17 Jan Marketing Strategy: Let’s cut costs until we find more customers…?!
If we came to your business tomorrow and offered you a tool that promised to reduce your job cost by 10% and it paid for itself in a reasonable amount of time, you would buy it right? If we offered to cut a service cost by 8% you would probably buy it as long as it was a similar service model – why wouldn’t you?
These are simple business decisions. As business owners, we spend a lot of time talking about how to reduce costs, increase efficiency, drive productivity, and trim the fat. All of this is necessary. However, what causes it to be necessary? Most times it’s a lack of sales. If you had too many customers, you would not have time to take my meeting to save 8% on a service when you are making 25% profit margins. You might buy the piece of equipment, but you might buy two because one wouldn’t cut it with the work volume.
This is a new economy. True. But, one thing still holds true: “You can’t cost cut your way to success, but you can use cost cutting to increase your level of success”. Obvious, right? Not really. What are the first budgetary casualties in many small businesses when times get tough? Advertising. Marketing. Image. People (especially sales reps). Stop the madness!
Tough economic times or during a recovery are not the times to cut marketing. These are the times you invest more in marketing and sales generation activities. This is the time when you most need a great marketing strategy, a rock star sales rep, or an innovative approach to generate customers. Buyers’ markets mean lower margins and less competitors, but they also mean fewer available customers. A good sound marketing machine is most needed when business is scarce.
Sometimes we hear that cash flow is slow. We hear that receivables are high. We hear that sales are off. No doubt there is validity in those statements. You can’t help but empathize. The problem is the course that some businesses will take in order to right the ship. They stop making investments in trying to attract new customers because it’s too expensive.
Purely from a strategic point of view, though, if we do not sell more customers, the prognosis for our business is grim. Why the disconnect? Simply put, they lack marketing efficiency. It’s easy to invest in a new machine that saves 10% on raw materials because they can measure it. They can watch the needle move on their invoices. What if we told you there was a way that your marketing is capable of the exact same thing?
Marketing can be extremely efficient. Marketing is measurable. Marketing will drive customers. Marketing will produce ROI. If any of those concepts sound foreign, please: contact Iconic Digital Agency (our favorite strategic marketing firm) and we’ll help you achieve all of that! Those companies that are able to sustain strong marketing activities during recoveries and recessions will pull much more than just short term gain. They will get consumers to try their products. They will get your customers to take a look. If they do a good job, they will create loyalty and you will need to market twice as hard with twice as much money (especially if your marketing machine is inefficient) to get them back if you survive.
Before you go too far down the path of cost-cutting your way to success, buying cheaper materials that hurt your brand, or reducing needed services, remember that businesses exist to get and keep customers. Before you spend time talking to suppliers for hours on end to find a cheaper alternative, keep in mind that the time may be better spent stealing your competitors’ clients. You know: the ones that aren’t marketing because they are waiting for more customers to pay for the marketing they will no longer need when they are too busy to take on clients…wait…what?