Interim Management Question: Will Decreased Consumer Spending Habits Last?

Will the recession lead to a lasting change in buyer behavior (in B2C) or will consumers revert back to old buying habits when the recession ends?

I think it will be all over the map. If you are an individual who prefers to buy a Pontiac, you will not have the choice of returning to your old buying habit. But this really isn’t the answer to the question, it only serves to demonstrate a point. The recession will change what options may be available and will certainly impact individuals perception of risk. Buzzwords such as value and frugality are currently in vogue. High end shoppers have most recently preferred that their newly purchased items be packaged in generic, no name bags. Along with an economic crisis there is a big spotlight on the condition of the environment. Living with less is being paralleled with a commitment of making less of an impact on the environment. There appears to be so much chaos occurring in the financial markets that a focus on individual financial fiscal management appears to be a focus for “not only” the more prudent/educated and knowledgeable types, but there appears to be a concerted effort on the part of the various government agencies to protect the less informed and uneducated populace. The surge of activity related to finding economically viable alternative energy will yield many new options for transportation and basic energy grid requirements. I don’t believe that we’ll go back to vehicles of the past just because we get pockets of reprieve from OPEC.

Bottom Line – Don’t rely on consumers to revert back to their old buying habits because by the time the option exist, they’ll probably forget what those “old” buying habits were. Will people start buying houses again, certainly. Will new house designs and sales strategies be different from where they were 18 months ago. You bet. Will consumers in conjunction with government watch dogs take a more conservative approach to credit card debt? I think so.

Max Clough
Interim Management Executive
seattle@oneaccordpartners.com

From an investment perspective… I hear deal makers speak as though the recession is episodic and therefore that we’ll revert to previous approaches to buying/selling companies.

The fundamentals got distorted the last 10 years and the norm going forward for consumers to business leaders alike will be to create and consume goods and services of value that produce tangible benefits.

Peter Klinge
Interim Management Executive
peter.klinge@oneaccordpartners.com
801.755.6820

Our basic economic order is built on a Keynsian Economic model – basically a “debt mentality”. As long as our economy has access to capital…it will spend. Yet, given the radical financial changes, a conservative approach will likely influence consumers, and more importantly businesses, for years to come. Ultimately – debt, yes, same old habits…not for a long time.

Jeff Rogers
Interim Management Executive
jeff.rogers@oneaccordpartners.com

This economic downturn is termed a “recession” but there are structural changes that make the “recession” different. There are some fundamental & dramatic shifts in banking practices (% equity to credit) that will change real estate and purchasing requiring loans. Also credit card companies are actually losing money due to non-payment so expect a tightening on credit applications, more discipline on payment dates & higher interest rates to offset non-payment losses. So bottom line as people go back to work & their disposable income recovers they will go back to previous low dollar consumer habits, but on higher dollar purchases requiring credit there are structural shifts in the credit providers that will ultimately restrict demand on goods and services permanently changing their habits. What we will not know for awhile is the degree of negative affect this structural shift will have.

Dale Hintz
Interim Management Executive
dale.hintz@oneaccordpartners.com
972-824-6923

Consumers have changed. They’ve been shocked by the reality of their situation – trees don’t grow through the sky…everything has a topping out and consumers now see that they are broke!

Consumption will be less conspicuous and savings will continue to grow as a percentage of GDP.

Jackson Weaver
Interim Management Executive
seattle@oneaccordpartners.com

Recessionary Consumer Behavior: Harvard Business School Video

Recessionary consumer behavior is discussed in this video with Professor John Quelch of Harvard Business School. He also talks about 4 types of consumers who are reacting in different ways to the economic environment, whether current consumer behaviors will become permanent, and whether you should invest in marketing during a recession.

Buyology: Can Brain Scans Provide More Accurate Insights Into Consumer Behavior?

by Charles Sipe

Buyology is an interesting book because it describes a completely new approach to marketing research. Instead of traditional methods of research such as surveys, or focus groups, Buyology explores a new frontier in marketing research, neuromarketing.

Specifically, Martin Lindstrom, describes scientific studies in which subject’s brains are scanned to see what parts of their brain lights up when exposed to certain marketing stimuli such as a brand logo or an advertisement. When different regions of our brain are active, the increased energy requirement means an increased flow of oxygenated blood to that region, which the fMRI can detect and display in a visual format. Lindstrom uses data from these studies to disprove commonly held beliefs in advertising, such as the effectiveness of subliminal advertising and that warning labels on smoking packaging can actually encourage smoking.

