i love recessions

The Recession-Proof

Business Strategy

There are actions a company can take to reduce

the impact of recession and even prosper!

Source: Victory Cheng (http://www.victorcheng.com)1

Ron McFarland, Tokyo, Japan

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What is the truth about the recession and what can be done?

In the height of a recession, a company can channel all

its nervous energy about its future into proven actions

which will not only protect the business but help it grow.

Our action plan

in this environment

This presentation is not empty motivation with no facts or actionable

advice for your business in a recession.

It is high of recession facts and gives very specific actions a company

can take to avoid the adverse influence of a recession.


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History of successful companies in a recession

Based on research of companies that has done well during

recessions in the past, they were in this situation. This is data of

companies that started during the last 12 recessions going back

136 years in US history.

Source: Victory Cheng (http://www.victorcheng.com)

Here is what we found from these companies.

1. They started in a recession and prospered.

2. They were small and weak in a hostile business

environment and grew from there anyway.

3. Their behavior can be apply to today’s situation.

4. They were in an environment that required the CEO to

firmly make decisions and act on them quickly.

Here is our plan to take advantage of this recession.


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The Recession-Proof Road Map

In these recessions, four characteristics were

present in all the successful companies studied:

1. Established a strong, positive mind-set

2. Solved problems that get worse in a recession

3. Minimized the problems by offering unique

solutions.

4. Marketed more aggressively, not less.


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Characteristic #1: Established a strong, positive mind-set

What do

people need in

these times of

uncertainty?

The owners of these start-up companies in recessions had passion,

tenacity and aggressiveness that defied all logic.

Others had a self-defeating attitude.

They believed in four things:

1. There was money in the economy, and they believed they could find it. They knew it

would be more difficult to find, would be in a different place than where past money

would be. Also, they knew people’s priorities would be different than in better times.

2. They based their business decisions on facts, not dramatic news headlines.

3. They found needs and opportunities that a recessions create. One opportunity is

created by the defeated attitudes of ones competitors.

4. They know they had to adjust to the environment or go out of business. They did not

ignore the faces in front of them. They continually got feedback, recognized

opportunities and acted quickly.


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Characteristic #2: Solved problems

that get worse in a recession

These needs,

wants and desires

increase in an

uncertain

economy!!

Billion dollar companies are made more in recessions,

depressions or economic panic than prosperous times.

They found what was needed in a recession.


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Characteristic #2: Solved problems

that get worse in a recession

These companies did not panic but redirected their attention.

They looked for what people were complaining about and

would pay to solve that complaint.


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Characteristic #3: They minimized

the problems by offering unique solutions

We have never worked

together before, but I think

we can help each other.

They talked to and approached people they normally don’t

associate with.

They started doing things that were unheard of at the time.

They expanded into underserved regions that no one else was

interested in.

They repackaged products that were very unusual at the time.


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Characteristic #3: They minimized

the problems by offering unique solutions

Target

Market

Different

Product

Different

Pricing

Different

Region

Different

Promotion

They looked everywhere to find something that was needed in

that economic environment. After much study, the came up with

a unique solution.


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Characteristic #4: They marketed more aggressively, not less

Once they plotted out their specific course, they dedicated

themselves to it, convinced others of the concept and aggressively

promoted it.

When the competition was hesitating, slowing down and being

indecisive, that is the time they expanded promotional activities.

In this short time of competitor doubt, the successful companies

moved very quickly, as they knew this opportunity would not last

long.


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Recession Success Story #1: Fortune Magazine

It started 90 days after the Great Depression market crash in 1929.

All thought it would fail.

It became a huge success because people wanted to know where

their money was going and how they could control it.

Fortune Magazine offered the kind of information the people most

needed at the time.


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Recession Success Story #2: United Parcel Service (UPS)

When recessions come, most companies put all their

attention on costs, sales and profits. The needs of the

customer gets less attention.

UPS noticed the need for reliable deliveries when the

competitors had their attention elsewhere.

All the company’s effort, image and focus was directed

toward reliable deliveries.

They thought if all employees dressed the

same, behaved in the same polite manner, and

showed up on time every single time, the

customers would believe them having reliable

service.

They were open for business 24 hours a day, 7

days a week and 365 days a year. No other

company would consider that in 1907.

