On "The Economy"

I thought blogreaders might be interested in this interview I did with one of our OneAccord staffers last month...

What advice would you give to companies that are struggling due to low consumer confidence and the economic environment?

In a recent speech, I quoted Steven Covey's profound line, "The environment you fashion out of your thoughts, your beliefs, your ideals, your philosophy is the only climate you will ever live in." What if C.N.N. (Constantly Negative News) reported that the overall economic climate was going to perk up in 2016 or 2026? Would you be willing to "stay down" for decades because someone else says so?

The "leading" questions I ask company leaders who are struggling are the same I ask those who are succeeding:

• Are you communicating more value than you ever have?
• Have you revisited your go-to-market strategy? (Either keep it or reinvent if not sound).
• Are you measuring where you make investments? (Cut back on those that don't generate a return).
• Have you addressed your customer pain by segment? (There may be ways you can identify solutions at lower price points, or even higher price points providing much higher value).

My old friend Mitch Tarr shared this story that he heard from his sales manager at IBM: There was a man who sold hot dogs from a stand by the side of the road. His son came back from college and said, 'Dad, don't you know the economy is in a recession and wall street is worse.' The man said to himself, 'My son must know what he's talking about, he's been to college'. So he took down his sign and stopped yelling, 'hot dogs for sale!' and sure enough, his sales dropped off.

This is the time to market and sell whatever you have developed before. Monetize those assets you have already developed so you can survive to see the brighter day. Get confident in your ability to rise above those who aren't willing to ask the hard questions, and your staff will feel and follow that confidence.

When do you predict the economy will turnaround?

Continuing on the points above, I am working with companies that are both forward-thinking and courageous to change around their economy rather than waiting for the rest of the water to float all the other boats.

• Look at how much time people are spending today keeping up with their own personal technology. Those who value their time/sanity/priorities will get help – not by wasting time going down to GeekSquad but with progressive personalized service like www.BluePhone.com which I helped launch for my client last year. This service is going to eclipse their first line of business, just watch.
• I wrote yesterday in my blog [60-Second-Marketing] about a deal automaker Hyundai just came out with: return your car within 12 months if you lose your job. They're putting the ear to the ground, listening to the market conditions, and being more creative about serving the customer than any of our Big Three.
• NPR just featured a toy company that had 100 SKU's (product offerings) at the $3.99 level. Their sales are up 60% over last year because, in this challenged economy, most everyone can still afford a few bucks for some fun!

Oh, your question was "when". My current perspective is that everyone's economy will change when they are ready.

What do you think are the major reasons companies fail to reach their revenue goals?

The famous McDonald's restauranteur, Ray Croc, used to say "There is no competition". What he meant was that we can't blame others for our failure with customers (I would add children or spouses as well!)

Some years ago, Rockefeller Corporation did a study which asked, "Why do customers leave companies?" Their findings, in David Letterman bottom-up style:

• 1% - The customer dies.
• 3% - The customer moves away.
• 5% - The customer has a friend who provides the service.
• 9% - The customer is lost to a competitor.
• 14% - The customer is dissatisfied with the service.
• 68% - The customer believes you don't care about them.

So what is the opportunity here? Just ask:

1. When was the last time you "touched" your best customers with a special VIP offer?
2. How about your "medium" customers with an upsell or a product line extension?
3. And rather than kick your worst customers to the curb, how can you monetize that relationship (and recoup your investment) by finding a strategic partner for whom those customers could be bright new sources of revenue?

As P.T. Barnum said, "There's a customer born every minute"!

Your book, Leadership on Demand, advocates using interim executives for key marketing and sales leadership positions. Why is this beneficial to companies?

As my co-author and I showed through case study after case study, interim management specifically focused on revenue represents one of the quickest ways to innovate.

Innovation doesn't have to be in your product line or your technology – it can be in new thinking about how to use your CRM [customer relationship management] system. It can be in going direct where previously you've relied on the channel. It can be in looking at your product offering and customer base a new way.

For example, a few years back I helped a software company that had a product line ranging from $295 to $11,995. After spending a couple months with the salespeople and in the trenches with customers, I stratified the product line for efficiency. The low-end products could be freely test-driven on the site and upgraded to paying versions by talking to the support technicians. The high-end products could no longer be obtained via the site, but rather began with a sales conversation to qualify buyers. Prices were no longer published but quoted custom. Within 9 months, the average selling price increased ten-fold and the company got acquired by a publicly traded competitor at an extremely healthy multiple.

Management guru Peter Drucker predated the advent of interim managers but his philosophies support them wholeheartedly, especially: "Marketing and innovation are the two chief functions of business. You get paid for creating a customer, which is marketing. And you get paid for creating a new dimension of performance, which is innovation. Everything else is a cost center."

Who should hire an interim executive?

First there is the issue of who and then there is the issue of who not.

Presidents, CEO's, COO's, and even CFO's of companies should consider an interim executive if they have:

• stalled or unacceptable levels of revenue
• an "empty chair" in the CMO, VP Sales, or VP Business Development roles
• competitors growing and/or taking market share
• tectonic shifts in the market without a strategic response.

Leaders should not hire an interim executive if the organizational culture has demonstrated a propensity to worship a high-end consulting firm who will write a beautiful report to adorn your desk – because an interim is going to roll up his/her sleeves and make things happen.

Another time leaders should not hire interims is when the culture suggests there is so much defensiveness that failure is unavoidable. One COO we interviewed for our book, "Leadership on Demand", put it this way, "If you're an interim, your staff looks at you just like the child looks at the stepfather: 'You're not my daddy'. "

Seasoned interims, who have been on these battlefields before, are boldly direct with their questions – in order to sniff out organizational resistance in advance. It can save a lot of energy all around if the horse isn't ready for a jockey.