To Spend or Not To Spend: That is the Question

The sub-prime crisis is hurting the US economy, and the worst fear is that the U.S. will stumble from recession into depression. That will really put the whole world into a tailspin. After all, USA is the last surviving political and economy superpower.

We read about Americans moving out of the suburbs to live in the cities so that they can cut back on petrol. We learn that city dwellers gave up on cars and switched to public transport and chose to walk instead. Basically, everybody is cutting cost to keep expenses to a minimum. The reality is cruel, income growth simply cannot keep up with the escalating cost of living.

Yet, ironically, by trimming costs and cutting back on spending, the economy will get worse. Even more ironic is that most people understand this. However, most companies will chose to treat the open wounds first versus healing the internal injuries. Avoiding pain is a natural response.

AdvertisingAge just published an article by Jack Neff with the opening paragraph saying:

Amid roiling financial markets, a who’s who of blue-chip marketers are making moves to slash marketing spending, or at least apply tougher financial discipline to what they do spend. Among them are five major companies that together contribute more than $10 billion to the U.S. ad economy: General Motors Corp., Procter & Gamble Co., Anheuser-Busch, Coca-Cola Co. and Nissan.

and that

A combination of hard times and internal austerity measures often has meant a back-to-basics movement …. — and quite possibly a resistance to any experimental marketing that doesn’t have proven ROI.

What does a recession mean to a small-medium business owner? So far, the two most common reactions I have heard are:

“If the big boys are cutting back, perhaps I should stop all marketing efforts?”

No. NO. That will be slitting your financial throat in the long run. If you are not around to serve your client and demonstrate how your products/services can actually save him lots of headache and heartache during this financial crisis, what makes you think that he will ever want you around when the good times return? Leo Burnett famously said “What helps people, helps business.” You don’t have to spend lavishly. You just need to spend wisely. If you are blessed with writing flair, write a killer sales letter and email to your current clients. There is no cost, and most likely no one will accuse you of spamming.

“Perhaps I should push harder on sales, just sell, sell, sell and forget about marketing.”

No. NO. I’m not saying you should not double or triple your efforts on sales activities. You should, in fact, you must. However, you must go in with the right attitude to serve. If the discerning client can smell a mile away that you are coming through the door with the sole intention of fattening your own wallet, he will put a leash on you when you attempt a pit bull sale. Most people prefer to buy rather than to be sold to.

Bruce Barton, co-founder BBDO (Batten Barton, Durstine and Osborn) Agency once said “In good times people want to advertise, in bad times, they have to.” Why? The simple and most straight forward answer is “out of sight, out of mind, out of consideration”. Some people wrongly perceive that advertising means exorbitant TVCs or expensive press advertisement or pricey sales brochures or the likes. These are indeed the most common media but not exclusively so. If you know how to do it right, even a small business card can bring you sales. Recently, I did a card for a client which led her prospects to ask so many questions that she was virtually “invited” to sell, sell, sell. How much can a box of business cards cost even if you add up consultancy charges, creative fee and printing price?

In this trying period, you can do creative marketing or guerrilla marketing with little or no money upfront. You can take a look at your business card and see if it is selling features or benefits. You can even see if there is a hook. Or perhaps you can introduce or revamp your loyalty program or referral program. Both take very little to implement but the results can be phenomenal when done right. You can also boost customer service, because these front line staff are the ones that can strengthen the pre-sale and post sales efforts of the sales people. There are many things you can do with little or no money.

When I first started my business in 1998, I was right in the midst of the Asian finance crisis. I had very little money to market myself and the new found company. Still, I did whatever I could to work myself into the client’s shopping list. If the client cannot remember me or does not have a good impression of me, I will not stand a chance to survive. At that time, with only an extra month of salary, I was struggling for survival, I was not even thinking of growing the company! During that one and half years, I learned more about personal branding and guerrilla marketing than 10 years in the advertising realm.

Building rapport, establishing credibility, nurturing trust, understanding the client’s concerns and problems and helping the client to overcome challenges and shine before his boss or the board could be far more important than the end product that’s actually delivered.

Currently, I’m helping a client who has less than S$2000 (USD 1470) a month to promote his training programs. The budget is small, however, whatever that’s done and achieved got me a text message today that started with “I’m happy …”. When I get the client’s consent, I will share what we have achieved together. It is indeed a true agency-client collaboration where understanding and support are the corner stones of a successful campaign done progressively and in phases.