As markets spiral downward -- quickly followed by consumer confidence -- each CEO must ask hard questions about how to grow his business in this tumultuous economic environment.
Harvard Professor Bill George told CNBC after the S&P downgrade of U.S. debt that CEOs should seek opportunity in the current crisis. Bill, a Three Ships Media client who was formerly Chairman & CEO of Medtronic, asserted that revenue growth will be harder to find in the U.S. in the years to come. As a result, companies need to initiate productivity improvements now.
I agree wholeheartedly. Lean operational teams with a focus on customers' top priorities will win over less-focused teams in this tenuous environment. Companies must play tomorrow's game today in order to satisfy increasing customer demands in an uncertain economic environment.
What is tomorrow's game when it comes to marketing? It's faster, more targeted, more data-driven, and less fluffy. Most importantly, it's accountable. Here's the playbook:
Tie Everything to Revenue
The great businesses gain market share during downturns. While advertising agencies claim that a recession is the time for aggressive marketing, in reality, a recession is the time for precision marketing. Reevaluate: Who are the buyers? How are they influenced? Why do they purchase?
Typical marketing statistics -- from "brand awareness" to "impression count" -- are considered noise compared to what matters most in a downturn: Revenue!
Next Action: Model each dollar invested in every advertising channel on a monthly basis and track a Return On Ad Spend metric. It doesn't matter what data you have. It doesn't matter whether you use very simple "last touch" models or highly sophisticated econometric models that show cross-channel influence. What matters is that you make high frequency adjustments to increase accountability, based on the best available data.
Reassess Your Salesforce
Customer decision-making, both for B2C and B2B, is evolving as quickly as the media landscape changes. The rise of social networking, the increasing importance of search to all generations, and the overall increase in online information consumption is changing the way every customer researches purchase decisions. Does your salesforce understand this? Have they adopted the way they sell?
Next Action: Use data to answer this question: "If I was starting today from scratch, would I be better off using targeted marketing to generate new prospects or would I rehire my bottom 20% of my sales performers?" Look at the cost-to-value ratio of every single sales rep. How many opportunities are they generating? How much business are they selling? A funnel-level snapshot of each rep should give you the confidence to answer whether their lead production and revenue production stack up against their targets.
De-risk Customer Decision-Making
In 2008 and 2009, liquidity concerns lessened business and consumer confidence. While corporate balance sheets have less leverage today than at the height of the credit crisis, myriad new questions have arisen that make buyers nervous. Government stimulus is unlikely. The mid-term outlook for inflation seems inevitable. Domestic growth prospects are dampened. Amid increased uncertainty, customers value options and want flexibility.
Next Action: Introduce free trials of your products and experiment with money-back guarantees, particularly if you have a high margin product. I recently spent some time with marketing and sales executives at a business unit of a large publicly-traded data company. They are finding it impossible to not offer a free trial of their product as more and more competitors promise customers results with no obligation. Many industries - particularly Software as a Service (SAAS) and other web-enabled service businesses are finding that it's impossible to acquire the lead if you don't entice the prospect with something of value.
Earn Customer Attention
The cheapest (and best) customer is a referral. Krispy Kreme's incoming Chief Marketing Officer, Dwayne Chambers, vowed to reduce advertising spend at the legendary doughnut-maker as one of his first actions. He's freeing up resources to deepen the brand's commitment to using social media and he's working to harness the employee base and the most loyal customers as a "word of mouth" machine for the brand. Kraft Foods is now the largest publisher of recipes. BMW is a filmmaker. How are you engaging prospective and existing customers?
Next Action: Shift budget from "paid" media to "earned" media. Quality content is difficult to accurately value without extensive enterprise-level web analytics, yet it questionably provides the best cost-to-value returns of any marketing channel. Are you generating leads or customers through "earned" or "owned" media as cheaply as "paid" media? If so, double down.
Create a Frictionless Customer Experience
Steve Krug's classic on web usability was titled, "Don't Make Me Think." Businesses that use technology to improve the customer experience ("Don't Make Me Work") will see higher close rates and less churn. At Three Ships Media, we are using the summer as an opportunity to reinvent our operational model. We're mapping every service we deliver to our customers in the earned media, paid media, and conversion areas. We're using technology to automate these processes, which allow them to scale more seamlessly across different functional teams, and we're also beginning to have conversations with clients about pulling their teams onto this technology platform.
Next Action: Ask how you're doing, using the Net Promoter Score methodology. More importantly, watch how you're doing by assessing falloff in your sales funnel and churn with your existing customers. While information technology might seem like the last investment to make in a downturn, it strikes us as the best investment possible -- particularly if it's about improving customer experience and loyalty.
Zach Clayton is CEO of Three Ships Media, a performance marketing agency focused on increasing sales through online channels for its clients. He is also a Managing Director of the Emerging Media Research Council.