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PREPARE FOR SUCCESS
Prepare for Success A 10-Step Practical Guide to Preparing for Economic Downturn with a Go-to-Market Program
By / Mark Coronna
John C. Maxwell, the American author, speaker, and pastor who has written many books on leadership has a wonderful quote about growth that says, “Change is inevitable, growth is optional.” There may be another version of this we should be paying attention to, and I think that version is, “Change is inevitable, so is an economic slowdown.”
With the long economic growth we have been experiencing it can be challenging to remember that we will not always have the economic tailwinds that have been boosting us along. The most recent ITR Trends Report continues to forecast a cyclical market slowdown. It says, “The United States economy has moved a little deeper on the backside of the business cycle, and the shift in momentum and outcome will feel more pronounced the further we go in 2019. Our analysis continues to point to a probable first-half-2020 bottom for this business cycle.”
The ITR analysts also advise contingency planning in case the cycle downturn is worse than projected and advise business executives, “not to forget to play offense by devising tactics to beat the business cycle as best you can over the next four to six quarters.”
The timing and severity of economic slowdowns may be a moving target—maybe we are already experiencing it, maybe not. Maybe the next one will have a steeper decline than originally thought, maybe it will be a gentle decline. That’s not my point.
There will be an economic slowdown, and just as ITR recommends, it’s time to be proactive and play offense. What does that mean to your business or Local and your go-tomarket programs?
In most organizations, surviving or even thriving in an economic downturn is possible. Can you grow in a declining market? Of course you can, that’s why you get paid the big bucks. Can you recruit labor and keep training centres full? Definitely.
When the financial recession hit in 2007-2009, I was managing a team of financial compliance experts serving the banking, securities, insurance, and mortgage markets. No one expected the recession to hit so quickly or to have such a large impact on the financial markets. We lost over 300 mortgage originator customers in 30 days—gone, poof. Never to come back.
We decided that now was the time to demonstrate our management expertise. We took proactive, offensive actions to survive the recession and come out a stronger player when the economy came back with healthy tailwinds.
That’s important context because you can either put your head in the sand or you can take the initiative. We took the initiative. Here’s what we did, and I’ll offer these 10 steps as a practical, proven approach.
The Ten-Step Checklist 1. Protect every relationship you have. In a slowdown, there will be fewer new business start-ups, less capital to invest, and lots of hunkering down. You have invested time and resources acquiring your relationship portfolio— protect every one. Understand which are worth the most to you (revenue, contribution, lifetime value), and make especially sure you protect the highest value relationships through your servicing touchpoints. 2. Keep competitors at bay—lock them out for a long time if you can. Everyone is going to be looking for revenue, and your competitors may be more aggressive with pricing in order to try to stay viable. If you offer service contracts, one proactive tactic is to offer multi-year service with price protection built in. We did this successfully, extending every one-year subscription to two or three years and locking in the price for our customers. We now had predictable revenues for several years, and our competitors were locked out. Many competitors never survived. 3. Go deep on innovation.This might sound crazy, but when markets are in turmoil, it’s a wonderful opportunity to have a conversation with your teams about their pain points, work collaboratively with them to reengineer processes, and to understand where digital tools could improve process cycles, costs, training opportunities, and quality. Many competitors will be cutting their R&D and product development budgets. You’ll be cautiously investing in new solutions. When the slowdown ends, they will be in worse shape and you’ll likely have something new to offer the market. There’s a common phrase, “never kick someone when they are down.” There’s a version of that phrase in Italy that says, “the best time to kick someone is when they are down (because that’s when you have the greatest advantage), but not if they are a relative or
THE KEY TO SUCCESS Matthew Smith, committee member on the SMACNA/ SMART Best Practices Market Expansion Task Force, offers a number of considerations for weathering economic turmoil in the signatory sheet metal industry.
Stable and quality contractors are always promoting more work opportunities even when the economy is strong to ensure that work is available and can be achieved even during a downturn in the market, he explains.
Staying competitive for the sake of the business and its workforce means straying from the status quo when necessary. Doing things as they have always been done in a fast-paced construction market can be the downfall of organizations who fail to innovate and be proactive.
“One of the mistakes I see happening is a decrease in marketing activities and promotion during the down times,” Smith says. “It is important to look long term and continue to explore new work opportunities and expansion into other markets where it can make sense. If you just simply react to the market without changing and growing with the market, you will get left behind.”
Contractors must commit to constantly motivating and keeping their valuable employees engaged especially during these down times, Smith says. “Again, thinking long term for the health of your company, you have to continue to invest in training and helping them to grow and prosper along with the company,” he adds. “We are definitely seeing a shift in the way to satisfy the needs of all of our employees to avoid costly turnover and instability in business growth. The old saying is true, our employees are the most valuable assets we have.”
