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Alpha Notes

Marketing Hints for Clients of Alpha Associates

What Do I Do in the Meantime?

We published an Alpha Notes called “Coping With New Realities.” In that newsletter we said:

"While prognosticators seem very optimistic, the clients we deal with are still confronted with delayed projects, cancelled programs, purchase orders "on hold" and "we can't give you a date right now" responses. These are the new realities."

Now almost everyone agrees. Our economy is in the tank! And yet, many of our clients are currently operating very successful and profitable businesses. How is this possible? What are they doing that you should be doing with your business?

The following is a checklist noting some of the actions we are routinely seeing by clients who are currently doing well. This might be a useful checklist for you to use in evaluating ways to positively impact performance and profitability at your business.

  1. Reduce Cost - You need an organization commitment to reduce the cost of doing business that will not adversely affect your ability to perform. While cost reduction is not a growth strategy, it seems to be part of every successful program we see these days. If cost reduction means reducing personnel, be sure that vital company functions do not leave the building with those employees. Another successful tactic we routinely see in cost reduction is using technology more effectively. This is especially true in internal and external communications that may eliminate expensive travel.
  2. Communicate with Customers and Prospects - Many of your customers and prospects are contending with the same economy that you are facing. They are looking for more cost effective products and services to increase profitability. This is an excellent opportunity for your marketing and sales people to make their case for your products and services based on cost-effectiveness and not the usual list of features and benefits. As an example, it might be interesting for your product managers to present your products versus the competition from the standpoint of cost-effective solutions.
  3. Re-examine Products and Services from a Profitability Standpoint - With current computer technology it is easier to break down your products and service lines by individual cost and profitability. Even if you are relatively sure of the results, it is a worthwhile exercise to ensure that products' profitability is meeting current company standards. If the information developed exposes unprofitable elements in the product lineup, you have the needed evidence to make necessary changes. Market conditions may also play a role in this product evaluation process.
  4. Re-examine Customers by Profitability - In several client assignments, we have completed this exercise with surprising results. Certain classes of customers may be producing significant revenues but very little profitability. In those cases, some of our clients have seen fit to take the risk of adjusting prices to correct that situation. An interesting exercise which we complete as part of this type of evaluation is to create a P&L by major customer so that the client will understand exactly what the profit picture is, not only by class of customer but by major customer as well.
  5. Consider Incentives - When business is good success seems to happen automatically. When times are tough it's not so automatic. Even if you have avoided incentives in the past, this may be the time to consider incentives for some of your employees that can affect profitability and revenue. If you do decide to consider incentives, be sure the team buys into the program and its value.
  6. Re-look Your Business Model - I realize this sounds drastic and is sometimes difficult to do from the inside. However, market conditions have changed dramatically in many industries over the past five to ten years. Is your company still structured to meet new customer needs? Are you now paying for expensive internal operations that should be outsourced? Is your current distribution system meeting today's market requirements? We have helped clients answer many of these questions during the past year with some surprising results.

During this "down" time you may have an opportunity to make changes that are long overdue AND will positively affect profitability. None of the experts seem to know when our economic rebound will happen. So my advice is to use the above checklist as a starting point in making changes that will improve your business. But most of all, don't sit and wait - ACT!!