Raising your game in tough times...

Let’s think of an imaginary company during the good times...

Money is easy to obtain so in many areas, the business is just not as lean or mean as it is possible to be. Customers get away with longer payment terms than agreed. Customers may be given 30 days to pay but many companies have average debtor days of 55+ or even 65+ days. The credit control department put in a decent days work but it’s not a tough job. When the business needs extra money, the bank is falling over itself to make it available.

Then along come tougher times. Customers take longer to pay, some are even inconsiderate enough to go bust and not pay at all. Those customers that were paying in 50 days now take 60 days to pay. The bank no longer wants to lend money and so the company decides, in management speak, it has to “raise its game” and improve its performance. Management ask the credit control department to get tougher on the customers and get the money in faster. (This probably happens a few minutes prior to the same management telling their payments department to start paying their suppliers later).

At the same time customers start taking longer to pay, the credit control department get asked to reduce the average number days and get the money in quicker.

This is when things get difficult. The manager of the credit control department has been working at a good rate for a number of years and has always tried to look at ways of improving performance. To now be asked to simply improve performance overnight and deliver improved results exposes the limits of a company’s people and systems. Some people are able to rise to the challenge but many others will not because they cannot.

Companies recruit staff of a certain level to get a job done under certain conditions and pay them accordingly. When those conditions change, those same staff may not be able to deliver the changed performance the new conditions dictate.

So, what does this have to do with marketing? Well, credit control is a very easy example to give of tougher times affecting performance because it such an easy thing to measure and it requires relatively simple systems.

Marketing is far more subjective and so it is much more difficult for management to clearly see the ROI produced. When times get tough and companies need cash, they ask the bank for a loan and get turned down. They then “raise their game” and start looking at the performance of different departments in the company such as credit control. When credit control report back that getting the money in quicker is proving difficult, management then look at cost cutting opportunities and the marketing budget is always one of the first areas to be cut. In my experience, very few senior executives really understand strategic marketing and how it can be the most effective tool a company can deploy during a crisis. In tough times, maintaining the marketing budget but focusing it more on those often overlooked areas such as brand consideration rates and brand credibility can be the best investment a company can make.

For example, just as customer payment profiles will extend during a credit crisis, so the sales cycle may extend as customers look harder at their purchasing decisions and produce a more detailed business case to justify the investment. As potential suppliers come under greater scrutiny, their brand credibility becomes more important than ever before. By growing brand credibility, a company can close a greater percentage of the deals it is involved in (or lose a smaller percentage when their brand lets them down).

Making the most of every sales opportunity and maximising your chances of closing every sale is something very few companies are good at and cutting the marketing budget doesn’t help.