When the economy sours, companies retrench and cut costs, especially in marketing. That’s understandable since it cuts business expenses, but it is a huge mistake. You need to continue your marketing efforts and keep your face out there.
Instead, a more viable option is re-thinking your relationships with customers and finding ways to add value to what you do. When you can make your customers more productive, save them time or money, or otherwise improve their business, you will reap increased customer loyalty and contracts.
In the late 1970s and early 1980s, McDonald’s had a contract with a local beef supplier. When a shortage caused the price of beef to go sky high, McDonald’s asked if the supplier wanted to renegotiate the contract. The supplier basically said, “No. A contract is a contract. We will honor the original price and take a loss on this.”
McDonald’s was impressed by the supplier’s focus on the customer. You could say the restaurant chain was lovin’ it. When everything turned around, McDonald’s awarded the supplier a continued contract and expanded the base of restaurants it supplied.
Smart companies build their relationships with customers by looking for new opportunities. A salesperson with several different product lines would be foolish to only push Product X; his customer might actually need Product Y or Product Z. If another supplier can’t provide what the company needs, it’s your chance to help out.
You must look for those new opportunities. That’s how Sysco Corporation, the global leader in selling, marketing and distributing food products to eating establishments outside the home, turned a negative situation to the company’s advantage.
In 1980, 25 percent of the meals in this country were eaten in restaurants while 75 percent were eaten at home. By the year 2000 those percentages had become 50/50. Restaurant chains really didn’t have to be that good because their market was expanding. As their market expanded, Sysco saw its market expand too.
After 2001, that market growth flatlined and then stagnated. Sysco’s did too.
The company started an internal blog and website promoting best practices. A Sysco employee in Baltimore would learn a best practice and promote it on the blog or website; a Sysco representative in Kansas City would pick up the practice and run with it. Eventually this idea morphed into Sysco’s Business Process Improvement initiative.
People managing restaurants work 80 hours a week, particularly if they own the place. They don’t have time to go out and see what other restaurants are doing or what the hot new menu items are. Sysco said, “We’re out here all the time — let us be your eyes and ears, free of charge.”
This Business Process Improvement for customers has grown to the point where Sysco helps restaurants with marketing, selection and preparation of menu items, human resources, operational services and financial services. The company built test kitchens where its representatives gave restaurant owners tips — for example, how to prepare attractive dishes with cheaper cuts of meat when the price of beef was high last year.
When you are perceived as having the best interests of your customers at heart and can improve their bottom lines, it builds tremendous customer loyalty.
Cardinal Health was in the drug distribution business and very good at getting drugs to the front doors of hospitals. They eventually realized that beyond those doors, hospitals had internal distribution systems that were often ineffective. For example, hospital pharmacists were spending 30 percent of their time correcting someone else’s mistakes.
Imagine you’re a pharmacist with Clarian. As Cardinal Health, I come to you and say, “I can give you back 30 percent of your time if you let me handle drug distributions inside your hospital.” You’d jump at that offer.
Instead of cutting marketing costs, my advice to companies is to look at how your customers use your products or services for their customers. Then think beyond your normal business practices to figure out how you can create better value for your customers.
Hear that sound? It’s opportunity knocking. Better answer the door.
Daniel H. McQuiston, professor of marketing and management for Butler University’s College of Business, contributed to this article.
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