The Recession-Proof Business : Chapter 4

Rule #4 : Market More Aggressively, Not Less

When I first learned to drive a car, my driving instructor told me to turn the steering wheel in the direction I wanted to head before I stepped on the gas pedal. In other words, be sure of your navigation before you accelerate.

The four rules to creating a recession-proof business follow the same logic. Rule #2 (Solve a Problem That Gets Worse in a Recession) and Rule #3 (Make Your Business Competition-proof) are both designed to help you navigate your business more effectively. These two rules allow you to plot your company’s direction to pick up customer demand while minimizing competition.

In Fortune 500, they call this “strategy” or “strategic planning.” I personally don’t like the term “strategy” because while the average business owner has heard of the word, most don’t have much of a strategy. I think it’s because even though people know the word, they don’t appreciate its meaning.

Instead of strategy, I prefer the term “navigation.” Imagine you are the captain of your own ship (or business). You see a huge storm coming over the horizon on one side. You see jagged cliffs on the other. Navigation is all about how you’re going to steer the ship to survive. Do you turn into the storm? Or turn toward the rock? Do you speed up? Or do you slow down?

A good navigator will give guidance to the captain, in this case you, on how to plot the course. The navigator recommends specific direction changes, the sequence of those changes, and their timing to reach the desired destination or outcome.

Remember the Titanic? It was a great ship, with a great crew, but with terrible navigation. You make the wrong decisions about direction, and it is life threatening for a boat and certainly for a business.

In the early stages of working with clients on a one-on-one basis, most of my work as an executive coach relates to navigation issues. Fundamentally, is the boat pointed in the wrong direction? If it’s not, what’s the fastest, least risky, cheapest way to get the ship pointing in the right direction?

But once the fundamental direction is set, the focus shifts to speed of execution, or stepping on the gas pedal. How quickly can you improve the operations on the ship to pick up the pace and reach your destination faster? I think of this as operations, or the execution of the navigation plan.

This is critical. If you don’t have good navigation, efficient operation is pointless. Imagine that the crew of the Titanic could run the engines faster than any other ship in the Atlantic. When you have poor navigation, great execution only sends the boat faster toward an untimely demise. In other words, when your navigation has you pointed toward a lethal iceberg, speed of execution is not an asset.

Phrased differently, navigation is the steering wheel. The gas pedal is execution. Don’t put the pedal to the metal if you don’t know where you’re going!

I’m attempting to illustrate the subtleties of this concept in several different ways for a reason. It’s vital not just to be aware of these ideas but to really grasp and master them. Here’s why.

In a challenging economy, most CEOs and business owners instinctively slow down and hunker down. Much like you and I will ease off the gas pedal when we roll into a bank of fog. We slow down to be more cautious and in some cases stop entirely to wait the fog out. Typically this instinct serves us well.

But as it applies to business, we have these issues of overhead and cash flow. Every minute not moving at full speed is extremely expensive. Depending on how well capitalized your business is or the size of your cash reserves, you may not be able to slow down or stop doing business indefinitely. Most businesses can afford to slow down temporarily, but most cannot stop doing business entirely or they’ll simply run out of “gas” or cash, as the case may be.

That is why the first three rules of the recession-proof business formula are so vital. Rule #1 about adopting a recession-proof mind-set prompts you to base your business “navigation” decisions by looking at the facts, not the news headlines. Much like how an experienced pilot can fly through fog by looking at the instruments (the facts) and ignoring the tricks the eyes can play on someone when looking out the window (or looking at the TV, as the case may be).

Rules #2 and #3 about solving a problem that gets worse in a recession and finding a way to insulate yourself from competition plots the navigation course to keep moving toward your destination without running into life-threatening obstacles.

Once you have these elements in place – great clarity about the pros and cons of your situation and a clear path to navigate – it makes sense to speed up your rate of execution. The part of your business that sets the tempo for the whole company is your sales and marketing efforts.

When the first three rules of the recession-proofing formula have been followed, the next rule to follow is to be more aggressive in your sales and marketing efforts – not less.

At first glance, this seems contrary to “conventional wisdom.” Conventional wisdom, which is the wisdom of the average person, suggests you should hunker down and lie low in a recession. Cut back on everything. Cut back on sales, cut back on marketing, cut back on research and development, cut back on service. Hunker down. Wait for the storm to blow over.

If you don’t have a business that’s well positioned to take advantage of opportunities created by a recession, hunkering down or shutting down your business are really the only viable options.

But if your business is well positioned, it makes much more sense to be more aggressive in your sales and marketing efforts. This is the case for several reasons.

First, what you have to offer is actually beneficial to customers in a recession. But in many cases they don’t know about what you have to offer. In other cases they may not fully appreciate or understand how what you offer is relevant to their needs in a recession.

A more aggressive sales and marketing effort enables you to communicate with customers and help them “connect the dots” between what they care about and what you have to offer. Don’t expect customers to connect the dots themselves; that’s your company’s job.

