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Implementing a deliberate strategy for identifying early signs of recovery and changes in the market along with your company’s responses to them, can turn a sour economic time into a period of healthy transformation. Christine Crandell, executive vice president and chief marketing officer for Egenera, explains how to do it.

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By Christine Crandell

In his fable The Tortoise and the Hare, Aesop teaches that “slow and steady wins the race.”  But at least in business, that’s not always true.  The fact is that there’s a time to be a tortoise and a time to be a hare.  Right now, as a result of the current worldwide recession, everyone’s in the tortoise or “turtle” mode.  But when the thaw begins, the hare will have a real advantage.

Today, the era of high spending across a wide assortment of programs in enterprise marketing departments has collapsed, giving way to bare-bones budgeting.  Although the marketing department’s charter hasn’t changed; its funding levels have.  As recently as November 2008, most CMOs were looking forward to steady or growing budgets.  But those expectations were quickly dashed as businesses realized the depth of the financial crisis.  Instead, a significant percentage of marketing departments have seen a sharp drop in funding.  For most technology companies, this situation will, in no small measure, result in less experimentation, fewer prospect ‘touches’, less awareness-building, fewer industry and partner programs, and a precipitous drop in costly events.  

But being a turtle, at least during a recession, isn’t necessarily a bad thing.  Turtles keep moving forward, deliberately and with clear intent.  It is a time when marketing should turn introspective and figure out ways to increase company mindshare and improve sales.  It is also a time to rethink the company’s long-term strategy and prepare to turn back into a rabbit before the start of the eventual upturn.  After all, you don’t just want to beat the turtles in the race, you want to beat the other hares as well.

1. Know thy customer. Astute customers and prospects as well as suppliers and vendors, keep a keen eye on the market, ready to quickly implement contingency plans and new strategies as soon as they identify a shift in the business environment.  Listen closely to bell-weather customers for early indicators of change, but also to understand how the overall market landscape is changing.  Social media can provide a quick and easy platform for picking up early signs of a shift.  Whole Foods, for example, keeps its finger on the pulse of customer sentiment on a continuous basis using Web 2.0 tools like www.getsatisfaction.com, communities around topics including gluten-free, etc .  On the B2B side, OpSource, itself a cloud provider for SaaS-enabled businesses, uses Twitter to say in tune with changing customer sediment and needs.  Interview your customers, prospects, and channel partners on their changing business drivers, expectations, and plans.  A quick online survey and LinkedIn poll can provide additional, statistically relevant data to support the findings of those market interviews and guide a timely change in strategy.  You may think you know what the customer wants, but without a reality check, you could find yourself in real trouble.
   
2. Checkmate your competitors.  Understanding how your competitors are going to act in a recession is just as important as understanding how they will act in recovery.  But companies, like people, are creatures of habit; their future moves can be predicted by how they behaved in the past.  If a given market and its major competitors have been around for at least three years, you are likely to see history repeat itself.  So develop a chessboard and plot each competitor’s moves in every major market segment based on past economic, industry, and market factors.  Pay attention to how they changed their marketing and sales strategies, tactics, and spending patterns.  That will give you a good indication of the actions they are considering today.  Twenty years ago, America’s Big Three automakers sneered at the Yugo, convinced that it posed no threat to their business of building big cars and trucks.  Fortunately for them, the Yugo’s execution and support system were lousy.  Today, Tata Motors’ Nano – a $2,500 Indian mini-car – is on its way to America and the Smart Car is already on the road.  History says GM will laugh again and miss a golden opportunity to take the automotive market – and survive.
   
3. Get outside the box.  Recessions are excellent opportunities to do the unexpected and pursue new strategies that can change the playing field in the next growth economy.  Think contrarian.  Brainstorm these strategies through a proven methodology like scenario planning, Blue Ocean Strategy, or chaos/complexity models, with a focus on market interdependencies.  The objective is to identify what will drive the next growth wave.  A key element to developing a successful “outside the box” strategy is to not lose sight of what your company is actually capable of implementing.  So Google, for example, which had remained largely in a search advertising box, has now extended its reach into cloud computing applications and built on its formidable network of online servers and users.  Likewise, one major producer of computer storage hardware is now shifting gears and selling its storage as a service over the Internet.
   
4. Realign product portfolios.  Assuming, for the moment, that General Motors survives the current economic downturn, what should it make when things pick back up?  History says it will revert to heavy vehicles with hefty markups.  But is that what’s best for the company and is it what customers really want?  Changes in market dynamics, company resources, and industry drivers require a realignment of product portfolios, and it should be more than a cosmetic facelift.  It should be an in-depth restructuring of the product portfolio based on a product audit.  Most companies, as creatures of habit, seldom question the core assumptions of their products.  The result is the 80/20 rule with 20 percent of the products driving 80 percent of the revenue.  Analyze each product to determine its market share, margin, maturity, and contribution to future innovation in light of changing market topography.  The result should be a clear action plan that identifies which products to retire, sell, repackage, reposition, or invest in for further innovation.
   
5. Create Rebound Triggers.  Rebound Triggers are points of congruence and inflection in the marketplace which serve to ‘trigger’ specific parts of a market plan as the economy slowly begins its turnaround.  There are lots of informal triggers that people dream up which may or may not mean what they appear to be saying.  For example, traffic levels, parking lot capacity use, or restaurant occupancy can mean different things.  Trigger points should be based on metrics that define the market and economic events: court filings, new CEO searches by executive recruiting firms, new company formations, patent filings, etc.  Accompanying each trigger, there should be tactics, funding, milestones, and other action steps which would be taken once that point has been reached. 
   

Using this 5-step process, you can design a strategy that uses the streamlined and focused marketing efforts employed during a recession to create a responsive, customer-centric marketing organization. To capitalize on the embryonic rebound, hares must invest in strategic marketing by dividing customers into identifiable groups based on their personas, technology adoption, and operational parameters.  That way, you can assess each group for its attractiveness based on its revenue potential and loyalty characteristics.  

Hares Can Stay Ahead

With all due respect to Aesop, hares can stay ahead of their markets.  Indeed, their ability to embrace change and think quickly in order to adjust and improve their processes and offerings are key traits needed to assert and maintain market leadership in an economic rebound.

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During a recession, your marketing resources and discretionary spending may remain scarce.  But your CFO will listen if you can clearly demonstrate how the landscape has changed relative to key signposts and how new marketing models have gained early traction.  Then show how social media linked to the proper content marketing can make your company’s offerings more relevant and result in leads with a higher conversion rate.  That’s a tale that will convince even the most conservative management team that there’s a time to be a turtle and time to be a hare.

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