Here we go again. Suddenly, people are fleeing the stock market for the safety of muni’s and other low risk investments. The U.S. dollar is strong only because of the weakness of the Euro and other foreign currencies supported by extraordinary deficits.  Emerging markets such as China, India and Singapore are the only ones growing and even China’s forecasts are cooling. Some economists are calling all of this a dreaded double dip.  Is this spasm an overreaction?

I am not here to offer a prediction as much as some perspective. Historically, there have been two elements that have preceded U.S. recessions.  Typically, there has been a scandal such as the Savings and Loan Crisis, Michael Milken, Enron/Worldcom, and most recently the liquidity crises triggered by the likes of Goldman Sachs, AIG, Lehman Bros, and Bear Stearns, where someone has manipulated a market (most recently derivatives and credit default swaps).  Secondly, the recession usually follows a bubble (dot.com, real estate, etc).  In other words, our economy gets fat and happy, investors take advantage, and then the bubble bursts.

We certainly have not seen our economy swell over the last 12 months.  People have been so desperate for good news that we accepted what little there was as signs of a recovery.  The reality is that our economy grows at about 5% in times of prosperity, and 2% in times of stagnation.  Three percent swings us from optimism to pessimism, which reinforces the magnitude of emotions in our decision making. Fear is always the most powerful emotion and motivator, greater than love and all the others.

So how will the next few months play out? I don’t have a concrete answer for that but what I do know is that our reaction to the sound bites from economists and experts is quite personal. Our practice is thriving at the moment (in part due to the acceptance of the book) which is proof positive that the performance of an organization can be driven in part by one’s confidence and sheer will. Certainly, market forces are in play and in some businesses (like construction) you can still hear the giant sucking sound.  In others the business can best be described as mediocre and the entrepreneur must decide how much investment (in sales and marketing for example) is appropriate.  What I have seen from manufacturing clients is that are petrified of expanding their factories out of fear that they will not be able to dial back capacity.

In a universe where most are passive, there is more opportunity for the aggressors.  I read of one recent investor who bought BP and shorted Apple, a counter strategy that clearly made him a lot of money. While I am not dispensing any investment advice, I am suggesting that we all must make individual choices on the level of risk we are willing to accept. In an age when things are uncertain, there is as much evidence that we will continue along a modest recovery path as there is that the bottom will fall out, and I have made the choice to stay on course. If you are not comfortable with the status quo, it may be time to find new product, services, channels or sectors because there does not appear to be a hockey stick coming any time soon.

Yelp just scares the crap out of me.  For those of you who are unfamiliar, Yelp is a service where you can rate anything from the local bicycle shop to your CPA.  From Zagat to Trip Advisor, satisfaction ratings on the internet are in vogue. On eBay, potential buyers have three criteria, item, price, and supplier rating.

Imagine the ramifications.  How long will it be before your product or service is rated on the Internet by consumers or professional buyers?  The trend speaks to a need to get ahead of the curve and acquire real time, unfiltered feedback from customers.

All clients tell me they listen to their customers but their approach varies dramatically. Many are reliant on salespeople to do the listening for them. During the downturn and a period of massive discounting, many salespeople have become more tactical and often lack the consultative selling skills required to diagnose and synthesize customer problems.  Having the salesperson as the sole lifeline to the customer is like having the fox in the hen house; it is not as if many salespeople will self report eroding customer relationships when they may be the cause or at least a contributor.

While much has been written about customer satisfaction, many of the most common approaches are impractical for the small and mid-market business.  Electronic surveys are impersonal and yield poor results.  Snail mail surveys (sometimes with a spif or prize) get poor response rates and feel so 90’s.

We often complete client satisfaction and perception audits for clients as a pre-curser for strategic planning.  By far, live phone surveys are the most effective method, as they provide instant, unfiltered feedback and the ability to ask follow-up questions that garner more specific commentary.

While live surveys are more expensive than the other types of survey tools, client satisfaction seems like an endeavor worthy of investment.  Ultimately, the real value of such surveys is the problems you discover and the responses to open ended questions which can be the source of innovation. We never advocate an “annual” survey because you could wait up to a year to uncover customer issues.

Of course client satisfaction is not the end game. It is customer loyalty that is nirvana and is much more difficult to measure. The book “The Ultimate Question” points out that there is one question that is the best predictor of loyalty and ultimately profitability. The question is “how likely are you to refer a friend or colleague” as referring a product or service meets a higher standard than just being satisfied with it.

Like many things, survey tools may be imperfect but querying customers on their attitudes about your company is always better than no feedback at all. “Hey, hey, hey, that’s what I say!”

The golfing world is bracing for the return of Tiger Woods at the Masters this week (in case you missed it, he had an unfortunate incident involving his wife and a golf club). Amongst the many looking on with interest will be Jennifer Brown, an economist with Northwestern University.

