With the economy looming as a dark cloud above, consumers are scrutinizing every dollar spent. You could say customers cast their vote each and every day with their wallets—determining which retailers will ride the waves of the recession and which ones will drown.
Don’t let others determine the fate of your retail business. It’s now more important than ever to adapt to the adverse environment and market conditions by evaluating every aspect of your business—from logistics and operations to marketing and co-op programs. As you carve your budget with surgical precision, don’t let the hatchet fall too harshly on marketing. It’s an investment in your future sales.
As a former retail CEO, I understand the pain retailers endure during economic crises and can offer these marketing insights to help your company weather the storm:1. Don’t stop advertising. History has shown that companies who continue to advertise during a recession come out on top when consumers’ wallets recover. Take a cue from Coca-Cola Chief Executive Muhtar Kent. In February, he told BusinessWeek that “advertising dollars are more powerful in this environment.” Kent said, “The airwaves are cleaner, the cost of advertising is much lower. You get much better bang for your buck in terms of how you reach consumers.”
2. Continually evaluate marketing plans. Just as you review your business plan, evaluate your marketing plan often to ensure it continues to meet your needs. Your plan should be nimble with the ability to adapt and adjust based on what’s happening in the marketplace. Assess everything, from the creative direction to the tactics and the media buys.
This could mean converting a direct mail campaign to e-mail marketing, which costs less and is easily trackable—and e-mail may be your consumers’ preferred method of communication. Instead of a brand campaign, you might implement coupons, since more consumers are more heavily relying on discounts to determine where they shop.
3. Reward your customers. Maintaining existing customers is the most effective and least expensive marketing strategy. We’ve all heard varying statistics on this theory: “It takes $10 of new business to replace $1 of lost business,” or “Acquiring a new customer can cost six to seven times more than retaining an existing customer.” Whatever the exact figure, we all can agree that once you win a customer, you must do everything in your power to keep them happy.
Consider implementing a customer rewards program, enticing them to continue shopping at your location rather than testing a competitor. Develop an appropriate name, such as a “reward program” or “customer appreciation campaign.” Don’t call it a “loyalty program.” Dogs are loyal. Customers are looking for respect, appreciation, and service.
The strongest reward programs provide incentives for consumers to return. Don’t provide discounts every time a consumer makes a purchase; immediate gratification is short-lived and may not encourage a repeat visit. Instead, implement a program that awards points based on past purchases. Customers will go out of their way to visit your store to use the credit, and they’ll probably spend more than the total amount of the reward incentive.
4. Communicate your message. Don’t get caught up in producing intricate advertisements and mailers. Especially in tough economic times, consumers are seeking substance and will be turned off. Now more than ever, retailers should implement a “block and tackle” strategy with meaningful messages, hitting all the necessary touch-points for consumers. Keep your campaigns clean and to the point, and communicate your message without losing sight of your core attributes. Stress your point of differentiation—let consumers know why they should choose your store over the competition down the street.
5. Negotiate media rates. Since fewer companies are advertising during the recession, your media partners are feeling the pinch. Talk with them about lower rates as well as creative ways to partner to promote your brand. Oppor-tunities may include free banner ads on their Web sites, partnering to sponsor events, or participating in e-mail campaigns. Roll up your sleeves and sit side by side with them to make your dime work like a dollar.
6. Partner with vendors. Remember that you’re not alone. Everyone is feeling the recession, including your vendors. When times are tough, it makes sense to partner and create new opportunities outside the normal course of advertising. Go beyond simple co-op programs and consider special events, advertising campaigns, and sponsorships that are a win-win for both you and your vendors.
A good example of thinking outside the box is an old-fashioned tent sale held at Kauffman Tire. The retailer partnered with vendors to create an event that not only enticed consumers, but also excited store associates and vendors. The tent sale attracted new, as well as existing, customers.
7. Create a positive, integrated in-store experience. When consumers enter a store, they should immediately feel welcomed by knowledgeable associates in a clean, visually-appealing environment that clearly conveys your brand message. Integrate your messages into visual merchandising, from signage to fixtures, displays, and countertop POP. Product signage also should clearly communicate key features, benefits and advantages; this will help consumers if sales associates aren’t in the immediate area.
It goes without saying that store associates are your front-line when it comes to gaining and maintaining customers. Customers must feel at ease buying from your store and your associates. Workers’ attitudes, product knowledge, and outstanding customer service are paramount, since customers can probably find your products down the road.
Consider holding regular team meetings with store associates to discuss special promotions, introduce ad campaigns, and share ideas. When associates feel valued, they’re more likely to provide excellent service.
8. Use social media. The Internet is a powerful marketing tool, but before jumping in head first, you need to understand your company’s goals. The Internet is like a wheel with hundreds of spokes, each representing a multitude of ways to reach customers.
Every retailer should have a Web site. The site should answer basic questions, including brand attributes, location, store hours, and products sold. Web sites have become the new retail store—if a customer doesn’t see what they need, they may never enter your store again.
But then what? Many retailers want to advertise online but don’t know where to start. First, determine your goals. Do you want to drive traffic to your site, attract customers to your store, or increase your brand exposure? Next, determine how to best reach your customers online. It can get tricky, since there are thousands of options, from Web sites to social networking sites like Twitter and Facebook.
E-mail marketing is the most affordable way to communicate with your customers. Start your own customer list by asking them to sign up while in the store or visiting your Web site. Place kiosks in stores, and attract customers to register by offering them a discount or an opportunity to enter a contest. If you’re not already collecting data from customers, start right now. You can capture valuable demographic information, which will enable you to segment customers for future campaigns. For example, PGA Tour Golf Superstore creates successful e-mail campaigns around major holidays like Fathers Day and Christmas, driving traffic to its Web site and stores.
9. Identify your customer sweet spot. You probably already know which products offer the highest margin, but can you recognize your most profitable customers? Know their brand preferences, limitations, the times they like to shop, how they like to receive communications, and which form of advertising is most appealing. Once you have these answers and can effectively communicate with your customers, they won’t have reason to shop anywhere else.
10. Emphasize your point of differentiation (POD). What sets you apart from the rest of the pack? Continue to push your POD whenever possible to separate yourself from the competition. Remind consumers why they should spend their hard-earned dollars with you. But be forewarned: don’t promote value exclusively. While consumers are looking for bargains, if you position yourself as the lowest cost provider, another retailer can slash prices and win your customers.
As you re-evaluate your marketing plans, remember the key to effective consumer marketing: your brand must reach the consumer three times—before the sale, immediately after the sale, and on an ongoing basis. Brand marketing isn’t a one-shot deal. It’s a relationship built over time with consumers. It may be a long-term commitment, but it will be worth it when the recession storm subsides.
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