According to the book, roughly 90% of consumer buying behavior is unconscious, which is part of the reason Lindstrom believes nueromarketing can a more effective method to find out what consumers really want and reduce the number of product failures.

“Markers and advertisers on the other hand have spent over a century, throwing spaghetti at the wall and hoping it will stick. The fact is that most marketing, advertising branding strategies is a guessing game…Until now marketers and advertisers haven’t really known what drives our behavior so they’ve had to rely on luck, coincidence, chance, or repeating the same old tricks all over again. But now that we know that roughly 90% of our consumer buying behavior is unconscious, the time has come for a paradox shift.”

I think this book is a very interesting read, though it is difficult for most marketers to implement fMRI studies without thousands or millions of dollars to spend on this new field of marketing. However, it looks very promising, as marketing becomes more science and numbers driven in the future.

You can download a free chapter of Buyology at the Martin Lindstrom website.

Jim Fisher Discusses Utilizing Areas of Expertise of OneAccord Interim Executives

My background is multi-unit retail chain marketing with a lot of brand building mixed in. I think the benefit [of OneAccord], for instance, the first proposal I worked on was really a manufacturing company and I’ve had no experience with manufacturing in a direct way. I’ve been more with companies like Pizza Hut or Cracker Barrel, etc. With the manufacturing company I worked with Greg Wilk in Dallas and he has a strong sales background. So between the two of us we created a 4 phase consulting plan that we could work through with the company and build the brand, build the strategy, build the business plan, which I’m strong on and with Greg’s experience in sales, we could really build that. It was a great combination between the two of us.

The other aspect, I’m working with a major 11 billion dollar software company. We’re not working with them now but we’re having preliminary discussions. Frankly I know nothing about high tech but
I can rely on other partners within OneAccord to fill that void. I can go in, I can talk to them about what their needs are, what their pain points are, what their challenges and opportunities are, and I can help build that strategy and respond to it and deal with the marketing issues but I can also bring in very relevant OneAccord partners who know about high tech who know about buzz marketing, things like that, that they’re really looking for.

Jim Fisher, is an enterprising senior marketing executive with a record of designing innovative programs that result in significant revenue growth and a strong market presence. He has held executive marketing positions at Pizza Hut and Cracker Barrel. Mr. Fisher can be reached at 781.449.4333 or boston(at)oneaccordpartners.com.

How Can Interim Management Increase Revenues?

Interim management can be an effective tool for increasing revenue growth at a company. Can you give an example of when you have been hired in an interim marketing or sales management role in which you helped a company increase revenues?

The client is a network security consulting firm, needing to transform its sales structure and culture from a product focused approach to a service based revenue stream.

Founded in the 1990’s, the market around the internet, hosting/outsourcing, security, along with the move from product to services was rapidly developing, with few standards. The client desired to build a significant regional presence, associated revenue stream, business processes & resulting
strong business valuation, with the intent to be acquired. The sales team was made up of 15-20 direct sales reps with little leadership, structure, or defined metrics.

The OneAccord Solution
OneAccord guided the organization through the design and implementation of a comprehensive sales and re-engineered organizational, created new roles, position definitions, metrics and recommendations for new compensation structures. OneAccord helped to define authority and accountability to revenue generation, define a sales strategy and assisted team members and management in execution.

Engagement Highlights

• Development of a comprehensive Revenue Generation Structure

• Clearly defined roles and responsibilities

• Defined accountability to results

• Tools for measuring critical activity

• Field tested manual

• Internal sales training process

• Creation of an inside sales team partnered with a direct enterprise level group

• Channel Partnerships developed

• Improved revenue generation

Results
Over the 3 year project, moving from project based work to Interim Sales Leadership, there was a significant increase in the critical sales activities, including cold calls, building industry relationships, channel partnerships, and targeted account acquisition.

Jeff Rogers is founder of OneAccord, an interim executive company, that provides best in class interim sales and marketing leadership for companies all across the country.

