By Dave Anderson, Learn to Lead
Rough times are not for everyone. In other words, you can choose to limit your participation during tough times by taking proactive and intelligent actions to prosper while others are whining. Fortunately, down markets present unique opportunities. Thus, you should not ask yourself, “How can I survive this?” but, “How can I make money from this?” In other words, don’t waste your breath asking for God to give you greater opportunities until you’ve first asked for the vision to see the opportunities you already have and are missing. I recently filmed two 45-minute DVDs covering the 10 foolish mistakes leaders make during a recession. With the space available I will cover five of these, as well as strategies for avoiding them. Addressing these areas personally and teaching your people to do likewise will help you create an unlevel playing field over your competition during tougher times.
1. They fail to concentrate more on existing customers than prospects. It costs six times more to sell something to a new person than to sell that same offering to a current customer. A more focused and personal marketing approach to current customers is the best way to leverage dollars in down times. Thus you must implement a strategy for extending your relationship with current customers after the sale. Chances are good that you have such policies in place. The more relevant issue is whether these systems for follow-up are being utilized. This would be the time to turn up the heat and intensify your efforts to reconnect with your best customers. It’s never too late to make the effort. Whatever it costs you is worth the investment since the cost of customer retention is miniscule compared to the cost of customer acquisition.
Strategy: Send out a discount voucher via mail or email that a customer can either use or give to a friend or family member. Make sure there isn’t a lot of fine print or “gotchas” attached to your offer. Keep it simple and honest. An online store, C28.com, where I’ve bought a good deal of merchandise over the past two years has pleasantly surprised me on several different occasions with gift certificates and discount coupons that keep me coming back.
2. They cut back on training. You don’t have to spend more dollars on training. You can begin by better leveraging the training sources you already have that are not being used. By taking down time and turning it into prime time for training, you will keep people sharp and you will upgrade their skills so they can sell a higher percentage of the smaller customer counts they may be experiencing. Training will also boost morale as employees feel better about themselves when they are busy, productive and when their company is making an investment in their development.
3. They gut their marketing budget. While you must avoid desperate, shotgun approaches to bringing in more traffic, you should focus more on marketing to your current customers and communicating a more positive and compelling message to the public as a whole. Since fewer companies are advertising, your message will stand out and capture greater notice.
4. They hide. During tight times, leaders must show up! Being visible, accessible and more decisive are key traits effective leaders display during downturns. It’s also essential to communicate quickly, honestly and consistently about business and performance because when people do not hear from you, they tend to assume the worst. However, they can also see through false optimism and Pollyanna nonsense. Be frank about the current situation as you remain hopeful for a better future, but make sure your better future is based on actions you are taking to change things, and not on waiting for the things around you to change!
Strategy: As important as it is to stay visible and accessible, you must stay personally engaged with high-return tasks in the process. The secret of every mega-wealthy person I know is focus. They know what they do best, and that’s what they do…in fact, that’s all they do. They don’t do things that they can hire others to do. Top leaders, especially, should stick to strategic rather than tactical work. Strategic work involves organizing, planning, developing and operating — working on your business more than in it. Tactical work is comprised of all the tasks non-managers perform to achieve results in their positions. Engaging in tactical work is a common temptation of leaders who, with good intentions, spend time in the trenches but confuse doing what is proximate over what is ultimate.
5. They panic. They try anything to stay afloat, including wasteful promotions and ill-advised expansion, marketing campaigns or a variety of other quick fixes that take them away from their strengths and confuse their employees and customers.
Three tips for keeping a level head:
- Spend cash carefully and only where you see the best possible potential for return. Use tough times to narrow your focus on what will bring the most bang for the investment.
- Don’t cost-cut as a knee-jerk reaction, but do so thoughtfully and all at once. Avoid cost-cuts that make remaining employees or customers feel less important. The leader should show a willingness to sacrifice first: this goes for pay cuts and perk cuts. Organizational excellence begins and ends with personal sacrifice from the leaders.
- Stick with your strengths. Your strongest products, people and processes are a key to prospering during the tough times. Don’t abandon these assets as you search for the elusive silver bullet that you hope will bail you out.
This article is reprinted with permission from Dave Anderson.