Tag: economic downturn

Ralf HallerRalf Haller November 2, 2008

Media lemmings on their way…

OK, it is the banks’ fault, even they know that now, after hearing all the bad press in the media. It is true that innovation is enabled, not created, by money. Value (wealth) is created by productivity. Productive companies create more value and they obtain productivity from innovation. So far, so good.

Now I had a weird experience this week listening to the radio while driving to work. A radio moderator from Germany’s number one radio station SWR3 said that we all should save money and only really spend what we need to spend. Savings rates went up in Germany according to a just-published report, and he used that to comment how “proud” he really is of all the people and that they should not listen at all to anybody trying to tell them they should spend more. Now this guy possibly influences hundreds of thousands listening to this, who might in turn influence many more, so he really has quite some power to make things even worse than they already are (e.g. if all car manufacturers stop production because of a breakdown in car sales).

The true story to tell of course is that, while saving by itself is not a bad thing, it is important to invest in things that help productivity as well, otherwise things will get even worse and the money won’t be worth much! If in the end they can’t even pay the fees for the broadcasters (radio, TV), the SWR3 moderator’s job won’t be too secure, either. Though on the basis of this broadcast, the broadcasters’ fees might be one area to save on already…

Ralf HallerRalf Haller October 23, 2008

How to do sales & marketing in the current times?

While all of us are probably still in a state of shock at the mess that has been created, the familiar phrase ” life goes on” still holds true.

I want to write down a few of my current thoughts on how in my opinion ICT firms should react to the situation. Unlike the famous US venture capital firm Sequoia, who invited their portfolio firms’ management in to give a presentation that basically said “put the brakes on and think 2-3 years out”, I think there are better ways to deal with it.

My thoughts assume that you have been able to use the last few years to accumulate cash and can deal with this for some time and are not living from hand to mouth, as you otherwise would have more pressing issues regardless of how the markets look like right now.

In healthy times everybody tries to grow within a certain framework that is given by key resources (budget and people). During these times you compete with everybody trying to maximize the return on sales & marketing spending.

Now when a lot of other companies start to put the brakes on you have a unique chance to stick your head out by simply not cutting down on sales & marketing, as you will get more traction than ever before. Historically, during recessions, very successful companies who think this way have taken the opportunity to build market share while their competitors are only thinking about survival.

As mentioned above, life will go on and there will be times ahead when the financial mess is no longer on the cover pages. If you have kept sales & marketing going up until then, you will without doubt be in a better position when the market rebounds than others who slowed things down. Clients are built over long periods in B2B business. Keeping in contact with them even if they might be ordering little or nothing gives you lasting credibility. Nothing is hated more about sales & marketing than opportunistic short-term thinking – something that btw brought us into this mess in the first place – but that is a different subject that will be taken care of I think now too.

Perception is key, as we see also in the stock market yo-yo game right now. If you give the perception that things are going on as usual by keeping your company’s client interface unchanged then you will give the best possible impression.

If cuts are inevitable then don’t make them where they are most visible to your clients, which is your sales & marketing department. It’s found over and over again that big multinationals in particular that are quick to cut down on sales & marketing, and equally in customer support, keep going down the death spiral.

Now I am of course biased, you might comment quite correctly. Still there will be a few companies that will follow my advice and enjoy a better position than ever before in only a few years from now! A market research we found too on this topic.

Ralf HallerRalf Haller August 27, 2008

US Economy UP, Europe Down, an overnight change – really?

Perception is everything in marketing and branding. It seems the exact same is true with economic forecasts. Just last week the overall perception was that the US is up for a recession (awaiting still the full impact of the financial services and housing crash) and while Europe is growing slower compared with a few months ago things look much brighter.

Now suddenly the US dollar goes up against the Euro and also the oil price rises again. Something not seen in quite a while and quite unusual. Market analysts talk the Euro economy down, supported by consumer and company indexes in Germany that show its lowest level in 3 years.

Of course this all makes no sense at all. It is looking at it with the perspective of half a glass empty rather than full. Surveys in the US show that more people are seeing the economy getting better now but at the same time there are 40% of people who say they had cash flow problems in the last 90 days and still 30% think the economy is getting even worse. So it is clear that opinion makers are at it here. If in Europe a survey would reveal such numbers, I think we would consider this as the worst economic downturn since World War II or so…

Warren Buffet is buying US dollars. Ok I would too since the Euro got way too high. But to think now that the one economy is up and the other is down overnight makes no common sense.