The new normal
That’s what economists are calling today’s economy. The big “R” has finally turned from “recession” to “recovery,” which is good, but it’s not the bubble-inflating rebound of last decade; it’s “the new normal.” No dramatic recovery. No hockey stick projections. Just slow sloping growth in the future—hopefully. So what do companies do with marketing? Traditionally, economic downturns cause businesses to cut expenses (and for good reason). But I caution companies looking to cut their marketing budgets blindly. Marketing is still one of the best ways for companies to be nimble and opportunistic, and recovery economies are great times to find opportunities.
Now’s the time
According to Alan Beaulieu of the Institute for Trend Research, the nation’s economy is in a recovery. His firm does not believe that we are headed toward a “W,” or a double dip recession, but rather a slow, steady recovery. Although some sectors will continue to struggle (namely commercial construction and commercial real estate—sorry Dan!), most of the sectors of the U.S. economy are starting to trend positive, especially food, healthcare/medical, biotech, energy, and security. He also believes that we will likely see inflation doubling in the next couple of years, so he recommends that businesses take advantage of today’s economic conditions—relatively low costs, low interest rates, and the opportunity for future growth. In his opinion, now is the time to grow, expand, and launch new lines of businesses. But for companies who just weathered 2009, what do you do with that advice? In my opinion, you engage in marketing.
Your customers have changed
During the past 18 months, there has been a dramatic change in the marketplace that has, without a doubt, affected your customers, either personally, financially, and/or professionally. People now are buying differently and for different reasons. It has impacted what companies have spent on marketing, both consumer-to-business and business-to-business. However, economic downturns can prove to be an opportunity to win the loyalty of more customers, increase productivity, and strengthen market position.
On the consumer side, consumer spending has risen slightly. According to SpendingPulse, a macroeconomic indicator report from MasterCard Advisors, U.S. retail sales this January rose 3.6 percent from January 2009. Of course, you’re saying to yourself, who was spending last January? Even though the trend was modest, and the baseline, of course, was low, it’s still trending upward. However if you dig into the numbers, consumers aren’t buying the same things for the same reasons they used to.
According to a recent New York Times article (“In Recession, Americans Doing More, Buying Less,” January 2, 2010) the recession has caused Americans to reprioritize “experiences over things.” The article quoted a New York Times/CBS News poll where it found that nearly half of Americans said they were spending less time buying nonessentials and that people are now spending more time with family and friends, gardening, cooking, reading, watching television, and engaging in other hobbies. Of course “nonessentials” can be discretionary. During this same period, movie ticket sales also increased and there was a rise (and name given) to “stay-cations,” or local get-aways. The numbers differ per industry, region, and by social-economic class, but the net-net is that the “what,” and more importantly the “why” people buy has changed, and that was also true for business-to-business sales as well.
On the business side, as the economy continued its downward slide, companies cut costs, delayed spending and tried to get more value for the money they did spend. The “must-have” versus “nice-to-have” benchmark took on a whole new meaning last year. But unlike the last recession in 2001 to 2002, when companies looked to outsource in order to curb spending, some companies mid-last year just simply froze their spending, waiting for the “other shoe to drop.” So far, 2010 corporate spending has seen an uptake, some from the pent-up demand of that last two quarters and some from renewed optimism that there isn’t another “shoe” (knock of some preverbal wood now).
So to move forward, companies must now look to re-understand their customers—what they’re buying, why they’re buying, what are their pressures and fears, and what inspires them. Companies can do this with basic steps such as having senior management meeting with key customers and customer satisfaction surveys to more sophisticated market research techniques such as focus groups, primary and secondary research, and trend analysis. The bottom line is that your customers have changed, and in order to continue to be relevant to them, you must understand how they have changed.
Change your marketing
Not only has your customer changed, but how to reach and connect with them as changed too. The past 18 months saw a decline in the economy, but also saw a profound rise of social and mobile technology. Social media websites, such as Facebook and Twitter, grew to customer numbers that would rank them as one of the largest countries in the world if they existed outside of cyber-land. And mobile technologies, such as the iPod and iPhone, saw record adoption that made it the most successful consumer technology launch—ever. And these new technologies weren’t just adopted, they have fundamentally changed how and why people communicate and connect. Now you can get your news anytime, from any source, anywhere. You can talk directly to large companies and global leaders. You can create new sensations, and controversies, with a tap of your keyboard or a tweet to your followers. You can talk, interact, seek, find, connect, and communicate with almost anyone from anywhere. And you can effect change. It’s not just the influencers anymore. Everyone can be an influencer. And this is not only happening with the younger generation. This is happening at all age groups and social-economic classes. So, as a marketer, what do you do with that? Ditch the traditional and go with Twitter? No… but you do need to look at integrating social and mobile into your strategy.
As always, your marketing efforts should focus on your customers. But in today’s interconnected world, you don’t manage your customer relationships anymore, you have them. That’s the mantra of social media—having connections, having relationships, being authentic. That may not sound like anything new, but for some businesses, it has been revolutionary. Companies can’t control their messages like they used to in the days of PR, lobbyists, and the nightly news. Companies can’t market their way into or out of new opportunities or publicity very easily anymore. There is a collective knowledge that can live on. There is ambient information everywhere, about everything. Today, companies have to build a strong marketing foundation that allows for relationships and collaboration to naturally and organically grow. And that is a fundamental difference between marketing in this decade versus last decade. And it’s a great change.
Tune into the next blog… and we’ll tune more into social media…