brandarticles brandbasics To cut or not to cut
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The Government wants cuts – is it right for small businesses? It’s easy for small businesses to be tempted to cut back on investing in their future because times are tough.
The first things to go tend to be either the marketing activity or the staff! Often this stems from the fact that we do not know if advertising will bring us extra work to cover the marketing spend, or that we fear the flow of work will dry up. But while all around are losing their heads, it pays dividends to stop and see how you can strengthen your business, not only to survive, but thrive.
Research conducted by MORI1, amongst 187 senior board directors of the UK’s leading companies, concluded that “94% agree that the asset which offers the greatest protection during an economic downturn is a strong brand”.
First, we have to understand what they meant by ‘brand’. I have to conclude that the senior directors of many of the UK’S LEADING COMPANIES were not referring simply to having a well-recognised logo! No, they are referring to the fact that a good reputation is the pre-requisite of customer loyalty.
Even in hard times, when customers are more likely to shop around for the best deals, keeping your customers happy and loyal is foundational. Prevent customer defection, and you preserve your bottom line and market share. It doesn’t matter if you are a multi-national or a have a local-area customer base, the essentials are the same.
But is it just the perceptions of customers we are concerned about?
No again. Keeping key staff is equally important. Many small companies shrink budgets and staff levels to preserve their bottom line, but this can be short-sighted. When the upturn comes, as it surely will, those who have kept their key staff will be better placed to take advantage of it.
The same applies to cutting the marketing budget. It seems distinctly disadvantageous to me to stop telling your customers you are still there just when you need to do so all the more!
Short-term cuts may lead to short-term relief, but they will definitely lead to long-term disadvantage. Keeping customers loyal, and keeping key staff envisioned, are simply the by-product of providing great experiences. And that’s exactly what working from a brand strategy is all about – how to keep those experiences from being BAD experiences!
Let’s look at some of the advantages:
Confidence
If your staff are confident of the future, they will convey that to your customers. If you keep customers confident, they will return again and again provided you keep giving them great service.
Risk
Potential customers, prospective employees, and possible investors such as the Banks, are all more risk-averse in a downturn. So building and maintaining a strong brand reputation lessens the risk in the mind of all your stakeholders.
Value
The value of your company rests on your brand. A strong brand is likely to remain buoyant even in a downturn.
Price
A good reputation is the basis of a strong company and assists in price-conscious markets. Potential customers are still prepared to pay a bit more if they are confident of the exceptional service they will receive.
Reputation
Referrals are the best and cheapest way of gaining new customers. It can be 6 times more expensive to get a new customer than to keep an existing customer, so protect and enhance your reputation by great experiences.
So don’t be tempted by short-term contraction. Rather, concentrate on developing a brand strategy that will see you through the downturn and position your company to be stronger than your competitors, and therefore better placed to take advantage of a change in the business climate when it happens.
1 Companies selected from the top UK 50 by turnover, the FTSE top 100 and the top 100 by capital employed.
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