They aggressively promoted reliability and

build credibility through testimonials from

satisfied users.


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Recession Success Story #3: The Walt Disney Company

In 1928, the middle of the Great Depression, Walt

Disney introduced amazing cartoon characters and

cutting-edge usage of audio sound.

When there is much uncertainty in the economy, the

demand to escape to the movies usually increases.

When long vacations were not possible, like in a deep

recession, nearby theatres were the next best thing.

Through their aggressive efforts, even when

industry-wide box office sales were down, Disney’s

business boomed.


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Redirecting Customer Demand

The best way to redirect your marketing when demand changes is

to apply what is called “direct response marketing”.

During most business start-ups, someone sells something to

another person face-to-face.

Marketing is just taking face-to-face salesmanship and multiplying

it using a wide range of media.

Image advertising is designed to build awareness only.

Unfortunately, image advertising does not make direct sales and a

great deal of money can be wasted on advertising that produce no

results.


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Redirecting Customer Demand

1. Direct response marketing “sells” and asks prospects to take

action.

2. Direct marketing asks the customer to do something.

3. Direct marketing can be tracked and the marketing activity can

be analyzed to whether it is effective or not.

4. This type of markets is accountable for getting a customer

response. If there is no customer reaction, it must be stopped,

changed or modified.


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Getting the attention of the target customer

With all the communication methods available at very little cost, people are

continually overwhelmed with too much noise around them.

Therefore, companies must develop a 1-unique, 2-compelling and 3-credible

promise.

Unique• A unique promise that is very different

and exceptional.

Compelling• A compelling promise that connect

with user needs and wants

Credible• A credible promise that can be

confirmed by others and verified with specific data


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Components for making a promise unique

Who are you making the promise to? – You can change your

target user to make your promise unique (small business-large

business, restaurants-stores, adults-children). It is important to

make this target as specific as possible.

What are you promising? – You can group products differently.

You can offer added services now not available.

Where will you deliver the promise? – You can change your place

of business or offer delivery/pick up if it does not exist now.

When will you deliver the promise? – You can change business

working hours. You can increase the speed of your service or

more fine tune the speed of your service.

How will you deliver the promise? – You can change how you

deliver by adding product training to the users, or add a show

with the promise (Benihana cooking in front of customer).Ron McFarland, Tokyo, Japan

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Making the promise compelling

Great, that is just what I’ve

been looking for but didn’t

know it myself.

What do people want and what do they really need now? Your

promise must provide a solution to what the customer needs and

what he really wants solved.

It must be a clear and compelling promise in the mind of the target

user.


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Making the promise credible

Developing

Testimonial

Letters

1. Put current customer photographs on a wall.

2. Put current customer photographs in an album.

3. Prepare customer testimonial letters.

If you have a highly successful customer

that trusts you, ask him if he would be

willing to be a testimonial for you. Then,

get specific information to make it credible.

You need to provide easy-to-believe proof that you

can deliver what you say.

Using both written and verbal testimonials from

people using your product can help greatly.

Using specific details, data and examples can also

increase credibility.

The use of written guarantees can also build

credibility.


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Marketing as an accountable

investment, not expense

Once a unique, compelling and credible promise is decided, it can

then be promoted. The promised must be decided first.

Too many companies either spend too much money or not enough

money on promotions because they do not know how to evaluated

it.

Every promotion investment made should be measureable in terms

of return on investment. You should know in specific details what

you get for the money spent.

The promotions that were successful in the past may fail today, as

the demands and priorities in the market may have changed. New

promotions may be required. If a change is required, its success

must be tested.


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Marketing as an accountable

investment, not expense

Added profitPromotion expense Results

Measurable promotions allow a company to start on a very small

budget, yet scale up quickly when it finds the approach that works

best.


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What is a measurable promotion?

Please give me extension 123. I’m

asking about your free offer.

A measurable promotion is simply any form of marketing that asks the

prospect to take an action that is measurable by the company asking.

There is some kind of tracking system in place in advance of the promotion,

for example using a traceable telephone extension number, distributing

coupons to be returned, asking the customer to use a special phrase when

inquiring or visiting a specific website and asking for a specific free item.

Once the promotion is completed, response scores can be compiled.