In 2008 I was Interim VP of Sales for a Midwest company in the Gift Industry. I was brought in while they conducted a nationwide search for a permanent VP of Sales. The company ended 2007 down in sales and was starting 2008 in the same downward direction. As Interim VP of Sales I focused my efforts on reversing this trend. I identified several critical processes and procedures to implement to reverse the negative sales trend. By the end of March, 2008 their sales were +9.5% over the same period in 2007. The engagement was extended through the fall of 2008 as OneAccord focused on several other revenue generating opportunities after the permanent VP of Sales was hired.

Interim management executive, Richard Brune, is a sales and marketing professional with over 25 years of experience in building and managing some of America’s most recognizable consumer brands including Stanley Tools, Hartmann Luggage, REI Inc., Swiss Army Brands and licensed products with Eddie Bauer and Disney.

SITUATION:
Truck and Commercial Vehicle Product Category had very negative quality reputation in marketplace and significantly lagged market share of automotive products. Internally low existing sales and persistent quality issues resulted in defeatist attitude about potential to improve. Sales people creatively avoided selling this segment of the product line – as they did not want to stake their personal reputation on a poor quality offering.

ACTION:
Research competitive products to bench mark key features that drive customer preference and product performance. Direct engineering activities to develop distinctive products that fit within manufacturing capabilities. Create internal business plan for increased sales and lower warranty costs would offset increased piece cost. Develop Training materials and Sales Support materials including brochures and magazine advertisements. Coordinate launch product through sales force and customer base. Built on momentum by communicating both internal and external success stories.

RESULT:
First year unit sales increase of 20%. Eliminate poor quality reputation in the marketplace on this visible product category. Field evidence and acceptance of superior quality occurred within 6 months of launch. Re-energized sales force to aggressively pursue sales opportunities with existing accounts and more importantly new accounts who were not open to prior discussions due to previous persistent quality issues.

Interim management executive, Dale Hintz, is a highly organized, strategic and creative executive with expertise in product research/development, price optimization, market segmentation and mapping brand strategies. He can be reached at 972.824.6923 or dallas(at)oneaccordpartners.com

Last year after speaking with a CEO of a company doing 8 figures per year, he realized I had been VP Marketing for a competitor of a company he had received news of an auction on — and engaged me for a few days in order to help him determine the potential value and an appropriate bit amount. So for under ten grand, he got serious “feet on the street” with eyes that had different “focal range” than his.

When that particular acquisition opportunity didn’t manifest, he expressed his appreciation for adding value without ramp-up time and said he wanted to launch a SERVICE business to complement his SOFTWARE offering. Unfortunately, given economic conditions, his management team was up to their eyeballs in alligators — so this new business opportunity would ALSO have been unable to contribute any revenue or profit to the corporate coffers.

He thus engaged me as an Interim VP New Business Development to explore the business and create it if indeed the opportunity were real. In a four-month timeframe, I:

• Scoped customer pain and tested the value proposition and price elasticity

• Created a brand with input from the legacy marketing department

• Developed interoperability arrangements with a JV partner to ramp fast

• Built a financial model demonstrating the opportunity to DOUBLING REVENUE

• Returned the business, packaged in a box, such that the existing team could run with it

Paul Travis is an interim marketing executive at OneAccord. Mr. Travis is based out of Seattle with 25 years of experience in high technology, marketing, and consulting. He can be reached at Paul.Travis(at)oneaccordpartners.com and at 206-910-2222.

The Recession May Make CMOs More Numbers Driven

John Quelch wrote a thought provoking article (How CMOs Should Function in a Recession) which touches on how the recession can alter the role of the CMO in an organization. Not only do they have to come up with creative ways to stretch marketing spend further but they have to be more cognizant of the return on investment on marketing spend.

The recession will have two important, lasting results for CMOs: First, financial accountability of marketing is here to stay. Only in a few high-margin fashion-intensive categories will the shoot-from-the-hip right brain marketer survive. Second, improved accountability requires CMOs to be financially literate, to understand the balance sheet as well as the income statement impacts of marketing initiatives. The result will be a new generation of CMOs who command more respect in the C-suite and hold their jobs longer as a result.

