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7 recession survival tips


For sellers in the digital media marketplace, what can be learned from the dotcom bust that can be applied today? Whether you're a publisher or managing a network, lessons from the last downturn have already been applied with success in today's environment.

Those of us "old-timers" who were in the business in the aftermath of the dotcom bust remember it was a trying time, especially for emerging businesses whether they were new lines of business for traditional companies or a startup. With startups, it was a matter of life and death to get sales acquisition costs as low as possible. For established companies, it was the difference between mere survival and using the downturn to gain competitive advantage. Fortunately, interactive media is much more proven as a business model today than it was earlier this decade. It's a far more competitive space, however, and the market has responded with an array of companies filling every conceivable niche.

On a brighter note, companies such as Procter & Gamble have proven time and again that companies can gain market share in a recession. Pop quiz: What do GE, Disney, HP, and Microsoft all have in common? They were all startups that got off the ground during steep declines in the U.S. economy. GE started during the panic of 1873, Disney started during the recession of 1923-24, HP began during the tail end of the Great Depression, and Bill Gates and Paul Allen founded Microsoft during the recession of 1975. During those same periods, well-established companies shut their doors and startups never got off the ground. On a less grand scale, my firm emerged in the shadow of the dotcom bust with one simple mission -- help emerging businesses gain revenue traction while minimizing cash burn which was particularly apropos in those lean times. The lesson from all of these examples is that forced discipline in a downturn prepares one to thrive after things turn around.

How can you ensure that your business is a success story like HP, Disney, and Microsoft? Naturally, having a runway of cash reserves and a compelling product are absolutes. However, many digital media companies had both of those and didn't thrive in the aftermath of the dotcom bust otherwise referred to as a Nuclear Winter. When access to capital is tight, the cheapest form of capital is sales revenue, thus it's critical to ensure your end-to-end sales and marketing process is operating with maximum efficiency. Here's a list of problems and bad management practices that we frequently encounter when working with emerging businesses:

  • Sales and marketing planning and execution are dramatically out of sync.

  • Too often, we find companies have significant deficiencies in their end-to-end sales process which decreases the potential yield from their sales and marketing investments. Such process defects often result in wasted precious resources; lead generations methods are too expensive and sales reps are hired to qualify leads.

  • Lack of sales and marketing focus on the most profitable "lifetime" customers.

  • Superior products are being disqualified as "too risky" due to poor confidence building with the right prospects.

  • Real customer input and market trends are not being communicated or addressed by the company.

  • Websites that aren't designed or equipped for lead generation and/or customer conversion.

  • Chief executives have poor visibility into the sales pipeline and don't understand how to optimize the end-to-end process for increased revenues.

It's worth noting that consumers and businesses don't completely stop spending money during a recession, and that truth runs back through the Great Depression as well.  They just want better deals. To enable "deals" on your products, it is vital that your sales process is efficient so that the "deal" can be structured, delivered and profitable. Even before this downturn, prices have been decreasing dramatically over the last 10 years. A byproduct of that shift is that traditional lead generation methods and expensive shoe-leather sales people aren't penciling out the way they once did. In their place, web-driven leads coupled with much heavier use of telesales resources and better sales and marketing processes are enabling businesses to operate with fewer costs while generating strong revenue on the backs of emerging products. 

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Unfortunately, very few senior executives have experience in these telesales-heavy models. To their surprise, businesses often learn that telesales models will drive deals well into six figures. To re-engineer a sales process, a business needs to go through a complete overhaul to crash-proof their business. These are seven key elements that companies need to put in place to run sales efficiently:

  1. Develop a H.O.T. (High Odds Target) Opportunity Profile that defines your most profitable lifetime value customers. Profile elements can include vertical markets and sub-segments, psychographic elements (such as risk aversion) and specific company and contact criteria.

  2. Optimize lead generation efforts by starting with your own in-house list. We find these lists are surprisingly under-utilized and can rapidly become stale if there isn't a "drip-irrigation" program for staying in contact with these prospects.

