Out of the Box

Eye on the Recession: Preparing for the Recovery

By Menachem Lubinsky on April 19 2010

The whispers about a possible economic recovery are growing louder with some economists flatly saying that the recovery is already here. They base it on what appears to be a significant up tick in consumer spending and word that some industries, including hi-tech have begun hiring again. More significantly, it appears that even those consumers that took it on the chin during the recession have settled into a new reality and are no longer expecting the bottom to fall out. And then there is Wall Street, which has made a spectacular recovery.

Ironically, the one chain that seemed to have done well during the recession, Wal-Mart, appeared to have a down quarter while rivals like Target, Costco, and Trader Joe’s were all reporting increased sales. What this seems to indicate, economists say, is that many consumers may be slowly returning to pre-recession buying habits and are not necessarily buying cheaper non-brand items from Wal-Mart. There are indications that Wal-Mart will change its strategy by lowering prices in many categories and perhaps not offering as much of a variety of brands that are clearly not winners.

If a recovery is indeed on the horizon, there may be some opportunities for people affected by the recession. For example, a job counselor told a radio audience recently that it would be wise to resubmit resumes to companies that a year ago said they were not hiring. The rationale is that there are indications that the same companies that were laying off people 12-18 months ago were beginning to hire again. The counselor even suggested a phone call to former employers, just to indicate your availability. He said: “There is no shame in telling a former boss that you are still available, especially since he is the reason that you are around.” There are, in fact, indications that some firms are rehiring former employees because they are already trained and know a great deal about the company and the trade.

In a way, the same may be true for businesses that lost customers due to the recession. There is nothing wrong with checking in on old customers who just may be ready to resume doing business. In fact, a popular business newsletter suggested early on in the recession that businesses not loose contact with their customer base, even those that have left. They suggested sending out a periodic newsletter, information on special promotions, and, of course, holiday greetings.

Larry, a broker for a high end printing company, lost more than half of his customers in the past year and a half. Most of them have moved to less costly printing companies. His take home pay, based largely on commissions, was half of what it was just three years ago, causing enormous hardships at home. His wife, caring for two small children, returned to her job as a schoolteacher. Larry, always the creative type, continued to send his customers regular “cute” e-mails with updates about his family and always made sure to briefly discuss a job that he was handling. Every few months he would pick up the phone to call his former customers “just to say hello.”

In the last few weeks, Larry’s persistence began to pay off as some of his old customers suddenly began placing orders again. “I never gave them a chance, even for one moment, to consider an alternative vendor to our quality,” said Larry. When his company realized that there appeared to be life again, they lowered prices by more than 20%, which turned out to be an important catalyst in bringing back nearly 30% of the customers he had lost.

If we are indeed on the threshold of a recovery, is there a way to prepare? I counseled a “discouraged” worker to dust off his resume and to attempt once again to reach out to prospects that he had last touched base with two years ago. Discouraged, because this gentleman has not actively looked for a job in more than a year and a half.

It appears that a young woman who was laid off about eight months ago did not loose out when she e-mailed her old boss periodically just inquiring about how the business was doing. She politely wrote in one of her e-mails: “Believe it or not, I still have an emotional attachment to the company and am just wondering if things have improved.” The response she recently received was that they were interested in talking to her about perhaps returning part-time.

Businesses too are carefully planning their own recovery with selecting new products and services that are more in tune with the times. One fashion chain store that was a favorite with older women has recently moved to recraft their image for a younger clientele. A coffee chain came up with a promotion offering a discount for a second cup of coffee.

Most economists do not believe that the recession will get worse. They are encouraged by what they see on Wall Street, on Main Street and on Every Street. One business publication openly wondered whether some people are so mired in a recession mentality that they will miss the recovery. Hopefully, you will not be one of them!

Out of the Box is a collection of strategic marketing articles that Lubicom has published on various topics, trends and ideas in the marketing world. The articles have been published in the Hamodia weekly newspaper circulated on three continents to a readership of well over 100,000.

The name, "Out of the Box" is a term used frequently in business nowadays to describe creative thinking that is not the norm. It is meant to help a business pull away from the pack or separate oneself from the competition. It is to some extent fraught with risk, simply because it is not the run of the mill thinking, but it is at the same time the key to reaching the next opportunity.