Ms. Brown has tracked and plotted every Tiger Woods appearance, and the affect he has had on the game.  As it turns out, in the tournaments he played in between 1999 and 2006, the field scored an entire .8 of a stroke higher than in the tournaments he didn’t play (he does play in the hardest tournaments, but nearly a stroke difference in such a precise game is just staggering). Ms. Brown’s conclusion is that the presence of such a dominant player forces the field to press harder or just quit.

Jonah Lehrer, the author of “How we Decide” took the phenomena a step further and wrote an article wondering if “the superstar effect” applies in other competitive environments. This mindset has daunting implications for strategists. It suggests that dominance in an industry may be something of a self-fulfilling prophecy; that a dominant competitor may dissuade others from entering a market space, only fortifying its position.

This way of thinking only reinforces an accepted strategic principle; an organization is always better off owning a significant share in a smaller market than trying to penetrate many markets at the same time.  Every attempt to enter a new market requires the marketer to expend resources in a space where they have high R&D costs (unfamiliarity with the market), less brand awareness and less of a chance to achieve market leadership. 

Poor targeting is chronic in American businesses. It is typical for marketers to attempt to penetrate the largest market possible; usually at their peril. Generally speaking they are well advised to seek out smaller, undefined markets (white spaces) instead of competing within crowded larger ones.

I was recently working on a project for one of the nation’s largest professional services firms. In my research on the Internet I came across a firm that specialized in marketing and public relations for CPA’s. While I have no imperial data to prove it, my educated guess is that such a market is lucrative (as CPA’s are notoriously poor marketers). What grabbed my attention was how narrow and well defined the target was. Any CPA viewing the website would think “these people understand my business, because that is all they do.” Experts in everything are experts in nothing. In a competitive bid for an accounting firm’s business, such a company would have a significant competitive advantage over a generalist. They would be positioned as the superstar.

Now that Tiger has lost some of his luster, it will be interesting to see how quickly he can return to intimidating the field.  Of course at this point, it is Tiger who is probably more intimidated by; Elin.

I am often asked if organizations should include Facebook postings and other social media in their marketing plan. For those of you interested in a precise answer, here it goes: it depends.

Newspaper revenue has fallen off a cliff (down 40% by 2003) while magazines have not fared much better (down 20%). Television ad revenue is down 15%, this year alone.  Meanwhile, online media is growing at a 7% clip suggesting that as a whole, total spending on marketing is undergoing a precipitous drop.

According to Kiplinger, targeted campaigns will reap 75% of all marketing spending by 2013. Marketers, armed with the ability to regurgitate millions of data points such as age, gender, location, income and household size will find ways to market online to very specific audiences.

In these cases, social media will provide an inexpensive method for targeting specific customers.  In the interim, most of us are just spewing on social networking sites with little return. There is certainly room for consumables to be marketed through social media. A recent study published in the Harvard Business Review showed a significant lift in the popularity of certain products and services when Facebook  and Twitter are used to mold the consumers’ opinions, including the use of online coupons and the like.

Yet for now, it is hard to imagine a professional services firm (for example) using such sites for anything more than impressing their younger colleagues. LinkedIn is by far the most useful site for professional networking, yet few people take the time to mine their database beyond their existing relationships (which seems redundant and far from the point).

My conclusion is that if your primary audience is B2B, the focus of internet marketing should be search engine optimization, blogs, and LinkedIn. I have many of my B2B contacts on Facebook, but it is a slippery slope (some have even verbalized their preference not to have any business interactions on Facebook). It can be hard to mix business with pleasure, and Facebook certainly presents the opportunity for the horse to get out of the yard.

Combinations of internet marketing activities can be very powerful, such as linking Facebook, Twitter and LinkedIn posts to your blog. Some have gone as far as outsourcing to marketing professionals that do nothing more than ghost for a business on the internet.

I may be old school in this regard, but I think for most of us that money would be better spent trying to orchestrate meetings with people our own age who will be more impressed with what we have to say in person than how clever my Tweet is this week.

Many of my older colleagues are feeling a bit out of sorts with Facebook, RSS feeds and the plethora of online media which have disturbed the sanctity of our desktops. Many feel compelled to join the party, regardless of their place within the world order. 

I wonder if all of this panic is really necessary.  For some, running Facebook ads seems trendy, but for others it is like selling Yankee pinstripes at Fenway Park. My point is that if you have an old world product, it is hard to convert to online marketing techniques overnight.

