Historically, the economy only improves when people are
convinced that it is improving. Apparently the Bush
Administration hasn't been all that convincing because the
economy isn't steadily improving. At least not according to most
corporate managers and, more importantly, not according to
consumers.
We've all seen the deadly warning signs:
* Sales have steadily declined.
* Prices are plummeting.
* Consumers (business and individuals) have said they can't
afford products or services, no matter what the cost.
* Buyers are more cautious and searching for better value
* Reports of layoffs, increased bankruptcies, wholesale
corporate reorganizations fill the pages of our newspapers.
The U.S. economy grew slightly more than a paltry 1
percent during the past two quarters. Economists are
predicting that unless the federal government does something
dramatic, we will remain in a recession until at least late this year or
the middle of next year.
Car sales have skidded, real estate sales have slowed, the defense
industry is almost non-existent and big, powerful PCs sit on store shelves
despite almost fire sale prices.
Consumer electronics firms are forecasting lower sales and
Significantly lower profits on those sales. Financial institutions are still
reeling from the collapse of the dotcoms and the stock market while financial
dealmakers have to finally hustle for new business. There is also a growing
volume of bad debts and bankruptcies.
John Schwartz, a reporter with the New York Times, recently put forth
the premise that today’s refined Internet-based supply chain may have
contributed to the market’s rapid decline. He noted that despite the promise
of an Internet-connected supply chain manufacturers have found themselves
with bloated inventories and shrinking customer confidence.
Some blame our present condition on the fact that we have too much instant
technology while others say the problems lie in the fact that we don’t have
enough and that which we have aren’t being used in an optimum fashion.
Still others blame outsourcing saying that management is too far removed
from the actual market pulse.
One thing is certain; there is enough blame to go around.
While Alan Greenspan, the Federal Reserve chairman and one of the Internet’s
greatest cheerleaders, agrees that the speed and power of the Internet have contributed
to our current problems. He also feels it will help us out of the problems.
The Internet does provide decision-makers with immediate contact with every
part of their supply chain and with ultra-current information. The Internet isn’t a
crystal ball. It cannot forecast future market actions or reactions. It cannot tell
you that 3-6 months out you will have to temper component purchases, reduce
overall production or bring out a new product or solution. That requires the human
touch based on experience, rationale thinking and…luck.
Even with all the supply chain information, firms can’t turn on and turn off
incoming inventory, production and shipments at a moment’s notice.
In addition, just because we have instant connectivity available to us, the
Internet does not create immediate customer demand for finished goods. The dotcoms proved to us that the idealistic philosophy of build it and they will automatically come – and buy – simply doesn’t happen. Products must still be marketed and sold.
.
Since it is becoming painfully obvious that the Bush
Administration can't or won't take the necessary steps to help
the economy turn the corner, it is up to business to pave the way
for recovery. By examining past recoveries, we see that there
are six principles that have traditionally been helpful in
troubled times.
1. New Attitudes Make the Difference
Words are the building blocks for new attitudes. When
Churchill told the British population that he had nothing to
offer "but blood, sweat and tears," he instilled the renewed
sense of commitment, strength and hope that was needed to win
the war. By the same token, Presidents Roosevelt and Reagan
were economy cheerleaders who constantly stated that things
were getting better ... and they did.
Managing this downturn begins with managing negative
attitudes. Positive attitudes build hope and overcome tough
times. For example, the Farmer's Almanac states, "there is
no such thing as bad weather, only inadequate clothing."
Dale Carnegie once wrote, "Develop success from failure.
Discouragement and failure are two of the surest stepping
stones to success. But you must be willing to study them and make capital out of
them. Look backward. Can't you see where your failures have
helped you?"
2. Don't Cut Expenses that Generate Sales!
During business slowdowns, many businesses automatically cut
marketing, advertising and promotion. Salespeople are expected to pick
up the slack by making prospect calls, instead of closing
business deals. The strategy often leads to an accelerated
decline in business.
More savvy marketers maintain their activities and efforts or
redesign their promotion to fit the new economic climate,
while the competition cuts their market exposure even
further. The key is to cut fat, not muscle.
Potential budget cuts can include entertainment,
conventions or trade shows that can't be cost-justified.
Eliminate all special travel perks, downgrade benefits or
special bonus packages and find more economical ways to use
your sales organization. Rather than having sales people fly
or drive to every prospect, make heavier use of the phone and
email to qualify organizations to the point where a closing
sales call is indicated. This approach can be more efficient
and more effective for everyone concerned.
3. Focus on Different Groups of Customers
Most firms sell their products to several market segments.
Remember that even during the worst depression, some business
segments are still growing--and buying. For example, if you
usually sell to financial institutions, real estate offices
and car dealers and their sales are down; refocus your
efforts to include insurance firms, hospitals or attorneys.
When you talk to prospects in these markets, you'll find
greater enthusiasm and rediscover many of the benefits your
products and/or services can provide.
Develop new sales call priority lists. Spend more time
on the profitable market segments and put the least
productive targets on the back burner.
4. Contact More Customers
In a recession, many salespeople tend to make fewer sales
calls. In fact, a survey of purchasing managers showed that
during a recession, the call frequency from sales people
drops by as much as 38 percent.
They rationalize, "What's the use of calling these
people when I know their business is slow?"
It means that fewer salespeople are going after the
business that's still available. But the other side of the
coin is that while there may be fewer selling opportunities
available, if you increase the number of carefully targeted
calls, you'll get more than your usual share of business.
5. Upgrade Selling Know-How
A recession is the best time for salespeople to polish their
professional selling and negotiation skills.
During economic slowdowns, many sales people tend to
slip into a gloomy, helpless mood. To avoid apathy or
depression, change your personal habits. Create a higher
level of energy by setting extra time aside for aerobic
exercise. Listen to positive mental attitude tapes. Reread
positive books. Seek out positive people. Avoid
complainers, whiners or passive colleagues. Set higher
standards of excellence for yourself. Don't get frustrated
... get motivated!
6. Increase Commitment to Excellence
Some managers and salespeople need constant reminders to put
forth the extra effort needed to sell themselves out of a
recession. Thomas Bonoma, professor of Business Administra-
tion at Harvard Business School, once described the commit-
ment to excellence as a "fire in the belly."
He described a scene from the classic Orson Welles film,
"Lady from Shanghai." In the movie, Orson Welles asks,
"What makes a tough guy?" Someone
responds with, "I don't know." Welles
explains, "A guy with an edge. What makes
him sing better than me? (he points at the
jukebox.) "Something in here."
touches his throat.) "What makes it loud?
A microphone. That's his edge. A gun or a
knife, a nightstick or a razor, something
the other guy ain't got, yeah, a little
extra reach on a punch, a set of brass
knuckles, a stripe on a sleeve, a badge
that says 'cop,' or a rock in your hand, or
bankroll in your pocket, that's an edge,
brother. Without an edge, there ain't no
tough guy."
To paraphrase Welles: Fire in the belly is still the best
edge against the inconveniences of a sluggish, unresponsive
marketplace.
# # #
BUSINESS NOT GOVERNMENT MUST IMPROVE THE ECONOMY - To learn more about this author, visit Andy Marken's Website.
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The current National Geographic has a fascinating feature on capitalism in China's boomtowns, cities like Lishui that are growing so fast that city planners have razed 108 hilltops to accomodate the runaway growth. ...