If the promotional cost is ¥100,000, and ¥400,000 was made because of the

promotion, keep doing it.

If only ¥50,000 was made, stop doing it or modify the promotion. Keep

modifying it until the best promotion is found for the current economic and

competitive environment.Ron McFarland, Tokyo, Japan

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What to promote at what time

A common mistake in promotions is selling the wrong thing. They ask for

something too early.

In the selling process, there are many steps. Each steps is in sequence and

the first step should be completed before moving to the next step.

Here are the steps sales people use:

1. The salesman finds a new prospect.

2. The salesman makes a good first impression and the prospect begins to

trust him.

3. The salesman asks the customer what he is interested in.

4. The salesman makes a recommends that matches his interests.

5. The salesmen presents his suggestion.

6. The salesman demonstrates his suggestion.

7. The salesman negotiates the price and terms of payment.

8. The salesman makes the sales.

9. The salesman helps with the delivery of the product.

10. The salesman follows up to see if the customer is happy with the

product.

11. After learning all is going well, the salesman asks for referral.

For many products, the promotion should not be just asking for the sale

and ignoring the earlier steps.Ron McFarland, Tokyo, Japan

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What to promote at what time

Most promotions should only be to ask the customer to telephone

the company for further details, visit the store or to make an

appointment with a key person.

I’m calling to ask about your

offer to explain how a

manufacturing company can

greatly reduce its cost

producing in Vietnam.

A company doing a promotion knows what it is offering but does not

know the situation of the user.

That must be determined before the suitable product or service is

offered. Therefore, the promotion should be to sell the prospect on

asking for more information only.Ron McFarland, Tokyo, Japan

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The head promoter of the business

As CEO, I am responsible for

moving the company forward.

I am responsible for finding new

market segments & new

distribution channels.

As soon as the market and

products are decided, I’ll get my

sales and production people to

work on the operation.

There are three things that insure a company’s stability.

1-There is one person that is totally responsible for generating new business.

2-He finds new places to promote. He finds new market segments to target. He

creates new distribution channels to target.

3-Once the new approach is determined, he gets his team to serve that new

customer target, leaving him time to explore the next business opportunity.


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Hidden, low-cost profit potential

Also, you promote and make a sale of

an extra US$100 hammer to the same

customer.

- US$50 cost for this hammer

- US$2 advertising

- US$0 salaries, rent, utilities, etc.

Net profit US$48

For example, you promote and make

an initial sales of a hammer for

US$100.

- US$50 cost for hammer

- US$20 advertising

- US$20 salaries, rent, utilities, etc.

Net profit US$10

There is a hidden profit center in your business that should be explored before

any expensive external promotion. It is approaching your existing customers but

presenting different products.

If done successfully, a company’s margins could improve greatly, as there is no

or little increase in advertising, salaries, rent, utilities, etc. as those charges are

mostly covered by the initial sale.

That is an increase of 4.8 times. In many industries, companies track items/per

invoice, or amount charged/invoice. This gives the company clues if the sales

people are offering additional services or products.

Explore selling to active customers first. Customers in your files that you have

done business before second and completely new customers third.

Ron McFarland, Tokyo, Japan [email protected]

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Four way to sell to existing customer

#4-The

Continuity sell

#1-The

Up sell

#2-The

Cross sell

#3-The

Follow-up sell


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Sell to existing customer – The Up sell

#1-The

Up sell

The extra cost of the “Up sell” is almost nothing. All it takes is a

few seconds to ask. Sales people should be trained to do this.

We have in stock enough to

complete your order, as well as 50

extra. Would you like to take the

extra items too and save you an

extra trip?

At the point of the sale, ask the customer if he is interested

buying more of the same thing to save him the trouble of

future replacement purchases.


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Sell to existing customer – The Cross sell

#2-The

Cross sell

Again, if you do not tell your sales people to ask each customer ,

train them to do it and monitor their performance, they probably

will not do it most of the time.

As you are buying our air

conditioning equipment, we could

provide extended warranty or a

maintenance program as well.

Then, you won’t have to worry

about sudden repair costs.

Again at the point of the sale, ask the customer if he is

interested buying something that complements his

purchase nicely.