Peter Drucker said all management is marketing but I wonder if he is turning in his grave at the prospect of Twitter and its lack of a sustainable revenue model.  He couldn’t have expected marketing to change so dramatically, practically overnight.  Print advertising is dying a rapid death.  Yet some products and service have an experiential component that make Internet marketing difficult.  Companies are spending a lot of money on ad words and other SEO (search engine optimization) tools, sometimes void of any real strategy or measurement other than click through (which is a ridiculous measurement if I ever heard of one).

Companies are well advised to consider their Internet strategy within a broader effort that blends different approaches into an integrated marketing plan.  Marketers must take the time to acquire the skills, resources and technology to compete effectively in the online space. 

One advantage that online marketing offers us is the ability to measure specific outcomes of web traffic, and we should all be a bit more vigilant in measuring the effectiveness of our marketing so that we can better allocate resources to the approaches that work best.  See you all on Facebook.

I hear it from everybody, from the accountants to the architects, the world is simply much more competitive than it used to be. 

No industry has faced more brutal price competition than construction. In an environment where differentiation is hard to come by, The Concrete Network stands alone.

Concretenetwork.com is positioned on the Internet as the go to site for information on, well…concrete. The site provides everything from training on how to mix concrete to a database on how to find contractors.  They even have sponsors for their website. If an organization has the initiative and entrepreneurial spirit to be subject matter experts in an industry as basic as concrete, imagine what is possible for the attorneys, insurance agents, and manufacturers. It just takes some imagination.

I have spent the last year writing a book, blogging, writing articles and creating video testimonials to make my point.  If you don’t value your services, no one else will.  Creating a differentiated offer takes time, money, energy and resources, but mostly it takes will….the will to compete, the will to charge the hill and take on the competition. The easy thing to do is to whine that competitors are undercutting your prices and sabotaging the market. Of course, they do that because they are bit players in your production, but you have the ability to take them down.

Regardless of your offering, if you want to maintain price continuity and profit, one must find a way to add value whether it be through education, additional services, technology, support, etc.   You may need to experiment to find the right formula, but in the end, customers expect to pay more to vendors who offer more services and pay less to the lackeys who offer less.

Do you have the will to compete with the business that is replacing you?

The spasm of the global economy over the last year has completely recalibrated the customer- vendor relationship.   In order for suppliers to fend off commoditization in a difficult operating environment, sales professionals must be adept at renegotiating their relationship with customers.

Purchasing decisions have become more transparent, and in many cases, the primary buying contacts of the past have become irrelevant. The $100k decision that was made previously by a Director is now being made by a Vice President.  At a time when vendors face greater risks with customers, there are opportunities to deepen relationships and have more strategic conversations with decision makers.

In fact, offering up a senior level meeting to discuss providing more value or “reducing the total cost of ownership” is compelling for the customer, and opens doors for the supplier.   Such meetings often serve as a lever to identify latent customer needs that can be converted into improvements that create a more synergistic and sustainable business relationship. The downsizing of the workforce provides significant opportunity for vendors who can effectively replace internal functions that are being neglected, or outsourced.

Effective sales people who utilize consultative style selling techniques are adept at discovering customer needs that they cannot effectively articulate.  During the dot com bust, I held a senior position for a national gourmet food supplier.  One day I fielded a call from one of our Regional Managers who asked if I would take a senior level meeting with him at a major U.S. retailer for which our company had gained little traction. I agreed to fly to Minneapolis with him to try and reign in the elephant.

During the meeting, I asked the V.P. a series of fairly provocative questions such as “what are your corporate initiatives, how are you evaluated, etc.” They were not the type of questions that a supplier generally asks of a customer, and I remember the V.P. being amused and befuddled by some of the questions.  After about 45 minutes of discussion, I came to discover the real problem which was that the customer did not have the capacity (in the form of labor or expertise) to manage our category of products. I asked him “what if we could put someone in your office to manage the category for you?” I will never forget the customer’s response: “you mean you would do that for me?” We left the office with a multimillion dollar order at which time I had the Regional Manager buy me a really big steak. Consequently, we renegotiated our relationship and positioned ourselves to provide an innovative bundle of services in alignment with the client’s existing strategic initiatives.

In a world where headcount is being cut, vendors should not be thinking about how to cut prices, but how they can deliver more service.  The art of selling (and serving customers) is really about listening.  At a time when customer’s awareness of the value provided by supplier is heightened, there is a bounty of problems for vendors to solve.  Regardless of whether you are an insurance company or manufacturing widgets, senior managers need to be proactively meeting with decision makers to redefine their offer.

This is not a time to allow salespeople to own customer relationships exclusively. To do so emboldens them not to share critical customer insights that can reshape the service offering.  As business development slows, salespeople engage in more tactical thinking (such as cutting prices).  This market presents the opportunity to teach salespeople how to diagnose needs and to enable their organizations to provide more robust solutions.