If Quelch is right, successful CMOs in the future may require an analytical skillset that outweighs the creative skillset. In the classic debate of whether marketing is an art or science, this may give the science side the lead for now. The recent Stephen Baker book, The Numerati, describes how business is becoming more analytically driven as artificial computer intelligence is able to give marketers new insights into the behavior patterns of consumers, connecting the dots when human intuition comes up short. For example a computer sorting mountains of information from consumers online, found that Netflix users who rent romatic comedies are more likely to rent cars for the weekend. A data analysis also found that drinkers of hard liqour drinkers often buy Gatorade. These consumers likely wanted to prevent hang overs by drinking or mixing liqour with the electrolyte rich sports drink. This information could be valuable for Gatorade’s marketing department who could use this to target liqour buyers to increase sales.

Have you seen any examples of numbers becoming more important in the role of a CMO or marketing department?

Finding Profitable Clients

When working with company‘s that have sales revenue and profit challenges one of the first places to look and diagnose the root cause is within their sales numbers, specifically the sales pipeline. The sales pipeline typically reveals the symptoms associated with the revenue and profit challenges a company is currently experiencing or will experience. One key metric to examine is the win rate, which is the total revenue sold divided by the total revenue sold, lost and disengaged. The win rate percentage provides a factored view and insight into predicting a company‘s future sales performance. Conversely, it also reveals areas of deficiency that are impacting or will impact sales performance. Another key area is looking at how opportunities enter the pipeline. Do they enter from demand creation (the proactive pursuit of sales revenue) or demand management (reactive pursuit or sales revenue from leads, referrals and bluebirds).

Experience has shown that revenue challenged companies rely much more on demand management than on demand creation to generate sales revenue typically resulting in an unbalanced 80/20 split.

Companies with an unbalanced and unpredictable revenue stream need to ask themselves the following question: Where do we want our sales revenue to come from? When applying conventional wisdom, the answer to the question can be found by identifying your company‘s —ideal client profile“ or those clients most likely to receive significant value purchasing your product and/or service based on the alignment of qualifying characteristics and attributes between your company and the prospective client. However, going a step beyond conventional wisdom and applying biblical wisdom can help you identify not only your most profitable clients but also your most sustainable clients. The biblical wisdom referenced is found in the book —Beyond Babel“ by Gerald R. Chester, Ph.D. regarding the biblical principle of equal yoking specifically related to C4 to identify your —ideal C4 client.“

Since most companies typically do not select their clients, it is even more difficult to find C4 clients. The components of C4 include a company‘s:
1. Calling
2. Character
3. Capabilities
4.Commissioning

Calling Speaks to the heart of the company.
Will your value proposition bring lasting value to the prospective client?

Character Is the accepted worldview of a company.
Does the prospective client‘s company values and operating principles align with your company?

Capabilities A company‘s ability to assess the value proposition.
Do your services and/or products facilitate the successful completion of tasks or business challenges that can‘t be effectively addressed by your prospective client?

Commissioning The external invitation and permission to speak into a client.
Do you have the affirmation and confidence to fulfill your client‘s needs?

In conclusion, the alignment of C4 between your company and your prospective client(s) will not only help establish your most profitable C4 relationships but will also build a sustainable and predictable revenue stream

Need help growing revenues? Contact an interim marketing executive today at info@oneaccordpartners.com or visit www.oneaccordpartners.com.

Photo via flickr

Seth Godin Video: Godin Discusses A Remarkable Marketing Strategy

Seth Godin is one of the foremost marketing thought leaders and is constantly publishing innovative thoughts on marketing on his blog www.sethgodin.typepad.com. Godin likes to challenge the conventional way of doing things and urges us to take risk to make our product or service remarkable. The following video discusses why the “TV industrial complex” no longer works and why it more important than ever to be remarkable.

Marketing Video: 9 Marketing Trends for 2009

The Leo Burnett Group’s predicts 9 marketing trends that will be highlighted in 2009. Some interesting predictions is that online television viewership will go mainstream and the cultural impact of gaming will accelerate.

The Marketing Paradigm Shift Animated

This is an interesting animation of how the marketing paradigm has shifted from the days of traditional media’s dominance of consumer’s attention to the present in which consumers are bombarded with so many messages that they ignore or distrust marketing. The video shows how social media may be the key to gaining back consumer’s attention and trust.

Scholz & Friends: “Dramatic shift in marketing reality” from Michael Reissinger on Vimeo.

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