Slash-and-burn cuts don't work

April 1, 2009
If you're reading this and still out there hauling despite the downturn in freight, the spiking fuel prices of last year, and the maze of regulatory red tape post 9/11 well, that's good news at a time when there's not much good news to be had. Better still, no one is mortgaging his house to start a trucking company. There are zero new players entering the game. In fact, capacity is shrinking. It's

If you're reading this and still out there hauling despite the downturn in freight, the spiking fuel prices of last year, and the maze of regulatory red tape post 9/11 — well, that's good news at a time when there's not much good news to be had.

Better still, no one is mortgaging his house to start a trucking company. There are zero new players entering the game. In fact, capacity is shrinking. It's the perfect time to make your company stand out. Yet all too often, when the numbers look bad, managers who are otherwise decisive, disciplined and intelligent turn ruthless as they slash and burn their way through the balance sheet. The fire-starter of choice? The sales and marketing budget.

Torching your sales and marketing investment may seem like a quick fix and easy way to improve cash flow, but it's not. Now is the time to focus on good strategy, not big cuts. Here are some points to consider:

  • Marketing isn't advertising

    Most people think marketing is about stimulating demand. It's not, that's promotions and advertising. Marketing is about managing demand, so you can anticipate and adjust to marketplace changes. If ever there was a time to speak more with customers, it's now. Their needs are evolving; how can you keep up when you're cutting back?

  • Refine the message

    Most of us have only three or four core competitors, and we're separated by relatively small differences. What do you know about what those competitors do really well? What you can do better? What do their customers — your prospects — know about you? If a competitor stumbles and can't execute the basics, you want to be positioned to offer an alternative.

  • New recruits

    Last year companies were letting go their unproven and mediocre talent. Today, really good salespeople are falling victim to cutbacks and company closures. The best talent will gravitate toward companies that are aggressive in their recruiting. Given the opportunity to acquire experienced people (and the clients who come with them), it's a type of marketing investment that can pay off quickly.

  • Cut strategically

    Chances are you can find expenses that can be trimmed, but consider the value of each dollar you allocate. It makes little sense to eliminate an out-of-town swing of sales calls if it means cementing a year's worth of business. Nor does it make sense to cut the marketing budget by some arbitrary percentage across the board when you'd be better off reviewing each element of your marketing program and cutting out the weak links entirely.

  • Your real target market

    If you're a marketing manager, your most important target right now is your own CFO or controller. To him, you oversee a black hole on the balance sheet. You may have a genius-level marketing IQ, but you'll be forever in the corner if you can't show the bottom-line impact of your ideas. Work with your finance department or chief executive to come up with a set of sensible marketing metrics. No one can afford a let's-see-what-sticks strategy.

I know it's hard to think long-term when short-term prospects seem bleak. But last I checked, trucking is still the most reliable and efficient form of transportation in North America. And this downturn is temporary. Promote your strengths, think strategically, and you'll emerge from it a tougher, more formidable competitor.

Mike McCarron is managing partner at the MSM Group of Companies, which specializes in transportation and logistics service between Canada and the United States.

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