A crisis is a terrible thing to waste
A crisis is a terrible thing to waste
As the economy liquefies in front of your eyes, it is hard to find anything positive in the gooey mess stuck to your shoes.
Cost structures have changed. Some of your customers simply disappeared overnight. The customers that are left now have new preferences and new needs. Their thin margins make your margins thinner. You are sleeping less and drinking more.
In the movie Airplane, Lloyd Bridges summed up the mood of small business perfectly when he said: “Looks like I picked a bad time to stop sniffing glue.”
We’ve been hit over the head so many different ways about the economy and the new reality that we’re all a little punch drunk. Those that aren’t punch drunk are frozen by fear. There is way too much uncertainty. When people are confused, they do not buy.
But, thankfully, there is good news. There is nothing like the face through the windshield shock of being buried under a giant pile of manure to get your mind focused on digging yourself out. To maintain or even grow, it is time to revisit, rethink the and even discard some of the basic assumptions that sustained you during boom times.
So where should you focus your soul searching?
Look at the customers you still have. Even more, look at the customers you still have that are strong enough to survive and worth an extra investment from you.
Don’t over over-intellectualize this. This is a simple task that relies mostly on gut instinct and a little supporting data. Make a list of the customer criteria you find most valuable. This could be the most profitable. Fastest to pay. Easiest to work with. The ones with the lowest cost. Whatever your criteria, write it down. You have 20 minutes.
Once you have this list of characteristics, go through your current customers and rank them against the list. Use numbers, use color codes, use a flinch-test, just rank them. Who exhibits the best characteristics? Who sort-of does? And who exhibits almost none of them?
Once you have this ranked list, tune the value you offer (products/services), your value-offering mechanism (marketing), your value-delivery practices (execution), and value-support practices (customer service) to serve the ones that fit.
Work hard to fine tune your value so these customers stay customers forever. Make it brain-dead simple for them to become word-of-mouth referrers of your service to others in their circle.
Next step? Cut the bad customers (or let them cut themselves)
Thin the herd. Find the ones that raise your costs. These are the ones who use your customer service extensively, who constantly shop your bids, jump on your specials, ignore your follow-on promotions, and in general just raise the costs of doing business.
Fire them or even better, raise your rates. Some will leave but some of the bad customers might become good customers if they pay more.
Listen to your employees!
Don’t know how to increase service to those most desirable customers? Your front-line salespeople do.
Your employees are your front line; they make or break your organization. Living in the belly of the beast your employees see what’s going on from the inside out. The employees are really what your customers are buying, they make the products, provide the services and give the insight that your customers pay for.
When money is in short supply everyone needs to step up the game.
In fact, there may be evidence that too much money could be a bad thing (no laughing). A study by Booz Allen Hamilton (website registration required) on the 1,000 publicly held companies with the biggest R&D spend suggests that factors other than money may be the most important drivers of innovation. In fact, the study suggests that innovation may be inversely proportional to the size of the budget.
No money and plenty of time gives your employees a chance to really show off their strengths. What looks better on a resume than saying that you helped a company to overcome an economic downturn and stay the course in rough water? Ask them to step up to the challenge.
Now, find new customers that look like your good customers.
Easier said than done. The main point here is that your sales and marketing must be trimmed intelligently.
Take heed to the famous quote attributed to department store merchant John Wannamaker. Wannamaker said: Half the money I spend on advertising is wasted; the trouble is I don’t know which half.
Half your marketing budget is probably not working. The tactics that are hard to measure should probably be eliminated. The simple and easy to quantify tactics with built in measurement that worked when you started the business - the email newsletters, working your referral network, direct mail, PPC, improving your website, paying attention, speaking, getting intimate with your CRM database, measuring sales activity and conducting lots of testing - all those tactics worked in the past and it may be time to revisit them.
Finally, be ready to ACT!
So what if the economy is hitting a rough spot? Once you’ve invested more in your customers, cut off the dead limbs, watered the good ones, and given your employees a chance to really shine your company is going to be stronger.
If you have cash, there are great deals to be had, if you have good credit, banks are still lending. Everybody is willing to negotiate. It is a buyer’s market.
Warren Buffet said “be fearful when others are greedy and greedy when others are fearful.” Right now high quality talent is plentiful, there are many exceptional talents looking for work and many that will work at rates favorable to your clients’ new reality. Start the hunt, hire people you couldn’t afford 12 months ago, whether full time, part time or as a contractor.
Now is the time to act. Now is the time to look at new possibilities. Now is the time to reinvent your business.
Good luck!
A crisis is a terrible thing to waste - To learn more about this author, visit Ben Bradley's Website.
