Business runs on confidence. Its a scarce commodity these days, with the economy signaling such a ginger, tender-footed recovery. Even our states business weekly had a recent story exploring the new normal of the post-Great Recession American consumerbuying less, dumping debt, bargain shopping. From one month to another the numbers whipsawsales, confidence, this thing up, that thing down.
Is it a whole new economy with permanent, structural changes in the American consumer? There is way too much FUDfear, uncertainty and doubtremaining in the public psyche to call any trend right now. Along with questions from our own clients, the AB cover package has me exploring what to do now.
Focus on value, not price. Theres only one Wal-Mart; everybody else needs to figure out how to drive the greatest value into the equation. Know your customers. Deliver the quality they want. Price it right. Communicate that value proposition like crazy. June 2011 retail sales rebounded at the discounter and the luxury end; the middle marketwhere the value is hard to clarifyis still wheezing.
Get a Ph.D. in your competition. Sam Walton famously roamed the aisles of his competition every weeknot to gloat over what they were doing wrong but to figure out what they were doing right. Find their gaps, their weaknesses, the niches you can fill that they are ignoring. Renys, a Maine independent, found a way to offer premium brands such as Carhartt, Columbia and Woolrich at bargain basement, shopping-magnet prices. If the economy and the buyer have changed permanently and structurally, your primary growth engine must become stealing market share from your competitors. Youre not going to steal share from a competitor you dont get.
Measure everything. The dirty little secret in the marketing world is that nobody knows what will work. Especially now in a tottering recovery influenced by the disruptive technologies of Twitter, YouTube, mobile messaging and the like. The only way to know now is measure maniacallyonline traffic, conversions, inquiries and their source, share of customer. Your system doesnt have to be elaborate, but if youre not sufficiently curious about whats in your lunch, somebody else is going to eat it.
Make loyalty a religion. Everyone knows its cheaper to sell to an existing customer than to create a new one. The rule of thumb is by a factor of five. Focus on relationships, not transactions. Market, advertise, communicate, schmooze and show the love to your existing customers. If theres money, time and effort left over, focus on getting some new ones.
Baby your employees. How did Kroger employees become so friendly? Arent grocery store workers notoriously surly? Not Krogers. The company is competing hard and well with Wal-Mart in the grocery spacenot only with pricing and product strategies, but also by designing pleasant experiences for their customers. No army of greeters can compete with a tribe of friendly, helpful, courteous associates.
What are our clients experiencing in this economy? Without naming names, here are several items:
A regional chain of stores serving both professional builders and homeowners saw its pro sales halved as the new housing market evaporated. Consumer spending remained steady, even if its not setting the world on fire. Pro Sales Online confirmed this pattern throughout the economy. Now the chain of stores is focused on building that consumer segment into a solid brick in the foundation by pursuing many of the strategies mentioned above.
A regional home improvement supplier/installer has seen a roller-coaster ride from one week and month to the next. All bets are off this year as the historic seasonality and patterns of their business are disrupted. Still, they are staying in the game with an aggressive promotional program to drive visitation online and at stores. Strategies mentioned here mean deal flow may be down but nearly one in two proposals closes in a sale.
A home lender that we helped grow to number one in market share has reported breaking records during the Great Recession. They have stayed in the game throughout by keeping their marketing program intactdefying the common urge to pare back everything to the bone. When the first-time homebuyer stimulus and then historic low mortgage rates drove volume, their positioning and advertising program helped maintain and capture new share.
As I reflect on it, the new normal doesnt seem so new after all. In businesslike footballfancy strategies and creative ideologies rarely outperform great blocking and tackling.
Martin Thoma is principal of Thoma Thoma in Little Rock, a brand leadership and marketing communications firm. Reach him at email@example.com.