You Can Stimulate Your Way Back to Stability

But you can only invent your way back to prosperity.

“Historically, recessions are a time when new companies are born and great companies separate themselves from the competition,” quipped Thomas Friedman last week in a NY Times editorial.

Amen to that, Tom, who opined further: “We might be able to stimulate our way back to stability, but we can only invent our way back to prosperity. We need everyone at every level to get smarter.”

Getting companies smarter is more easily said than done these days, but it’s happening and not just at Google, Amazon and Facebook.

The Times’ Friedman still believes America, with its unrivaled freedoms, VC industry, research universities and openness to new immigrants has the best assets to be taking advantage of this moment – to “out- innovate our competition.” Unfortunately, most corporate coffers are nailed shut. Easy bank financing is a faded memory and venture capital is going through a seismic contraction.

“Personally I think the funds have gotten too big. Our biggest challenge is to think smaller and make smaller, smarter investments,” noted VC icon, Alan Patricof of Greycroft Partners at a recent venture investing conference in San Francisco.

According to the National Venture Capital Association, investment in venture capital funds shrank to $4.3 billion in the first quarter of 2009, from $7.1 billion in the same quarter of 2008. That’s a whopping 40-percent drop, but some experts think it’s a blessing in disguise, because it lowers the flow of capital into these funds. There won’t be as much excess money chasing bad deals and the VC industry may start seeing double digit returns some day. NVCA says investors are seeing about six-percent annually on their money over five years, down from 48 percent annually at the start of this decade.

With easy bank financing and easy VC money a thing of the past, organizations large and small are going to have to keep operating smarter.

More proof against cutting back on ads in a downturn

Just as cutting back on innovation during tough times comes back to haunt you when better times return, dramatically cutting back on advertising can be severely damaging to your market share and reputation.

Two recent surveys surveys of banking and retail consumers by research firm, Ad-Ology, found advertisers who cut back substantially during the downturn are building negative brand association. For instance:

• 48% of respondents agreed such advertisers “must be struggling”
• 12% of responds agreed “they may not be in business much longer.

Could good ol’ common sense be making a comeback? Read below for two examples.

Pearls of wisdom from the common-sense department

Generic Web site names that are self-explanatory deliver much higher click-through rates than a more abstract or clever name, says a new study by Memorable Domains. The study compares three sites using AdWords pay per click campaign for ads for electric bikes. “ElectricBicycles.co.uk” got 45 percent more clicks than “YourBikes.co.uk” and 105 percent more clicks than “InaHurry.co.uk”

Why? Experts says the self-explanatory site name makes sense and reassures prospects to see search terms reflected in a Web site address.

Tech companies: research says disclose price info if you want to make the sale

Many marketers are reluctant to disclose prices online, but that’s what many prospects want. According to a 2008-09 Marketing Sherpa {www.marketingsherpa.com} survey of 3,108 decision makers. Eighty-nine percent agreed that a technology vendor got the sale or inside track for a sale at their company because they were more open than rivals about their pricing.

There’s never been a better time to re-examine every way you do business, from selling into new markets, supporting existing customers and developing new products and services. But, while your immersed in financial navel-gazing, remember, you’ve can’t neglect to keep the advertising and marketing faucet turned on. And while you’re at it, make sure you tell ‘em exactly what it is you do and how much you charge. It’s just a matter of how (not how much) you choose to invest your marketing dollars in explaining your value proposition.

Turning the spigot on and off as business conditions fluctuate isn’t the answer. Your customers will see through the ruse during good times and forget about you when times get tough. Not only will you fail to separate yourself from the competition, but your competitors will start separating you from your long-time customers.