion in the bank and an already stellar growth curve that continues to accelerate while most other companies in their sector are experiencing the first ever downturn in demand for computers.
Thereâ€™s no reason why you canâ€™t reinvent your business and prosper when everyone around you is battening down the hatches, and trying to weather the storm.
As a case in point, 2008 has been an exceptionally tough year for estate agents. Many have stopped trading, while others barely survive.
Iâ€™m currently helping an estate agent who sees the current economic woes as a catalyst for change. He has completely reinvented what he does. Heâ€™s no longer an estate agent but is still involved in the sale of properties using an entirely new approach which works in todayâ€™s changed marketplace. Heâ€™s finding that people trying to sell properties canâ€™t get enough of his new service. His innovation may even become the way ahead for an entire industry.
Every day I see clients innovating in the way they deliver their products and services and breaking records while their competitors go backwards.
For example, weâ€™ve just spent Â£1,800 testing an email campaign for a vehicle leasing client. This generated 163 hot or warm leads. An extrapolation of the the responses from the first 60 leads followed up indicates that there could already be up to 4,287 potential deals just from this test. This could be worth anything from Â£4 million to Â£8 million in extra marginsâ€”a massive return on investment, particularly in todayâ€™s economy.
An economic downturn can be a problem for your business. Or it can be an opportunity to innovate and gain new clients and boost your sales â€” if you know and have mastered the sales and marketing methods that work best in times of recession.
You can have days of Robert Clayâ€™s time… but only pay for one hour.
The economic downturn is already affecting many businesses. The situation is so urgent that Robert Clay has arranged, at short notice, a special one-time only recession-busting event in Milton Keynes on December 9-10.
This two-day event will tackle some of the most critical problems and issues you face in your business right now and give you the tools you need to prosper through the current downturn, and beyond.
The two days will be very tightly-focused, fast-paced, and right to the point. Youâ€™ll learn the crucial marketing actions and recession proofing steps to take now. Youâ€™ll learn how to deal with todayâ€™s market conditions, looming dangers, current opportunities and specific action steps that you should consider taking immediately.
Youâ€™ll get inexpensive, low-risk ways to increase your sales, proven techniques for reversing the effects of the global downturn and hands-on advice, including the personal strategies, marketing strategies, business strategies and customer service strategies you need to survive and thrive.
To learn more about this event, please call 01908 357657. But you must act now to reserve your place. This is a one-off event and it is limited to a relatively small number of participants. So, places are available on a first come, first served basis – and we apologise if the two-day event fills up and you canâ€™t get a place.
For more information, visit http://www.linkedin.com/in/robertclay