LESSONS FOR A POST RECESSION WORLD

Without question, the state of this economy is having an incredible impact on the business of manufacturing. It is changing the nature of business in ways never seen before, with perhaps the most profound change of all being the customer. The customer is changing to the extent that the return to ?normal conditions? many companies are betting on through a typical recovery might never occur, because what was ?normal? no longer exists.

?The scenario is simple,? says John Graham, the president of sales consulting firm Graham Communications (Quincy, MA). ?Customers have been changed in ways that are leaving marketers and sales people puzzled to figure out what has happened, what is still happening, and what?s going to happen.?

In other words, the post recession world is going to be occupied by a new type of customer, one that is different from the past, one that already exists today. To win this post recession customer will require new ways of doing business, starting (most importantly) with marketing and sales. And these new ways of doing business will ignite the recovery everyone is waiting for.

The implications of this reality are illustrated nowhere more than in automotive manufacturing. Consider the lessons being learned from General Motors Co. (Detriot, MI), with its litany of customer dissatisfaction, a Neanderthal corporate culture, descending sales, an embarrassing bankruptcy and a government takeover.

When 77-year-old Bob Lutz, the vice chairman of global product development, abandoned his retirement plans in July to return as the chief marketer for GM, he intuitively noted how this huge manufacturer had lost its connection with a customer that no longer existed.

The first thing he saw was that marketing was in near-total disarray. ?When Lutz arrived back at GM a decade ago, he said in no uncertain terms that there was something wrong with the company?s vehicle line up and his job was to fix it,? notes Graham. ?Since then, reviewers gave most GM cars high marks. But the sales for those cars failed to reflect consumer confidence. Lutz made it clear something was wrong with the way GM was advertising its products.?

Lutz was upset because he had already experienced a similar problem once before. ?A few years ago, he got the Chevy Malibu ready for the road and the marketers came up with a bizarre advertising theme called the car you can?t ignore. It didn?t take an expert to figure out what would happen,? smiles Graham. ?The consumers took the bait, of course ? and they ignored the Malibu.?

This time, Lutz recently delivered a body blow to Buick marketers who told him a new Buick TV commercial ?tested? well. ?He told them that just because an ad tests well does not mean it?s an effective ad,? says Graham. ?When one Buick vice president commented that the pre-test for the ad landed in the ?top quartile for originality and breakthrough? work, Lutz asked, ?So what???

Drifting this far off the mark is precisely why so much marketing is in disarray. Marketing must be aimed at one specific target: the value perceived by the customer. That value changes as the customer changes in size, shape, age, income and mental image. Whenever one or more of these factors are changed, the customer?s perception of value can change. And this economy has considerably changed the income and mental image of many customers.

This explains why ?marketing officers have shorter tenures than NFL coaches,? laughs Graham. ?Most of them last less than two years. Instead of making ads that actually sell product, they spend their attention on things like customer satisfaction (88 percent), customer retention (86 percent), segmentation (83 percent), competitive intelligence (82 percent), brand loyalty (82 percent), search-engine optimization (81 percent), marketing ROI (80 percent), quality (79 percent), data mining (78 percent), and personalization (79 percent).?

When Lutz came back to GM, he discovered fickle, frightened and frustrated customers with a different variety of mental images. The old ?normal? customer was gone, and with him went those old marketing metrics. Even though the recession may be starting to fade in some areas, considerable financial damage has been done and it will be a while before these customers jump back in. Say hello to the post recession customer that must be persuaded by a different marketing message.

?No wonder marketing is in trouble,? states Graham. ?An ad may test well, but does it sell product? It appears that too many marketers are more interested in defending their personal decisions rather than in connecting with customers.?

Business downturns and protracted unemployment have changed the economic situation of the post recession customer. He has come face-to-face with facts, not fantasy. Across the board, customers are experiencing what might be called ?a value assessment and realignment.? This post recession customer connects with value that represents more for less, not the old bells and whistles that interrupt and scream for attention.

David Kent of The Right Group (Sydney, Australia) says, ?Providing more for less is what customers now expect, if not demand.? The exploding consumer acceptance of ?store brands? indicates the nature of this change in the customer mindset. ?Long looked down on, store brands are now pushing popular brands off just about every shelf. ?The ultimate driving machine? of yesterday may well be ?the reliable driving machine? for tomorrow,? states Graham.

When he discovered that selling was just as messed up as marketing, Lutz said, ?We have to reconnect with a depressingly large part of the American public who won?t give us consideration.? This speaks volumes on how the general impression of those in sales must be altered. ?The images of a Road Warrior and the hunter stalking the prey continue to influence the thinking and behavior of salespeople, who practice what may be the world?s most narcissistic profession,? explains Graham. ?Simply put, too many salespeople have one favorite subject: themselves.?

This appears to be what Bob Lutz and others found at GM, which had become a manufacturer focused on serving itself. In good times, their salespeople (who thought every sale was due to their incredible skills and carefully cultivated relationships) wanted to be treated as heroic figures deserving endless praise and impressive rewards. But in bad times, they blamed others for their lack of success.

Furthermore, salespeople can be so totally focused on wanting to make the sale, they fail to listen to buyers. ?They become so absorbed in what they want to accomplish that they actually alienate customers. This may explain why the closing rate of the average salesperson is only about 20 percent,? adds Graham.

A new way of selling is needed for the post recession customer, perhaps a different type of salesperson. Thinking outside the box about this, Graham ponders, ?One wonders why selling seems to attract the wrong people. As contrary as it might seem, what would happen if companies, including auto dealerships, hired social workers? Many salespeople will quickly declare that to be plain crazy. I felt that way until I came across Rob Plotkin, a social worker who is also an entrepreneur.?

Plotkin says, ?Social workers make great salespeople, believe it or not. Why? They listen first . . . sell later.? He is on target when he explains, ?After all, isn?t a good therapist selling something besides their time? At its basic level, therapists sell mental health. They sell themselves as the conduit for the person to find solutions.? That may be the most accurate definition of a salesperson.

During this tough time, many manufacturers are focused almost entirely on deeper cost cutting in their plant operations. They might also consider some of the lessons learned from GM about doing business in the future:

? Tough times have created a new customer, different than the old one of the good times, one that already exists today.

? Winning this post recession customer requires a different marketing message and a new selling technique.

? New marketing and selling (not deeper cost cutting) will ignite the recovery everyone is waiting for.

? This post recession customer is fickle, frightened and frustrated, with a different variety of mental images that all translate value as more for less, not bells and whistles.

? Marketing value as more for less can connect with the post recession customer and persuade them to buy.

? Really listening to the post recession customer can enable salespeople to help buyers overcome their cautious frustration.

Just a thought.

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Mike Riley is the editor of Fabricating & Metalworking magazine and the author of Backfield in Motion (Derek Press, 2007). Share your views with him on the post recession customer and other impacts of the economy at 205-681-3393 or [email protected].