Posts Tagged ‘layoffs’

Marketers look over their shoulders as recession hits

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!


The fool’s gold of economic development

More than 200 people lost their jobs yesterday in Roseburg, Oregon after Dell closed its call center there. While the closure came as a shock to many employees and the community, no one should be the least bit surprised it came to this. What’s surprising is that elected and economic development officials, desperate for jobs, keep rolling out the red carpet for global corporations whose only long-term allegiance is to making money for their shareholders.

Back in 2002, Dell chose Roseburg for its call center after starting with a list of 3,300 communities as potential sites for the center, according to a December 23, 2002 article in The News-Review of Roseburg. To win the selection process, the city, Douglas County and the state of Oregon agreed to give Dell a package of tax breaks and other inducements. According to The News Review, the package included a property tax waiver of up to three years, a state income tax credit worth up to 25 percent of property investments that relate to online trade, a reimbursement of $250,000 for Dell expenditures on telecommunications upgrades and equipment, and even an agreement to build a 75-car parking lot at no cost to Dell.

In that same newspaper piece five years ago, well-known Oregon economist Joe Cortright warned, “Places that are going after call centers have to be very cautious.” He was very aware that the trend then (and now) was toward moving corporate call centers overseas to save costs. It’s also the case that business conditions change rapidly and companies react accordingly. That same month of December 2002, as the article noted, DirecTV closed its call center in Beaverton, Oregon and laid off 400 people after shutting down its Internet subsidiary.

The warning signs were there five years ago, making what happened yesterday in Roseburg no surprise. Too often winning the chase for jobs from outside corporations is nothing more than fool’s gold. It may look like real economic development, but it is soon followed by the realization that the same thing that draws large companies to a community – lower costs and higher profits – is what sends them on their way when their business declines or better opportunities present themselves elsewhere. Dell is just the latest example of this. As has been widely reported, Dell sales have been falling, and they are in the process of shedding jobs.

So what’s the choice for communities hungry for jobs, like Roseburg, which has long struggled to overcome the deterioration of timber industry employment? It’s doing everything possible to take care of existing local employers and to encourage local entrepreneurship. This is not the quick-fix answer public officials seek, and it doesn’t let them bask in the glow of ribbon-cutting ceremonies with out-of-town corporate fat cats. But independent locally owned businesses are the long-term foundation for a sustainable economy.

One Roseburg resident summed it up well yesterday in comments to The News Review:

“Did anyone know Dell was going to close?” Absolutely! Everyone who has been paying attention to the business world for the past few decades (at least). Small towns bend over backward to give big corporations whatever they want; the companies fail to deliver, and then leave in five years. If half the worth of incentives and tax breaks had gone to supporting locally-owned businesses instead of Dell, the people of Roseburg would be better off today.