Do You Have What it
Takes to Survive the Dot-Com Bomb?
Are you struggling to develop new business?
By Martha Francis
News about failures in the dot-com industry have become as prevalent in the recent media as the deluge of success stories were just a year ago. In a recent report on Webmergers.com, at least 210 internet companies failed in 2000, and nearly 60% of those shutdowns occurred in the fourth quarter. Forrester Research projects that 60% to 75% of remaining independent dot-coms will go bankrupt or put themselves up for sale. Dot-coms spent significant portions of their seed money on attention-grabbing identity and branding campaigns, which was great for the design industry.
Experiences in the dot-com arena have been varied for design firms. Jon Craine, who heads up branding at Devine & Pearson in Boston, started a division in the company just to deal with internet start-up branding issues. Called Identity Crisis, the group took on several start-up accounts. "Basically, we lost a lot of money," said Craine. "We actually completed projects and even did the printing, only to not get paid because the company was unable to secure additional venture capital financing. In one case, we went to a client meeting and the entire company had just vanished. But at least we ended up with some great stuff in our portfolio."
John Waters, President and CEO of Waters Design in New York City, had a similar experience with one dot-com that went belly-up. His company, which specializes in interactive design, had to deal with the financial uncertainty of start-ups after being paid by one in now-worthless stock. "We instituted a modified billing procedure to get retainers one month in advance of the work to be done," said Waters.
Michael McPherson, Creative Director of Corey McPherson Nash in Watertown, Massachusetts, said about 30% of their business came from "pure-play" dot-coms over the past three years. Although there were lots of positives working with these impassioned clients, such as being given a great deal of creative latitude, there were some downsides. According to McPherson, the problems arose from "poor business plans, changing decision makers, constantly evolving business models, and failure to secure expected venture capital backing."
This is the wreckage left by the dot-com bomb and it's already having a ripple effect throughout companies that service the internet industry. Face it, 2001 looks to be much more difficult than the past few years have been. Most of us have been riding high on the internet wave and some of us lucky ones have even had to turn business away. But are you prepared in this new economy to keep business coming in? And, at a STEADY pace?
Most likely you've been through down cycles before, even before the internet existed. Wynn Medinger, CEO and Creative Director of BrandLogic Group in Ridgefield, Connecticut attributes their success in getting through these down cycles to "building long-term, partnering relationships with clients - among them Fortune 100 companies - that we've worked with for over 25 years." Waters agrees, "We've been through downturns in the economy before. It's important to scale back and keep focus on the solid corporate clients." McPherson's strategy is to "grow carefully. We've seen some lean times and knew the e-business opportunities were a bubble. We taken great care to develop a diverse portfolio of clients."
We're great designers, but not so adept at new business development. It's just so easy to put all your eggs in one basket by doting on too few companies, or too few industries. During a lull in the past, you mustered the effort to send out a direct mail piece to remind clients that you still exist. Chances are you got little or no response. Somehow a client miraculously appeared, but you're not even sure just how that happened. All you know is they came just in the nick of time. Once again, you were lucky.
But there's a funny thing about luck - it's not reliable. If it were, we'd all be playing the lottery. Maybe it's time to get smart. With a little planning and consistent follow-up you can start developing what we like to call a Living Marketing Plan (LMP). Now, don't stop reading here! If you're like most of us, your mind shuts down as soon as you see those dreaded words - marketing plan. Or a few words come to mind, such as drudgery, tedium, and work. An art director friend of mine uses an ammunition belt for an analogy of how he'd like to be able to market his services. All he wants to have to do is stop designing momentarily, pull one of the "marketing bullets" out of his belt, and fire it off.
A Living Marketing Plan is one that is as individual as you are. It should reflect your skill, personality, style and culture. It must reflect real life for all involved. Done properly, a LMP will not only help bring in consistent work, but bring in the type of work you love to do and the kind that makes you money.
Designing Your Living Marketing Plan
Step One:
Analyze Your History
This may sound basic, but you'd be surprised
at how few design companies have actually looked at how they get business. When
asked the question, most are surprised that they don't really know.
- What industries have you served and how profitable was each industry?
- How did each client find you and from what marketing activities?
- Was there repeat business or referrals from those clients?
- Do you have a reporting system, and if so, does it provide timely, actionable data?
- Should you be looking to expand into new industries, and if so, which ones?
Step Two:
Focus on Your Markets
Today is an age of specialization. Design
companies need to become more disciplined in their focus to compete. You cannot
be knowledgeable in all industries and succeed. Focus narrowly and deeply on
your best short list of industries.
- Focus on what sells and makes money
- Stop changing everything
- Focus on business you can win
- Cooperation is the key to the successful implementation of a marketing plan
- Remember that time doesn't stand still
Step Three:
Create Your Database
Creating and maintaining a database is
crucial to bringing a marketing plan to life. Proper management of the database
is essential, so when you send out press releases, cold letters, or reprints of
articles, you aren't wasting money. It's also quality not quantity when it
comes to your database. Ask yourself these important questions:
- Does every contact have a direct relationship with you?
- Do they know what you do?
- Have you identified the real decision makers?
- Can they afford your services?
- Have you kept it up to date?
Step Four:
Choose Your Marketing Tools
In order to live your marketing plan,
choose the marketing tools that fit your style and your marketing team's
expertise. These could be anything from direct mail, cold calls, cold letters,
speaking engagements, publicity, articles in trade publications, and a web
site.
Cold Calls/Letters - Our research shows that these are staple methods of new business development for all design firms. As much as 30% of your new business will come from them. We recommend that you only send out a few at a time and follow up immediately. Credibility is key here, so be certain that the follow ups are done when you stated, that only a qualified person makes the calls, and that they are treated as a priority.
Publicity - There are two aspects to this very powerful marketing tool. The first is generating publicity by targeting specific publications in the industries you service to have articles by and about your firm published. These can also coincide with speaking engagements. The second is capitalizing on the publicity you've generated by publicizing it. You do this by using published articles as reprints and mailing them to key people on your database.
Web Site - Use a web site as a digital portfolio where visitors can see examples of your work with projects categorized by industry. Promote the site whenever you have an opportunity - in cold calls and letters, direct mail and all correspondence.
Step Five:
Allocate Funds
Marketing costs should be realistic and correctly
proportional to revenues. A general rule of thumb we recommend is that a
marketing budget should equal 20% - 25% of revenues. Track the results of each
marketing tool you budget for and make changes as needed. If a specific tool
isn't bringing in work, get rid of it and replace it with something
else.
Again and again we keep hearing reasons why the internet shakeout is occurring. Foremost among them is that these start-ups weren't held accountable to, or never even developed, time-tested standard business plans. There are no short cuts to success. So, let the dot-com bomb become your wake up call. Make developing and implementing that marketing plan you've been putting off become your number one priority.
About the
author:
Martha Francis is a PR Associate with Design Management
Resources, Inc., a Marketing and PR services firm for the design industry. It
is the only firm with professionals who have a passion for design and for
educating those in the creative services. These professionals work from offices
located across the country. Although they may never meet face-to-face with
fellow associates or clients whose services they promote, they work as a
virtual marketing department in an electronic environment--out of sight but not
out of contact.
Are you struggling to develop new business? Check out Design Management Resources' services.
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