Growing Through Difficult Economic Times
It was almost nine months ago that we first commented here about the declining state of the economy. Over the summer it was clear to us that commerce was grinding to a halt. By the time the successive calamities hit Wall Street this fall it was all but certain that we were not only in a recession but were in the worst recession since the Great Depression. On the first business day of the New Year there are already signs that the economy continues to crumble and despite some very optimistic talk from reporters and talking heads I do not think many expect 2009 to be an improvement over 2008. Today the Institute for Supply Management released their report showing its manufacturing index fell to 32.4 astonishingly lower than the 35.5 predicted. Anything below 50 demonstrates contraction in the manufacturing sector with the number today being the lowest in almost three decades. With news out of the Far East of economies contracting by as much as ten percent in the fourth quarter and with the US being one of their largest export destinations it’s obvious we’re in a dramatic downturn that is accelerating.
Despite all of this we enjoyed our best year by a signficant margin selling promotional products and ad specialties. Growth is possible in a downturn and as we found throughout 2008 opportunities abound. As we discussed in The Fall And Shrugging Off The Bad Economy instead of relying on costly advertisements, expensive technology updates and websites or worse subcontracting labor to foreign countries like many of our competitors we grew the old fashioned way. A review of end of season numbers indicates 86% of all new business was acquired through the age old method of cold calling. That’s right, in 2008 cold calling still worked and in some regards worked better than we ever could have expected. Instead of sitting back and waiting for customers to call us for we proactively called on new customers using various databases available.
You’ve all seen the mailings that you receive from these database companies. We spent most of January looking through the various offerings with many offering free trial data. It’s beneficial to take this approach as we found a wide variance in the usefulness of the data. Some were geared heavily towards financial data but a couple had key data on contacts within the organization. After determining which data source to use the next step was developing an effective approach to contacting prospects. Being able to read reviews for books online allowed us to narrow down the choices to a few core authors. Once the books were received we developed several trial scripts and diligently tested them and kept track of the results. By February we were actively making outbound contact with new potential clients and the results were immediate and impressive. By the time we wrote Almost Time For Picnics And Fun business was pouring in from the direct cold calling channel at a rate of 4 to 1 over all other sources and direct sales were beating internet sales by a margin of 7 to 1. Almost all of our growth in 2008 came from these calls and not the “new” method via websites, 3rd party marketing, ad space or direct mailings. In fact online business was down for many in 2008 with online retail sales posting their first ever drop at the end of the year. In these difficult times contacting customers directly helped to jolt customers out of the status quo and get them ordering again. Overall we found higher priced items to have sluggish sales including Sport Bags and other less versatile items. Customers have opted for multi-function items which we’ll discuss on Saturday. We have heard over and over again from our friends in the industry that online sales were slow and that industry wide the news was very bad especially the last two months of the year. We expect 2009 to stagnate at best as budgets continue to shrink.
We’ll be back to updating regularly and plan on getting into details and reviews not only of the products we sell but of products we use such as the databases discussed previously. You can find quite a bit of good information on the topic at DMNews.