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NOTE: *I believe the title of this article can be attributed to economist Paul Romer.
As the economy liquefies in front of your eyes, it is hard to find anything positive in the gooey mess stuck to your shoes.
Cost structures have changed. Some of your customers simply disappeared overnight. The customers that are left now have new preferences and new needs. Their thin margins make your margins thinner. You are sleeping less and drinking more.
In the movie Airplane, Lloyd Bridges summed up the mood of small business perfectly when he said: “Looks like I picked a bad time to stop sniffing glue.”
We’ve been hit over the head so many different ways about the economy and the new reality that we’re all a little punch drunk. Those that aren’t punch drunk are frozen by fear. There is way too much uncertainty. When people are confused, they do not buy.
But, thankfully, there is good news. There is nothing like the face through the windshield shock of being buried under a giant pile of manure to get your mind focused on digging yourself out. To maintain or even grow, it is time to revisit, rethink the and even discard some of the basic assumptions that sustained you during boom times.
So where should you focus your soul searching?
Look at the customers you still have. Even more, look at the customers you still have that are strong enough to survive and worth an extra investment from you.
Don’t over over-intellectualize this. This is a simple task that relies mostly on gut instinct and a little supporting data. Make a list of the customer criteria you find most valuable. This could be the most profitable. Fastest to pay. Easiest to work with. The ones with the lowest cost. Whatever your criteria, write it down. You have 20 minutes.
Once you have this list of characteristics, go through your current customers and rank them against the list. Use numbers, use color codes, use a flinch-test, just rank them. Who exhibits the best characteristics? Who sort-of does? And who exhibits almost none of them?
Once you have this ranked list, tune the value you offer (products/services), your value-offering mechanism (marketing), your value-delivery practices (execution), and value-support practices (customer service) to serve the ones that fit.
Work hard to fine tune your value so these customers stay customers forever. Make it brain-dead simple for them to become word-of-mouth referrers of your service to others in their circle.
Next step? Cut the bad customers (or let them cut themselves)
Thin the herd. Find the ones that raise your costs. These are the ones who use your customer service extensively, who constantly shop your bids, jump on your specials, ignore your follow-on promotions, and in general just raise the costs of doing business.
Fire them or even better, raise your rates. Some will leave but some of the bad customers might become good customers if they pay more.
Listen to your employees!
Don’t know how to increase service to those most desirable customers? Your front-line salespeople do.
Your employees are your front line; they make or break your organization. Living in the belly of the beast your employees see what’s going on from the inside out. The employees are really what your customers are buying, they make the products, provide the services and give the insight that your customers pay for.
When money is in short supply everyone needs to step up the game.
In fact, there may be evidence that too much money could be a bad thing (no laughing). A study by Booz Allen Hamilton (website registration required) on the 1,000 publicly held companies with the biggest R&D spend suggests that factors other than money may be the most important drivers of innovation. In fact, the study suggests that innovation may be inversely proportional to the size of the budget.
No money and plenty of time gives your employees a chance to really show off their strengths. What looks better on a resume than saying that you helped a company to overcome an economic downturn and stay the course in rough water? Ask them to step up to the challenge.
Now, find new customers that look like your good customers.
Easier said than done. The main point here is that your sales and marketing must be trimmed intelligently.
Take heed to the famous quote attributed to department store merchant John Wannamaker. Wannamaker said: Half the money I spend on advertising is wasted; the trouble is I don’t know which half.
Half your marketing budget is probably not working. The tactics that are hard to measure should probably be eliminated. The simple and easy to quantify tactics with built in measurement that worked when you started the business - the email newsletters, working your referral network, direct mail, PPC, improving your website, paying attention, speaking, getting intimate with your CRM database, measuring sales activity and conducting lots of testing - all those tactics worked in the past and it may be time to revisit them.
Finally, be ready to ACT!
So what if the economy is hitting a rough spot? Once you’ve invested more in your customers, cut off the dead limbs, watered the good ones, and given your employees a chance to really shine your company is going to be stronger.
If you have cash, there are great deals to be had, if you have good credit, banks are still lending. Everybody is willing to negotiate. It is a buyer’s market.
Warren Buffet said “be fearful when others are greedy and greedy when others are fearful.” Right now high quality talent is plentiful, there are many exceptional talents looking for work and many that will work at rates favorable to your clients’ new reality. Start the hunt, hire people you couldn’t afford 12 months ago, whether full time, part time or as a contractor.
Now is the time to act. Now is the time to look at new possibilities. Now is the time to reinvent your business.
Good luck!
A crisis is a terrible thing to waste - To learn more about this author, visit Ben Bradley's Website.
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