November 28, 2015

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02/25/08 Donít Run From Recession! (Seize The Opportunity)

The debate over whether the country is falling into recession persists, but recession certainly seems to have hit the retail business my friend Jim owns in Texas. Last year business was up 20 percent, but since November his sales have fallen off the map. I asked Jim what he plans do, and hereís what he told me: lay off some people, stop all advertising, and live off his reputation until things get better.

His response is logical, and itís what a lot of businesses owners will do. Itís also stupid ó and I told him so.


1. Advertise like crazy.
ďOf course youíre going to recommend advertising,Ē your clients will say, ďitís what you do for a living.Ē But hereís what happens: The strongest brands survive most recessions because they find customers even if they stop advertising. They have deeper reserves that help them ride out the storm without advertising. However, when lesser-known brands stop advertising, business declines. They cut back even more, and eventually go out of business. When advertising stops, people stop coming. So imagine what happens when a top brand stops advertising and a secondary or tertiary brand increases advertising? It STEALS MARKET SHARE from the big guy! During recessions, new brand leaders are established when other brands cut back. I know business owners who welcome recessions because they know they can increase brand awareness for less money while their competitors lay low. Every one of your clients that isnít a market leader needs to follow his example.

2. Go for the high end. High end customers are less impacted than lower-end consumers. This cannot work for people who sell commodity products, which are based on price alone. But if you can find unique product lines that appeal to the high end, grab íem, promote íem, and sell íem. Caution: All brands have a meaning, so if your client is known as a low-end brand itís difficult if not impossible to recast that image.

3. Launch new businesses. Business owners often wish they could expand into other markets and sell other items. Since all businesses cut back during recessions, this is a great time to launch a new product or service, build your new brand, and quickly take over a new market.

4. Kill the expensive advertising: Iím not one of those radio people who thinks TV or print is a bad idea, but I know it can be expensive. You can cut back on the type of advertising you use and not lose market share. Kill the TV, cut your overall budget, and dominate on radio. If you cannot afford to spread the love around, pick one or two stations you can afford to dominate.

5. Cut non-essential expenses. Most businesses cut advertising and marketing first, but this is foolish because advertising is essential. Cutting other expenses wonít hurt the business as badly; it may be painful, but itís better to make those cuts than to lose the cash flow generated by customers coming into the door.

My buddy Jim had to lay off two employees, but he took my advice and increased his advertising. And he focused on advertising to those high end customers. His competitors are not advertising, and he is welcoming new customers. This month he had higher sales than the past two months combined. His move was gutsy, but it worked.

Now is the time to share this column with your advertisers. You will save their businesses, and they will thank you for the advice.

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