In uncertain economic times it's wise to re-evaluate your current business model, especially your marketing and advertising strategies. Unfortunately when the economy is struggling and sales are in a slump many business owners tend to react rather than respond to the changing marketplace.
And there is a huge difference between the two approaches.
"Responding" is a positive activity where corrective and flexible action is taken to maximize results and minimize loss while navigating the storm. "Reacting" on the other hand is a defensive posture steeped in emotion. Think of it this way. Your Doctor prescribes medication to combat a certain condition. On your follow-up visit he tells you, "you body is reacting to the medication instead of responding to it".
See the difference?
In a business situation a person in response mode accepts the market conditions and looks to not only adapt, but exploit the situation, which is almost always rich in previously unforeseen opportunities.
However since reacting is a defensive position, a business owner that is reacting to the market is almost always searching for ways to batten down the hatches.
Becoming reactionary not only leads to overreacting, and the unpleasant consequences it can bring. It reduces the likelihood of recognizing the unique opportunities an economic down turn can present. And if panic sets in can convince some business owners to adopt a slash and burn cost cutting policy that can actually be counterproductive to their own best interests.
While cutting costs in a sluggish market is always prudent, the "reactor" tends to apply the policy to the most cash intensive and possibly least quantifiable in terms of dollars such as training, continuing education, public relations and marketing and advertising. While the first three can probably be put on the back burner temporarily, marketing your business never should be regardless how depressed the economy.
Remember regardless what product or service you offer, your business is marketing. And ceasing to market your business is tantamount to closing your doors. So if reducing costs by cutting your marketing budget is not an option what should you do?
Respond to the market. And responding comes in two forms. One is to identify and eliminate wasteful marketing and advertising activities. The other is to exploit the situation before it has time to correct itself. Let's take a look at the second one first. If you're currently advertising in print, radio, television or all three you need to perform a media contract audit. Not unlike many other industries the media is scampering for sales revenue.
Since many business owners are reacting and are cutting their own marketing and advertising budgets many media outlets are struggling and they are slashing prices on advertising inventory. Unlike many construction related products, air time has no shelf life. Once the day has passed that day's potential ad revenue can never be recovered.
Take the time to review all your ad agreements. If they are close to expiring renegotiate and don't be shy about offering half of what you normally pay. If the contract is still in force it may be time to buy more advertising at a substantially reduced rate. Investment advisors call this "share cost averaging". That is buying more ads at a substantial discount that in turn dilutes the original amount of money spent making unit cost of individual ads less expensive overall. If you are paying for TV or radio ask for complimentary banner ads and trailers. It's not uncommon for a station to give away hundreds of these 10 and 15 second ads to existing clients.
If you're advertising in print media such as newspapers and cannot put a verifiable hard dollar figure on the return, you may want to either stop altogether or ask for a deep discount. If your local paper does not offer an online edition and include print ads there as part of your contract I would seriously consider eliminating this part or your advertising mix. Traditional newspapers are struggling amid declining readership and are simply not a good bargain compared to other options.
Taking the time to audit your advertising contracts can save as much as 50% of your budget and may even allow you to lock in the lowered rates for a year or more.
Now let's take a look at marketing and advertising that is just not pulling its weight any longer.
Although probably a small part of your overall budget, goodwill marketing is rarely an effective marketing strategy when compared to the return. Goodwill marketing can encompass everything from sponsoring little teams, yearbook advertising, charity event sponsorships, civic and youth group events and fundraisers, and involvement in non industry specific community events like job fairs and carnivals. While all these causes are worthwhile, in lean economic times they should be carefully evaluated.
While discount coupon packs and card decks are still viable, individual direct mail is not. In lieu of formal and sometimes costly coupon mailing packs, you might consider partnering with five or six compatible service companies and create your own mailers and send to each other's prospect lists. One successful program is creating a 4x7 refrigerator magnet with all the service companies listed and distributed to all current clients.
The value of home and garden shows varies from market to market, but sponsorship and attendance are way down. Do not fall victim to the belief you must participate because your competition might be. Direct these dollars into geographic specific cable television spots to run during the week the show is in town.
Although bill boards are rarely effective for service companies, the recent glut of this ad space is making for some amazing deals and might be a great place to move newspaper advertising dollars.
This is a short list of possible places to cut marketing costs. The larger point is in unpredictable times it is essential you respond to the market instead of reacting by re-evaluating what your advertising dollars are generating in terms of cold hard cash. If you can't see a direct link between the ad and an increase in sales, it's time to make a change.
Michael Hart is a speaker, author, talk radio host and shameless publicity hound. His marketing and publicity strategies have been featured in numerous magazines including: Selling, Forbes, Entrepreneur, Sales and Marketing Executive Report and many others. He is the co-host of the popular weekly home improvement radio program HOUSE STUDS www.HouseStuds.com He can be reached at (866) 238 5294 or michael@MichaelHartSpeaks.com