But there is some good news, maybe.
Despite the Fed's recent announcement, which seems to have done retailers a favor by focusing on containing the destructive effects of inflation instead of appeasing financial-obsessed Wall Street with another rate cut, last week's crises seems to have done little to further dent consumer confidence. That's probably because it couldn't get much lower.
In many ways, last week also reflected Wall Street's catching up to what Main Street already knew: The fundamentals of the U.S. economy have been shaken to the very core. This has translated into increased caution in consumer spending, particularly among near-retirement baby boomers. It means fewer high-ticket purchases of non-essential items such as cars and vacations, and more bargain-hunting in the grocery aisles and, well, everywhere else. It is this year's recurring theme--getting more for less. It also means that retailers, revenue developers, marketers and advertisers will face mounting pressure as the economic crisis deepens, to look for more effective channels to reach hurting consumers.
Over the past nine months, we have published a number of white papers, held webinars and talks with industry groups about the permanent impact that this honest-to-goodness recession will leave on our industry. Unlike in the past, when marketers have gone back to doing more of the same, this time around it is a different story.
Combine new media, an evolving permission-based marketing landscape, the erosion of customer faith (on so many levels) and effective marketing tactics need to be readdressed--right now. Christmas won't be cancelled, but unless marketers look at developing strategies to connect with customers in ways they want to be reached, it's going to be a rough ride, today and in the future.
Of course, for many the natural reaction has been to shut down the cash faucet and "weather out the storm." But the exact opposite is true. In times like these, robbing Peter to pay Paul doesn't work. Businesses, brands, retailers--they all must remain highly visible, and importantly--relevant and connected with their customers. So cutting back isn't going to make any of those things happen. Instead, marketers need to be clever and divert their campaigns and budgets to the most effective means possible.
Following are some of the topics that we have been discussing with businesses and clients over the past few months, which reinforce the importance of embracing new media tactics but in a respectful and engaging way to create impact that translates into loyalty (and dollars and cents).
Never, ever sacrifice existing customer loyalty communications for the budget's sake.
Existing clients, particularly those who have opted-in to receive messages from company X, are the single most valuable asset that company can have during a slowdown. The key to sustaining growth, especially in the lean times, is to develop stronger relationships through effective communication. We have focused our efforts on campaigns that create trust, encourage disclosure, and promote accessibility through voice and mobile marketing platforms. In a recession, existing customers are the engine of growth, and forging a bond with them is the proper play for businesses that are concerned about the potential impacts of an ongoing slowdown.
Leverage multiple touchpoints to optimize direct marketing results.Developing crucial relationships with customers is key, but you already know that. How about adding touchpoints like a mobile initiative in conjunction with direct mail, or an in-store and voice marketing combination? The additional point of contact is usually incrementally inexpensive, but reveals a multiplier effect (IVR solutions, for example, generally cost out at about 8 cents per delivered message, but can deliver an incremental ROI of between 800% and 1400%).
Growth is achieved by nurturing customer relationships.
Consumers adopt a variety of attitudes toward retail outlets. Some outlets are perceived as interchangeable, particularly as purse strings tighten ("Hey, I can get that same bag of dog food at Target for $2 less"). Others, however, evoke a possessive and obsessive quality among their customers ("this is my grocery store, that's my boutique"). The quality of the bond between an outlet and its customers is determined by the effort the outlet puts into developing that relationship. Individual connection is the engine behind that effort--one-to-one communications, the establishment of trust, and the provision of relevant and welcome information allow a retailer to "pull" in business rather than "push" their products on the public.
Drive value with a zero-based approach.
Many marketing initiatives come with a lot of baggage, not the least of which is an obvious mandate to drive customers to the stores. Instead, an effective relationship-building campaign should begin with the questions "what do I need to do," "who do I want to talk to," "what are their needs" and " what do I need to say to them." A brand employing this sort of marketing will be more in touch with who their customers are, how they receive messages, and what they are seeking--and therefore be in a better position to deliver value and attract customers to their outlet.
Embrace new media, new tactics.
Today's consumer wants to adopt a message, not be exposed to an advertisement. They desire conversations rather than commercials. Social media and mobile media can help a retailer change the way their efforts are perceived, and can often provide more impact and penetration for far less cost.
Content must serve the message and the medium.
Tailoring a message is integral to the success of relationship marketing, but even more critical when marketing efforts employ digital media. Businesses can derive a wealth of information from existing customers, and must put that information to good use when crafting a mobile or social marketing message. Is text or graphics appropriate? Do our customers utilize broadband or dial-up?
So what does all this mean? Our economy's financial sector--viewed in isolation--does indeed paint a grim picture. But the retail industry and marketers would do well to take note of the above. There's still time.
It is, after all, just you, me and the economy.