There is no doubt: a strong labor-management partnership and regular communication is absolutely necessary during all times of the market and economy. It is crucial that parties are constantly working together to understand each collective and individual needs in order to achieve success.
“This success for all includes increased person hours, company profitability, and growth in our markets,” Smith says. “We have to be united in our communities and politically to establish ourselves as the true leaders in our industry.” ▪
they have lots of friends.” As an Italian, I kind of like that approach. 4. Take the opportunity to understand where your organization makes money. A slowdown should force you to take a deeper look at your organization. I’ve found that market, customer, and competitor insights are often not a strength of many organizations. Many of my clients have been in markets for a long time, but when you ask questions about share, profitability across multiple markets, profitability across customers, and competitor knowledge, you get a lot of blank stares. You should improve your organizational intelligence now to re-shape your focus and priorities, and to prune unprofitable parts of your operations. Another great place to focus is on your product and service portfolio. If you haven’t evaluated the performance of your products or training programs across your entire portfolio for a while, this is an excellent time to understand their role in your offering, their profitability, and expectations for future growth and contribution. Slowdowns give you a fresh set of eyes to understand what drives your organization and your team. Understand, validate, then act with confidence. 5. Diversify markets. One of the reasons we were able to grow our business 8% annually through the financial recession of 2007-2009 was our revenue mix. Serving several markets (banking, securities, insurance, and mortgage), meant that while some markets were hit hard (mortgage), others were impacted to a much lesser degree (banking, insurance). Now is the time to reduce your concentration risks from too few markets and from a small number of large customers or areas of expertise. Now is the time to invest in training that prepares your workforce for hireability in your region’s growing market sectors.
6. Stop shot-gunning lead generation and get more targeted. If you are using passive lead generation programs as your primary source of new business or new recruits, it’s time to get more focused and targeted. Websites alone will not drive enough qualified leads or bring enough trainees to your doors. You’ll need to use proactive lead generation tactics like paid search and account-based marketing to help you more efficiently put more qualified leads into your sales pipeline. Don’t forget to access jointly-funded programs to fuel your marketing and recruitment initiatives. 7. Complete a Marketing Assessment and Audit. If you have not done a rigorous review of the performance of your marketing programs, it’s time. The goals of a marketing assessment and audit are threefold: • Provide an immediate identification of “Horizon 0” opportunities which can be evaluated for immediate performance and financial improvement. • Set a formal baseline of current performance, which will function as a foundation for future performance improvements. • Ensure that marketing performance aligns with future needs by quantifying the gap between current and required future performance. 8. Evaluate the performance of your marketing and sales staff and suppliers. You’ll need high value from everyone on the team, internal as well as external. Time to check whether you have the right number of marketing and sales people in the right seats and with the right skills. Have you waited too long to implement a more proactive digital marketing program because you don’t have the internal expertise? Maybe time for a swap out or an addition. Are your suppliers bringing maximum value to you? Time to ask them to buy-in with extras (research, services, etc.). 9. Fine-tune your pricing. Just as I’ve recommended for fine-tuning your markets, customer relationships, and products, this is an excellent time to review your pricing strategies and tactical execution. Have you deployed a consistent pricing strategy? If so, what is it? How consistently is it utilized? Where are you losing value because your prices are too low? 10. Empower and develop your marketing and sales staff, and have some fun, too. Everyone will likely feel the effects of a slowdown in different ways. It’s your job to keep them aligned, focused, and acting as a team. Schedule some fun team-building activities. Make sure your staff have the ability to act on each one of the previous nine checklist ideas, too. They need to feel empowered and part of the solution.
What Next?
A wise person reading this article and the 10-step checklist may say, “Why shouldn’t I be doing these activities all the time and not just to prepare for an economic slowdown?” That person gets an “A.”
Having challenges with your pipeline management, alignment of sales and marketing programs, customer acquisition, recruitment, training, or overall revenue growth? If you are interested in learning more about building a highperforming marketing program, please give me a shout.▪
Construction Forecast Information Coming Soon
See upcoming issues for a general construction outlook and
targeted information for each region as presented at the 2020
Partners in Progress Conference.
Mark Coronna is area managing partner & CMO, Chief Outsiders. He earned note as one of the first ecommerce industry executives and built a career leading marketing efforts for some of the most revered names in software and financial services. This article was reprinted with permission from Chief Outsiders. Please see its original publication at chiefoutsiders.com/blog/preparing-foreconomic-downturn
