It Ain’t Over Till the Fat Lady Sings
Despite some indicators of economic progress, the recession wears on, and consumer confidence is still low. Can you take those lemons and make lemonade?
Well, she’s hummed a few bars in the past few months, but she’s not quite ready to belt out the tune; in fact, I think she may have forgotten the words!
It ain’t over till the fat lady sings, and the “it” I’m referring to is the economic downturn we’ve been working our way through in the past 18 to 24 months. It’s affected all of our businesses and how consumers spend and think about spending. We’ve seen some brief glimmers of positive indicators, but they’re not related to the point of portending sustained or sustainable growth and economic well-being. The economy is still in trouble, and your customers are still concerned.
As far as a real economic recovery, it’s all about jobs. We won’t see sustained economic growth until the private sector starts hiring back full-time workers who can start putting money back into the economy (read: spending). Sure, we’ve seen some government reports showing that the unemployment rate has started to decrease, but when you dig deeper into the numbers, there are two alarming trends. One, much of the hiring is the result of government stimulus, such as the Census; two, most of the jobs created are temporary, and without benefits. June unemployment data shows a decrease to 9.5 percent (from a high of about 10.1 percent at its height in late 2009), but that’s an illusionary figure as more than 650,000 people left the work force, and the nation actually lost 125,000 jobs in June. And, when you factor in the roughly 2.6 million people who are unemployed and no longer actively looking for jobs and those who hold short-term positions the real unemployment rate shoots up to 16.5 percent! Some pundits say that it will be well into 2015 before we see a return to 6.5 to 7 percent unemployment, which is still considerably higher than past post-recessionary periods.
And because of political infighting and concern that high government spending will lead to an exploding deficit, 3.2 million unemployed workers will be losing their unemployment benefits, a number that will increase each month until either the private sector starts aggressive hiring or the government extends benefits or provides stimulus funds to create new jobs.
Stimulus spending is not sustainable. Take the Cash for Clunkers program. While this program spurred millions of people to purchase new cars, the auto industry reverted to pre-stimulus levels when the incentive period passed. Or consider the new home buyer stimulus. Millions bought homes with the $8,000 incentive, but as soon as the incentive period ended, home sales plummeted. And this in the face of continuing home foreclosures and increasing homeowners with underwater mortgages. It’s widely accepted that government spending prevented the U.S. economy from tipping into a depression, but the government can’t increase private sector hiring that will lead to a healthy and vibrant economy!
Consumer confidence, a bellwether of how deep and how often consumers will reach into their pockets, is still alarmingly low. They’re concerned about the steps being taken to address the economic crisis and about their own financial well-being. The lack of job creation is top of mind.
This is definitely not a normal economic recovery and some experts are saying that, unless things start showing real, sustained improvement, we could face a double-dip recession or deflation.
But enough doom and gloom, especially about things you and I have no direct control over. (But they still impact our customers’ spending!)
A Hidden Opportunity
But it’s been said that you shouldn’t let a crisis go to waste; it’s an opportunity to do things you couldn’t (or wouldn’t) do before. Most of the low-hanging, cost-cutting fruit has already been picked, so you have to look for the undiscovered opportunities. How do you position your company to lead when we finally exit the recession?
The answer to this question won’t come without a lot of hard thinking and some judicious and prudent investment, things that many of your competitors who are still in the survival mode and not thinking about the endgame won’t be able to do. Here are five tips.
First, continue doing what you’ve done to survive the challenges of the past two years: controlling costs, protecting your cash flow, maintaining inventories and categories that work for you. You need to be profitable to sustain your business in the next year and position yourself for growth as the economy starts recovering.
Second, refine your value proposition. What sets you apart from your competitors? Is it price, the services you offer, the product lines you merchandise, the quality and expertise your staff provides?
Are your competitive strengths in sync with your customers’ needs? (You’d be surprised by the number of companies who cite strengths that aren’t important to their customers.) Now is the prime time to find out what’s really important to your existing and future customers. It’s is the only way you’ll be able to build long-term loyalty with them.
Third, enhance the customer experience. Recent studies show that customers pay for experiences and products that make them feel special and appreciated, and provide personal satisfaction. The experience is made up of every contact the customer has with you, from in-store merchandising, signage and marketing communications, from employee interaction to complaint resolution, from your website to your physical store.
Fourth, define your message. What are you really selling? Are you selling stuff at a price, or the benefits of the services and products you offer? How do your products and services enhance your customers’ quality of life? What are their social and economic benefits? Are you tapping into the emotional and psychological connections between people and plants, the serenity and grounded-ness they need, especially in times of anxiety and uncertainty?
Finally, how does your marketing and communications plan connect with the customer? Have you combined traditional advertising with relationship-building social media, such as Facebook? Are you looking at every customer touch point to reinforce and leverage your value proposition and customer experience?
Too often, companies view each of these as individual activities instead of an integrated process. They’re all interrelated, and when you approach them together, the results have a multiplier effect.
Many of your competitors are still struggling to keep their heads above water; they don’t have the luxury or foresight to see the opportunities these challenging times present. Now is the time for progressive, visionary companies to create their own futures and position themselves as market leaders in the recovering economy.
The fat lady hasn’t started singing yet, but hopefully she’ll learn the music and lyrics, and the sooner, the better…
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