  3. Think like Hansel and Gretel leaving "bread crumbs" leading to your website and into the sales funnel. We believe that "content is marketing" (if done right). Thanks to Google and a website that is search engine optimized or at least an effective paid search campaign, you can get people to qualify themselves. Valuable analyst reports, whitepapers, buyer guides and the like are frequently used as bait to get someone to register their interest with your business. A well-optimized page can result in two-and-a-half times more leads for every dollar you spend.

  4. Closely align your marketing team's efforts with sales. Ensure both teams understand and agree on the HOT Opportunity Profile, marketing plans and execution timing so generated leads meet the requirement and aren't discarded by your sales team. This upfront work saves time and money.

  5. Map the right resources to each step of the sales pipeline. For example, we frequently find that someone who is more of a "farmer" is put into a "hunter" role and visa versa, resulting in sub-optimal sales yield. It is critical to have defined roles for every person on the sales team.

  6. Appeal to the nervous buyer. A recession can mean more risk-adverse buyers, which may lead to a tendency to go with "safe" solutions. Companies selling emerging products need to do more than ever to build trust by integrating customers into your marketing mix. Recessions mean fewer risk takers and visionaries, so take a lesson from Geoffrey Moore's "Crossing the Chasm" and use methods that appeal to mainstream pragmatists: industry-specific marketing tactics and solutions; vertical customer references; relevant partnerships and alliances.

  7. Tightly define each step of the sales process with the corresponding likelihood of closing the deal. Here's an example of the stages in the sales pipeline -- notice that each should have a corresponding set of questions answered or work completed to promote them to the next stage of the pipeline:

    • Lead qualify

    • Lead promoted to opportunity

    • Develop solution

    • Remove roadblocks

    • Negotiation

    • Ask for the order

    • Present end close

    • Deal closed

    • Sell case study

Companies taking the seven steps outlined (above) have consistently reduced their cost of customer acquisition by 50 percent or more. In many cases, we work with organizations that have an expensive field-heavy sales model that will transition to a hybrid field-inside sales model or even pure telesales models. Over the course of several months, their sales process can be overhauled and they can start seeing the benefits just a couple months later. Besides the cost benefits, this also enables these media properties and networks to reach down into the "mid-tail" of advertisers. For networks, it means expanding their customer base. For publishers, not only can they expand their customer base, but it also means selling a higher percentage of inventory at their premium CPM levels as opposed to putting that inventory into lower CPM ad networks and exchanges. One of the lessons of the last Nuclear Winter was that those who acted decisively were able to thrive while those who didn't contracted or shuttered their doors.

History has shown that recessions are a great time to launch new products or gain market advantage for existing products. In fact, 16 of the 30 companies whose stocks make up the Dow started during recessions. Smart companies can thrive even during steep declines if they have the right strategy in place. Better yet, they slingshot out of the recession when it is over as they are well-positioned for long-term success.

Dave Chase is a partner at Altus Alliance.

Dave is the CEO and Co-founder of Avado. Avado is a Patient Relationship Management platform that empowers the healthcare parternship between individuals and their health & wellness providers while giving the individual a Connected Health...

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to leave comments.

Commenter: Segiun Nomer

2011, May 16

This is a pretty informative post, I learned some useful advice here. People with businesses should know that making growth in your business is possible even in times of recession although ultimately you will have to face tougher challenges and work harder in order to do that.

I also believe that every situation calls for a different approach; people shouldn't neglect analyzing the current situation of the business in every aspect carefully before proceeding onto coming up with the best decision / marketing moves for your business. Whatever strategy that worked before doesn't mean it'll work this time again. All the advices given here is worth taking notes, but it will also be best to check out all the different advices and tips given by others and pick out the ones that you believe will work well with the type of business you're in. Here's something I can share: Recession survivial tips for small businesses: at personalmoneystore.com/moneyblog/.