- August 5, 2020
- Posted by: David Marshall
- Category: Business, Innovation, Management
One of the biggest mistakes executives make during an economic downturn is to make cuts to their sales and marketing staff.
Those are the two departments that actually make the money that your company runs on, which means there are fewer people helping you make money, which means you make less money.
Sales have to stay up for your company during a downturn. You need as many people as possible out there fighting for every sale and every dollar, not fewer. And, if you manage things right, you could even increase your market share as your competition falls out.
In a downturn, people have a tendency to internalize. They focus inward instead of outward as a function of self-preservation, which is a fight or flight instinct.
But change occurs very quickly in a downturn: Your contacts will disappear, either because they were laid off or re-assigned to a new job. They moved on and the people you thought you knew are no longer where you left them.
When the downturn ends, there will be new people sitting in the chair who have no clue who or what you are. And if you’ve been “missing” during the downturn, you may not get a chance to win those new people’s attention, not to mention that you’ve lost track of the old contacts and have no idea of where they went.
A downturn is the time to redouble your efforts to keep your name out there and in front of old and new contacts. You want to keep engaging with people so you can keep selling to them when they return to normal, and even start selling to new customers when your old contacts get new jobs.
How to Grow Market Share During an Economic Downturn
Over the years, it has always been my policy to increase my marketing in an economic downturn, because that’s the best time to grab additional market share. And if you do it right, you can grow your business dramatically.
When your competitors collapse after they lay off their sales and marketing staff, you can step in and pick up the pieces. You can call on their customers, you can fulfill their orders, and you can continue to grow.
In just about every recession I’ve seen going back to the 1980s, withdrawing and cutting back means you won’t be noticed. You may save money in the short-term, but you won’t get back the opportunities in the long term, and you’ll still shrink, even during the recovery. You have to stay in the forefront of people’s minds, or else you won’t recover.
I remember once in Canada in 1985 or 1986, things were very tough at the lighting division I was running. I had decided to launch a new mid-range outdoor floodlight product that we called The Bandit. In my pricing of the product, I allocated $1/unit for marketing, and we placed ads and had articles written in every trade show publication and industry journal where it was appropriate. If you were in the lighting industry, it was everywhere you looked.
While all of my competitors were trying to figure out where they could make strategic cuts, we kept pushing The Bandit everywhere we could. The results we got were amazing and it changed the market share for our little company pretty significantly: Over a period of about five years, we went from 2% market share to 20% — we took one-fifth of the outdoor floodlight market just because we were bold and kept marketing while all our competition curtailed their marketing and advertising spending.
The funny thing was that the recession actually put this company on the map, even though it had been around for a long time. We had languished as a branch operation of a US company in the years before, so when they asked me to take over as GM and president of the company, I decided we would no longer be reliant on the marketing coming from the US headquarters. Our push changed the entire market’s perception of what this little company was.
As a result, we were able to pick up many customers that belonged to our competition, which expanded our customer base exponentially.
Once our product name and company name was more widely known, it was very easy to move our existing products into the marketplace, as well as launch new products. One of our new products was the very first variable level dimming system for high-intensity discharge (HID) lighting.
There was no such thing in those days for dimmers for industrialized purposes for HID lighting. We actually developed the very first one. The first usage for it was on the Burlington Skyway in Ontario, Canada, where the Ontario Ministry of Transportation believed lighting levels could reduce accidents in bad weather.
So they installed the system and the light level would raise and lower depending on the severity of the weather conditions, and they found that it did reduce accidents in that stretch of road. They also installed it in several tunnels to regulate the amount of light at the entrance and exits of the tunnels depending on the weather conditions.
All of that happened because we didn’t shrink away during the economic downturn of the 1980s. We increased our sales and marketing efforts, and as a result, grew our market share from 2% to 20% and started winning provincial contracts for our newer product lines.
I’ve been a manufacturing executive, as well as a sales and marketing professional, for a few decades. Now I help companies turn around their own business, including pivoting within their industry. If you would like more information, please visit my website and connect with me on Twitter, Facebook, or LinkedIn.
Photo credit: Vinsky2002 (Pixabay, Creative Commons 0)