Are You a Safe Bet in a Weak Economy?
Timing in business is everything, but its not something you can plan on your calendar. Business confidence and confusion arent measured in days or months. Theyre measured in waves and in comparison to what came before and whats expected to happen at some unknown point in the future.
In times of low consumer confidence, its always safer to buy from established companies that you know will still be there when your kids grow up. Thats why vendors like IBM and PeopleSoft are sailing through this down market, while others are treading water faster and faster just to stay afloat. And its why established service providers continue to pay their bills while newcomers continue to struggle.
That contrasts sharply with a market beset by mass confusion, which is what we just lived through with the so-called New Economy. We should have called it the Transitional Economy. Weve passed through it, and now most corporations know what the Internet is good for and how theyre going to use it. Instead of creating Web sites theyre building customer interfaces to their businesses, and theyre figuring out which pieces to keep, where the bottlenecks and security risks are, and what to outsource and to whom.
While the financial markets are in turmoil, the IT confusion index is now at its lowest point in six years. Thats why generalized trade shows like Comdex and Networld + Interop are picking up steam while the draw at specialized conferences is declining. Its also why Web integrators like iXL have thoroughly rewritten their business plans and why an established consultancy like Accenture (despite the new logo, its still Andersen Consulting under the covers) feels confident enough to go public in a down market.
So what does all of this mean to your business? Plenty. The best asset you have is your relationship with your customers. And while it was pretty easy for nimble newcomers to displace lumbering old-line integrators two years ago in e-commerce and Web design projects, customers now are looking for partners they can trust and who they know will be around long enough to see a project through to completion.
In short, this is the time to go out and win new business. But unless youre in a very narrow market with limited competition, its not necessarily the time to spend lots of resources trying to win new customers. In fact, its going to be a lot tougher to pick up brand new customers without references from a big vendor like Compaq or Microsoft, or unless you have a widely known company like a Big Five consultancy behind you.
Understanding those dynamics should help you figure out where to focus your sales and marketing resources. In existing accounts, keeping up business relationships is vital to your companys vitality. In new accounts, its more important to carve out partnerships with other service providers that have longstanding relationships with the customer. If you succeed in doing that, you can continue growing at a steady pace no matter what happens in the economy.
Business will continue even in tough times. Corporate America needs IT services whether the stock market is up or down, and regardless of whether consumer confidence is high or falling. The trick is figuring out the right timing for what and how you sell, and to whom you sell it.