Posts Tagged ‘recession’
So we’re officially in a recession. That explains those paranoid marketers looking nervously over their shoulders. They know what’s coming.
Most businesses treat marketing as a discretionary expense, making it an easy target for budget cutters. It’s as if marketing is a luxury afforded only when times are flush. Less customer demand, less we can afford marketing, or so conventional thinking goes.
But really, can we ever afford not to market?
It’s natural to want to preserve cash during a downturn. I was an employer for nearly 14 years, so I’m sympathetic. But the tendency is to make deep cuts in marketing when sales head south. Companies often start by reducing or eliminating outside expenses, such as advertising, events, sponsorships, research. And when that’s not enough, they lay off marketing employees, sometimes the entire department.
The net effect of gutting marketing is to stifle generation of customer awareness, demand and retention just when these things are needed most. It’s a penny-wise, pound-foolish decision.
Management guru Peter Drucker contended, “There is only one valid definition of business purpose: to create a customer…Because its purpose is to create a customer, the business enterprise has two-and only these two-basic functions: marketing and innovation.”
Drucker believed “true marketing” starts with customers, including their demographics, realities, needs, values. “It does not ask, What do we want to sell,” Drucker writes. “It asks, What does the customer want to buy? It does not say, This is what our product or service does. It says, These are the satisfactions the customer looks for, values, and needs.”
Notice, he doesn’t equate marketing with branding, advertising and promotion, as it has come to be broadly perceived and practiced today. Above all else, the marketing function is about engaging, understanding and pleasing our customers. It involves deep listening to customer needs and then helping the business respond with innovative products and solutions that satisfy those needs better than the competition. A recession might curtail how much you spend on marketing, but the function remains essential under all economic conditions.
If you’re contemplating cuts to your marketing program, ask yourself this: Do I truly understand my customers, their needs, their values? And is my company converting that understanding into innovative products and services that my customers value over other choices in the marketplace?
If the answer is no on both accounts, then it’s time to restructure and refocus your marketing efforts so they perform their function. Sure, you may need to trim spending here and there in marketing. Taking an ax to it, however, is your worst move. You’ll only sever connections with customers when you can least afford to lose touch.
If you answer yes to the questions, pat yourself on the back. Your marketing is doing its job. So why mess with what’s working? Find ways to preserve the people and the processes you use to market. They are more valuable than ever as the recession tightens its grip and each customer becomes more precious.
Devotion to sustainability as a company doesn’t exempt you from the fundamental need to market in bad times as well as good. In fact, there’s never been a better time to distinguish your company from the competition and prove your relevance to customers. You’re part of the solution to what ails us. Time to let the world know!
I remember July 2001 well. It was the month someone pressed the dimmer switch on the high tech marketing business I co-owned. For the first six months of the year, our business soared. It was the best financial stretch in our eight years as a firm.
In July, it was as if the previous half year became an instant, distant memory. We’d become a victim of the tech implosion that followed the dotcom bubble burst. Virtually all of our clients slashed their marketing budgets in unison when it became apparent their revenues were falling far short of annual targets.
The summer outlook turned bleak. And then came 9/11. Suddenly any hope for a soft landing for the economy and our firm vanished. The next two and half years became little more than an exercise in survival. But eventually we got through it. And happily, by 2006 we had nearly grown back to our pre-recession peak.
I left my firm and high tech two years ago to work with companies on the sustainability path. Even so, memories of 2001 and after are still fresh. As bad as things became then, this moment is even more worrisome. Are we in for the Big One: the Category 5 hurricane, the 9.0 earthquake?
My rational voice reminds me my worst fears never materialize. They didn’t a half dozen years ago. My insecure voice replies, “Yes, but maybe this time they will.” And so it goes, back and forth.
You may have a method for keeping fears and insecurities at bay. Mine is to move outside myself, to become more aware of the needs of others. I have the good fortune of health, home, family, friends and financial savings. As this recession tightens its grip, more Americans are losing their jobs, homes and nest eggs. And it appears things will get worse before they get better.
A turn of events like this tests our commitments to sustainability. Are sustainability values only to be embraced during economic prosperity? The answer is obvious. There’s no escape clause from sustainable business practices when recessions hit. It’s true we may have less money to invest in environmental initiatives, employee benefits or community programs. But we can still make a difference through our time, ideas and creativity.
I’ve seen enough from the unrestrained capitalism of the last 25 years to conclude this: Humans acting in their own self-interest in free market economies do not produce a massive trickle-down flow of goodwill to those less fortunate. Nor do they automatically protect and preserve our natural resources. If they did, we’d have no need for a sustainability movement.
A recession teaches us the invisible hand of the market isn’t a helping hand. It’s incapable of caring about anyone or anything. A commitment to sustainability asks us to do the caring. Now would be a good time to renew our vows.
Here’s a silver lining in the existing or pending US recession: Chances are consumption and production will slow, meaning less fossil fuel expended and fewer greenhouse gases emitted. Feel better? I didn’t think so. None of us wants to see the inevitable wrenching loss of jobs, income and personal security that comes during a major economic slowdown.
The attention of government and business leaders, as well as the public, is increasingly fixed on the economy. And while that’s understandable, every other public concern will likely take a back seat to the economy. Including climate change. America, the largest source of CO2 emissions in the world, will be telling the world that we can only afford to focus on climate change as long as our economy is growing (and spewing growing amounts of CO2).
The effects of a recession are painfully real. I started my career in the early 1980s when Oregon was in the midst of a miserable recession — depression, really. I was fortunate to find a job. Some of my friends, meanwhile, lost their homes. Earlier this decade, I felt the tech implosion in a very personal way. The marketing business I co-founded lost half of our revenue in just a couple months in 2001. Within a year we had laid off nearly half our staff. It doesn’t get much worse than that as an employer.
For those of us who believe global warming is real and human-caused, this recession — if that’s what we’re in — poses a vexing question: Can we or how do we keep the very real concerns of recession from overwhelming the equally real threats of climate change?
We may be entering a very nasty period of job and income loss for millions of Americans — and perhaps for many others around the globe dependent upon our economy. A recession is one of those clear and present dangers experienced at the personal level. It’s difficult to think about much else when you’re faced with the prospect of losing your livelihood or your home.
And yet, climate change is no less urgent of a matter than the health of the US economy. The UN Human Development Report 2007/2008 calls climate change “the greatest challenge humankind has ever faced.” Its authors warn:
(Climate change) is still a preventable crisis — but only just. The world has less than a decade to change course. No issue merits more urgent attention — or more immediate action.
Try telling that to someone who’s lost his or her job or home. Or to the political candidate who can’t get the words “It’s the economy, stupid” out of his or her head. To them, global warming is a faraway worry. Unfortunately, it’s not. When we get through this recession — and we will, as history shows — the issue of climate change will still be with us. Every year our political leaders back burner the issue draws us that much closer to irreversible harm. As the UN report makes clear, “The world’s poor will suffer the earliest and most damaging impacts.” They have no political voice in America. And neither do future generations.
If the world is going to avoid the worst of global warming, America and Americans must be completely engaged and leading the way. We’re about to find out whether we’re up to the challenge.