The “Up sell” only works in some businesses, but the

“Cross sell” works in almost any business.


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Sell to existing customer – The Follow-up sell

#3-The

Follow-up sell

The “Follow-up sell” is used after the customer has

used the product/service for some period of time and

is happy with it.

If your products and services are really good, the new

customer will learn this after he makes the initial

purchase and starts using it.

Therefore, at this specific time when he knows the

product value, the sales person has an opportunity to

offer something else with little resistance.

Shortly after the sales,

visit the customer again.

Let him know you care

about him getting exactly

what he wants.

After confirming he is

happy, suggest a second

item he might be

interested in.


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Sell to existing customer – The Continuity sell

#4-The

Continuity sell

Instead of ordering each time you need it, we could

look at your yearly demand by item, prepare a 3-

month blanket order and place the order every three

months. In this way, we can purchased materials at

better rate, and we can pass that saving on to you.

The continuity sale is simply to provide some offering on an ongoing

basis via a monthly agreement.

The customer can continue to get the offering until he decides to

cancel.

The advantage of continuity sales is, with continuous delivery of

product to your customer, a company gains the enormous financial

advantage of automatic, recurring, continuous billing to the customer.

The continuous billing can be automated and costs reduced greatly.

The best way to study “Continuity sell” methods is to look at customer sales history.

Then, explore what purchases could be planned over an extended period of time.

If you build up a set of customers that prefer doing business with you, habit, loyalty and

laziness can make the “Continuity sell” very effective.


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Business Reinvention

If a recession has had minimal financial impact on your business, leaving things

as they are or making minor improvements might be enough.

We still have a lot of reserve cash.

Therefore, losing money for 3-4

years is not that great a problem.


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We will be out of business in two

years if we do not do something

differently!

If your business is on track to pretty much fail, what is the worst thing that can

happen if you try something different? Worst-case scenario: You still fail.

Best-case scenario: You turn the whole thing around, survive, and if you move

fast enough, thrive.


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If you are determined to try something different, this is where the reinvention

process starts. Follow these steps.

#1Follow where

the money is.

You must first determine what people

want in this recession. They still

need and can pay for some things, so

what are they?

In some cases, you may be forced to

find an entirely different set of

customers who are interested in what

you have to offer.


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#2Look for a new

combination of

what you have

Look at your business. Could

anything be modified or adjusted to

bring it in align with the recession?

It could be a slightly different

production process, a slightly different

customer, a slightly different raw

material, a slightly different design, etc.


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#3Uniqueness

What makes your company special right now.?

It might have been hidden in your business and

not used when times were good. Now, it could

be very valuable.

It could be in your customer list…

your prototype products…

your distribution channel…

Or the people you know and trust.

Could minor changes in affiliating with a supplier,

a customer or a completely different company

make you unique?


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Internally created

in the company

supplier-driven

reinvention process

- New production technology

- New product development

- New sales promotion

Externally created

outside the company

customer-driven

reinvention process

- New customer needs

- Change in local market

- New government warnings

In a recession, a supplier-driven and focused process to reinvention, in most

cases, has a very low chance of long-term success.

A customer-driven and focused reinvention process makes more sense, but you

must be very close to the market to know what that reinvention is. You must

regularly evaluate demand.


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The challenge with a demand-driven process is the fact that it is a process. You start

with what you know and come up with your best concept for reinvention. Then, you

still need to find some way to cheaply validate it with real customers before investing

too much.

Current market

knowledge

Add new

market data

Edit useless &

unrelated market

Test data

with customers

Up-date

knowledge

Ron McFarland, Tokyo, Japan [email protected]

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It is impossible to get it right on the first try. Therefore, you should plan for

future modifications.

Your customers will determine the success with their purchases.

The sales result is your most reliable success factor. No other opinions,

suggestions or comments matters, including yours.


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Quite often CEO’s/owners are too close to the problem, think they know the

problem and ignore the new signals in the market. That is where an experienced

consulting can be very helpful.

.

A recommended consultant

that has had experience in

solving the concerns you

have, could save you a great

deal of money.

Doing everything by yourself

on a trial and error basis

could be costly and time

consuming.


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Thank you

The Recession-Proof Business Strategy

Source: Victory Cheng (http://www.victorcheng.com)


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