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102 Managing Customers Through Economic Cycles

Replacing fear with facts

In a contracting economy, fear-based buying (or lack of
buying) is not only generated by actual economic conditions
but also by the media. Regardless, a successful approach in
mitigating some of these fears and anxieties is replacing the
fear with facts.

One large wealth management company practiced this
approach with their clients. They were able to demonstrate
that while the economic conditions of the market world
were weak, the historic track record of investing in the
stock market still proved to be the most financially sound
decision. Peter Lynch, former portfolio manager for the
Fidelity Magellan fund, commented: “If the Dow and the
overall market fall five to 10%, and you feel compelled to
sell, don’t invest in the stock market. These drops are
normal. They happen every 12 to 15 months and you need
to have the stomach to ride them out. If you worry about
what the market will do in the next six to 12 months, you
are not investing. You are gambling. Some of the best
stocks pay off handsomely in three years, some in five. In
every case, earnings make the difference.” Facts to replace
fear.

Tapping the one-time “business survival” sale

Brand integrity is all-important to any business, particularly
premium brands. There comes a time in the life cycle of
most businesses where driving immediate business activity
becomes critical to short-term survival. The question
becomes: Will a business survival sale, i.e. “Black Friday”
sale, cause damage to a reputable brand? Will this type of
sale set the expectation in the customer’s minds of a new
price point for the brand?