Second, when your competitors are hunkering down and hiding from buyers, it doesn’t take that much effort to stand out. It’s like when someone says, “Will the person who runs the best company for me to buy from please stand up” and the CEOs of all your competitors promptly sit down, and you win. In other words, as the competition fades away, it becomes easier and easier to get customers – provided you’re even bothering to try.

Recession Success Story #5: United Parcel Service (UPS)

In 1907, the United States was in the midst of an economic panic with unusually high unemployment. For the unemployed who were looking to do something to make money, many were willing to take more risks. Better to have a shot at a better life than to sit still with no income.

At that time gold had been discovered in remote parts of Alaska. This gold rush turned Seattle into a boomtown, as it was the closest major city that many gold seekers used as a staging area to get to Alaska.

As Seattle boomed and became a commerce hub, getting packages and messages delivered became an increasingly challenging problem. The messenger services that existed at the time were notoriously unreliable and were shady in some cases.

This was the economic situation that 19-year-old James Casey grew up with. He saw a strong, growing demand for messenger and package delivery services even in the midst of an economic panic. He also noticed a gap in the marketplace-an underserved need that he thought he could use to create a unique business. What was this underserved need? In a word: reliability.

So James Casey started a messenger and package delivery service known as United Parcel Service. He knew that there was demand for this service – following one of the keys to creating a recession-proof business. He also decided to offer an impeccably reliable delivery service – which was at the time radically different from the competition. By doing so, he followed the other key to creating a recession-proof business – solving customers’ problems in a unique way.

But he intuitively knew that alone was not enough. Sure, he had customer demand for his industry. Yes, he offered a unique approach to solving his clients’ problems. But he had one problem – none of his prospective customers knew about the unique reliability that UPS had to offer.

Casey recognized this reality and put as much effort into marketing his unique service as he did in managing the day-to-day operations of the service itself. In fact, he blended these two efforts so seamlessly it’s hard to distinguish which decision was a client service decision and which was a marketing one.

Here’s the story of how UPS got off the ground.

Casey knew from the outset that reliability would be not only the key to differentiating his service but also the cornerstone of his marketing efforts. He realized that reliability was not a physical attribute like color, weight, or size. It was an intangible quality about his service that was not visible to the human eye. So his marketing was quite clever in finding visual and auditory cues to communicate this intangible quality of reliability.

He started by hiring the “good kids” from his high school. As a kid himself, he knew which kids were responsible and which kids got into trouble. He cherry-picked the most responsible teenagers he could find.

Next, he made every one of his employees wear the exact same uniform. While the uniforms weren’t the brown color we’re used to today, they consisted of a nice shirt and a matching baseball cap. He trained his staff to be exceptionally polite with customers and made sure they showed up on time. He was insistent on this.

He figured that if his employees all dressed the same, behaved in the same polite manner, and showed up on time every single time, his customers would believe his promise of having a reliable service.

Next, he painted his three bicycles and two cars all the same color. Originally, that color was supposed to be yellow. But at the last minute, Casey’s business partner convinced him that dirt on yellow-painted bicycles and cars would stand out more – ruining the reliable message he was trying to convey. As an alternative, Casey’s partner suggested brown. The decision was approved and all delivery vehicles were promptly painted brown.

But the one decision that really put Casey over the top was his decision to be open for business 24 hours a day, 7 days a week, 365 days a year – far from the norm in 1907. Casey was a lifelong bachelor. He never married and never had kids. UPS was his life.

He and his business partner both put cots in the UPS offices, and they actually lived and slept there every single day. To make his point about reliability, he encouraged customers to call UPS at 2 a.m. on Christmas Day – because when you call we will be there. Call at midnight on Thanksgiving Day – no problem, because we’re UPS and we’ll be there.

He drilled this message into the minds of his active and prospective clients over and over again. He backed up this message with operational execution that delivered on the promise. Phone calls at 2 a.m. really were answered. Package pickups were always on time. Packages were delivered when they were supposed to be.

The combination of offering something unique to customers and aggressively marketing this uniqueness launched UPS.

What I find so remarkable about the UPS story is that James Casey’s unique formula for UPS in 1907 remains largely unchanged more than 100 years later. Think about why people use UPS today. I know I use it because, well, the stuff I ship with them gets there. I use UPS because it’s reliable.

It’s amazing that a business founded 100 years ago, one based on the unique idea of providing an exceptionally reliable package delivery service, still exists, still dominates, and is used by customers today for pretty much the same reasons that customers used it 100 years ago. Amazing.

Sales and Marketing Execution

The role of marketing in a recession is so vital to recession-proofing your business that I’ve devoted an entire section of the book to the topic.

For now, it’s useful to appreciate the importance of marketing in recession-proofing your business. And it’s equally useful to keep in mind the prerequisite conditions needed to feel comfortable about marketing more aggressively, namely solving a problem that customers still care about in a recession and solving that problem in a unique way. When you have these two elements in place, marketing more aggressively is the right move. We’ll cover this in much more detail shortly.