Red Zen Marketing

In these tough economic times, many companies' development and engineering groups are examining their stable of products and services,conducting 'line reviews' to search for those quiet, hidden products that are no longer producing at the expected levels, with the aim of raising net profitability. Other firms put their sales analysts to work on analyzing relative customer profitability, producing a ranked listing with the bottom 'losers' slated for receiving a "Thanks for the memories" letter from the VP of Sales.

Though it's always valuable to have data, and I'd argue for monitoring these sort of indices on an ongoing basis in any firm, and I'm sure there are occasions in which each of these approaches bears some fruit, there are some important cautions to be heeded when looking to approaches like these in lean times. My experience with technology-based companies in particular highlights a number of situations in which lean times are opportunities.

Here then, is my list of five mistakes I've seen technology companies make in trying economic times, and a few suggestions of how to avoid making these in your firm.

1. Taking actions without talking to customers -
   It seems so obvious to me after watching this mistake made over and over again, but when your firm as a vendor or partner of your customer is going through a difficult time, that is the time you most  need to know what your customer really needs, what they depend upon you for most, what matters to them about the product/s you provide.  So many times I've seen companies end-of-life seemingly unprofitable products--shutting down lines to save tens of thousands of dollars, like in my first example, and then watched hundreds of thousands in orders disappear the next quarter since customers depended upon that other product to be available from the same vendor. This likewise goes for 'value engineering' projects which end up substituting components in critical customer products-- don't do it wiithout involving your customers in the process!  Often, upon initiating serious and sincere dialog with customers about product offering questions and issues, new opportunities will be illuminated, unseen challenges that they are facing will be uncovered and in pursuing these, you will find a new level of partnership and trust established with the customer. 
2. Becoming absorbed in endless parochial analysis -
   This error appears to be made by a certain type of manager or leader most; those most uncomfortable with making hard choices will put off decisions by continuing to research the problem/s endlessly, calling in analysts from finance, marketing, manufacturing, etc. to all put there data on the growing pile. They are only satisfied when multiple conflicting results continue to hit there desk--feeling that the conflict best represents real world information, but simultaneously giving them more cause to postpone decision-making and order up more research and investigation of the problem: "what about European sales? How has Customer Support been affect in the Fourth Quarter over the past two years? What about legal claims over the affected periods for sales of those products in Canada?" The questions go on and on. The focus stops being on making a pragmatic business decision for the health of the company--or even about using the data to make a decision--but becomes about collecting answers to more questions. In this case, those assisting in collecting information need to provide 'impact and conclusions' statements along with data, to help guide the discussion beyond data to reach directional decisions for the business. If you're the hapless soul that becomes mired in the indecision and analysis paralysis, make sure to scope every analysis assignment with an objective statement: why is this being done? what business question will the results of this analysis guide? It also helps to describe ahead of time what results are expected and what action is likely to be taken based upon those results--all ahead of time--even if only for your own use. Doing this will help you stay focused when the data comes in.  
3. Forgetting sales basics -
   It's all too easy to dig in to start weeding out less profitable customers, but many times the issue is closer to home: Sales Management may be failing. One thing I learned from leading a sales organization -- and those of you with senstive eyes may need to look away - many sales people are lazy.  They often don't spend time on 'tough' accounts that time more time to develop. A high percentage of sales people in the typical organization are 'order takers' and need to be well managed to keep them on task and on track. Low performing customers may be more an indication of sales personnel performance than of customer attributes. Sales management needs to talk to those customers before you cut them loose-- do your due diligence and you may find opportunity lurking just below the phone receiver. It may be time to invest in good old sales training to reinvigorate your team.
   
4. Cutting Back On Innovative New Products -
   R&D or product development may often be the first casualty of a downturn. I've watched this more than once. Sadly, in each episode, the firm had sacrificed its future for the short term. Yes, this may not be the time to start that incredible new cold fusion project, but the project that is 3/4 complete and 5 months from launch, expected to reinvigorate channel and partners is not the place to take aim simply because it's a big number on the spreadsheet. The costs later in lost market position, lost share, lost leadership, etc. are tangible and real. Be cautious when reviewing your future product pipeline for sacrificial lambs during hard times - you want to be sure you still have the fat sheep to take to market when the time comes and it's needed.
   
5. Stopping Web Development and Refreshes/Downplaying Online Marketing -
   Over and over I've been watching well intentioned companies in various categories from software to biomedical equipment to technology materials cut back on previous plans to update and modernize their online presence when faced with their current economic situation. Seemingly flying in the face of obvious trend information indicating the accelerating pace of B2B online research and purchase behavior, home surfing for work purposes, use of social media for business (yes, read- Twitter, Facebook, etc.), and increased business broadband penetration, these businesses are sitting back on their hands. They blindly cede their category leadership to ambitious competitors. They hold tightly to a tens of thousands of dollars while market opportunities worth hundreds of thousands or millions of dollars remain at stake in their segments, with their market positiioning becoming stale and more out of date by the month as they wait for better times. It's penny wise and pound foolish. In today's market, a technology firm needs a leading online presence to be taken seriously. The majority of B2B purchases have vendors researched online prior to any contact via telephone being made--if that impression is not aligned well with a set of competitors, you don't get the chance to make a personal impression, and you've already lost the battle before entering on the field.
   

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