What are the 6 Biggest Challenges and Changes Facing You in the New Economy?
We've all experienced the gigantic shift that has taken place inconveniently during the biggest economic downturn since the Great Recession. I've identified six big changes that challenge those who resist change. How would you rank order them in terms of the impact on your business?
1) A new generation of promotional products buyers have moved in and they don't buy the way old ones did. Meet the new boss—not the same as the old boss, as a rocker might sing. These buyers are digital natives. They grew up with a screen in their face or in their hand. The television set was their babysitter. They interacted with the screen for as long as they can remember. They have always had information at their fingertips. They pick up a mouse instead of a phone. Those who have made their living picking up the phone, picking up the tab at the restaurant or the drinks at the 19th hole need to reinvent themselves. Quick!
2) The banks got us into this mess. While they didn't suffer long due to the largess of us taxpayers and the congresspeople they own, the suffering continues for small businesses that depend on credit to even out the cashflow. The time was when the small distributor could use the collateral of home equity as the basis for the business line of credit. What happens when home equity dries up and uncollateralized isn't in your banker's vocabulary? Suppliers are feeling the credit crunch as well. With shrinking lines of credit, inventories shrink. Fast turnaround promises fly out the window when there is no product on the shelf. Reliable, quick turnarounds disappear. Deadlines are missed. In an industry where so much value is directly related to time and a missed delivery means loss of value or loss of client, this is a problem.
3) What happens when products are stuff, rather than solutions? Stuff gets commoditized. Stuff is stuff is stuff. Where can I get it cheaper. The consultants come in and figure out how to create cost plus contracts and we willingly compete in a race to the bottom. As costs come out, so does value. Some major advertisers have created reverse auctions to see how low we will go. We go along thinking we're leaving something on table or that a crumb is better than nothing. The only way to win as the low-price leader is to have the processes to guarantee a win. Wal-Mart has been able to take that position in retail at great cost to those who have tried to beat them at their game.
4) When did we suddenly become responsible for what we sell? Responsibility for quality, for content, for proper usage of our products was not really on the radar screen for most of us. A much-hated California Proposition 65 began a change culminating in 2007, becoming known as the Year of the Recall and a Bush-administration strengthening of the Consumer Product Safety Commission and a whole set of regulations regarding children's products called the CPSIA. Third party product testing, compliance documentation, tracking labels suddenly became a part of our industry's life. An industry bent on keeping its television advertising, even though the underlying message to our youth is "got a problem, take a drug," chose to make our promotional products the target of a ban to demonstrate their responsibiity. Yes, I'm talking about pharma and the disappearance of a $1 billion segment of our industry. Taking their cue from their favorite lobbyists, many legislators who use our products to get elected found ways to restrict the use use in other ways. Vigilance and political activism is now required of all of us to keep our industry strong. With states going bankrupt and deficit spending at an all-time high, we can also expect continuing "revenue-enhancements" sneaking into all kinds of our business activities. Taxes remain one of life's certainties and it is certain that new ones will be born.
5) The traditional Supplier - Distributor - End Buyer supply chain is breaking down. The new distribution model is Manufacturer - Supplier - Distributor - Buyer - End User. Globalization and the internet has slaughtered the sacred cows that we worshipped and dramatically coded and cloaked in secrecy. In a world of transparency, the ABCs of promotional products has been laid bare. Each member of the supply chain must define their value proposition, add value, provide relevancy, solve problems and earn their profit. Simply sourcing product is not a competitive advantage in the current business environment.
6) What happened to customer service? What if I have a question that your automated telephone menu doesn't address? Why do you leave me screaming "Representative!" at my phone? Why doesn't your website have a way to reach a real live person? The answer, of course, is in the previous issues. Cutting costs often means cutting customer service. We're in a time-sensitive business and we want answers right now. We need answers because that is part of our value proposition to our clients. My job is to make my client look good. Your job is to make me look good. We need good customer service to do that. (And we need to be willing to recognize the value, pay for and be loyal to where we receive it.)
I'd love to hear your comments. What challenges or changes have I missed? How to rank these in terms as the impact on your business? What are you going to do about it?