Marketing

What We Can Learn from the 2008 Economic Crisis

By Jean Marie Caragher

 

The 2008 financial crisis was – at that time – the worst economic disaster since the Great Depression of 1929. The stock market nosedived, wiping out nearly $8 trillion in value between late 2007 and 2009. Unemployment rose, peaking at 10 percent in October 2009. The annual net revenue of the Top 100 firms dropped from around 11% in 2008 to 8% in 2009 to -5% in 2010.

Caren Rodriguez (currently chief marketing officer) joined DMJ & Co. as the first in-house marketing professional in the fall of 2006. At the time, developing a budget, identifying opportunities, and creating a marketing and business development culture were just coming to light.

Her early successes were tactical. For example, moving client updates from fax to email, developing audience channels for more targeted communications, and establishing benchmarks for future growth. Strategically, pipeline meetings were adopted and accessible to all firm members so the business development process was transparent.

“These last several weeks (and now months) have made me incredibly grateful for the processes and approaches we established early on,” says Rodriguez. “What was created in the shadows of 2008 became the framework for our strategy today. I had to navigate the budgeting process from determining spending priorities to evaluating sponsorship requests within those years. What was created out of necessity – like those audience channels – have been relied on heavily to share the developing news with the right audience. Firms with industry and sector focused approaches had to navigate and adjust, and that’s certainly echoing back again today.”

Marketing Budgets

This is certainly the time to examine your budget and make smart, strategic changes. In 2008, Rehmann took quick, aggressive action to modify their growth game plan. “We cut spending dramatically in the traditional areas that are easiest to cut:  events, ads, and sponsorships,” explains Mitchell Reno, principal and director of client experience. “We funneled our efforts toward client cross-marketing strategies and highly focused target marketing in key niches and segments. At that time, we used direct mail and tele-prospecting so that our dollars were highly monitored and could show documented ROI.”

“We were very fiscally careful at that time and our budget was significantly reduced as we evaluated every initiative,” adds Sally Glick, principal and chief growth strategist at SobelCo. “We did spend money, but in a targeted and thoughtful manner.”

“My budget was not greatly impacted,” says Jill Lock, director of marketing, Isdaner & Company. “Other times I might stretch the budget to introduce new programs, but in 2008 I kept to the budget.”

Fees and Pricing

“Post 2008, accounting firms made the classic mistake of price-cutting to win new business—a horrible strategy that I anticipate we may see again,” says Reno. “Marketers would do well to counsel their firms to avoid devaluing their services during crisis. Ultimately, this will hurt everyone.”

Michelle River, president of Fore LLC and creator of Advanced Pricing Methods®, agrees with Reno. “CPAs are a very caring bunch,” says River. “They see long-time customers in need and want to help—perhaps even at no charge as an investment in the relationship. That’s okay, but be wise and measured about what you do for free. Avoid discounting, which devalues your entire firm. For CPA firms, discounting is a race to the bottom. It is the strategy of giants like Walmart who move so much volume that they successfully pressure suppliers for discounts in order to maintain margins.”

River explains that quality CPA firm “input suppliers” are top talent. There are no great people available at deep discounts. Further, the profession is moving AWAY from the high-volume at low-price model, leaving that work for the tax-prep stores and enrolled agents or small bookkeeping shops. Firms that will thrive into the future maximize the opposite business model. The consultative business replaces the outdated “triangle” leverage model with a “diamond” model where the greatest number of professionals are at the middle levels.

“Three important factors in a downturn are: managing work capacity, having predictable revenue, and exceptional communication,” says River. “While some competitors resort to discounting in lieu of better strategies, you’ll want to change the way you position your work and its worth. Maintain your price integrity and become proactive to:

  • Focus on keeping the right customers and team members
  • Draw good, clear boundaries about price, scope and any freebies
  • Price up front, with options, outlining results (or the problems you’ll help resolve) at each level of investment.”

How can you communicate price without being a jerk? River advises:

  • First, acknowledge the strain, “We know this is a difficult time for you…”
  • Reassure about your role and abilities: “I want to do everything possible to help you through this situation.”
  • Clarify freebies and limitations. Be proactive and say, “Here are some things that my firm and I can do at no charge…”  This could be just an initial call, or check-ins every two weeks. “Beyond that, we can work together to determine a budget and decide what work is most important at this time as you shift your priorities. You will know prices in advance and we will figure out a payment plan that works for us both.”

Opportunities

So, what can we learn from the 2008 economic crisis?

  • Examine your marketing budget and make adjustments, as appropriate. “We looked for creative ways to make our marketing program go further on a strict budget,” shares Lock, “with more focus on joint activities with referral sources, a push for unpaid publicity/promotion (developing unique stories to get firm publicity), enhancing relationships with the media, more internal training rather than hiring outsiders (you discover you have lots of talent on your team), and utilizing existing tools better.”
  • Use this time to create or update your firm’s marketing and business development processes and strategies. ““One positive impact {of the 2008 economic crisis} was that our staff had a bit more time and motivation to build business,” says Brian Falony, marketing and business development director of Brady Ware & Company. “We worked with them to find opportunities and, for a few, the new focus stuck.”
  • Focus on the needs of your current clients. “During 2008 we were very aware of the impact of the recession on our clients in some niche areas,” says Glick, “and, as such, we focused more on retention and cross-selling than on attracting new business.”

All of us also need to adapt to marketing and business development during a pandemic. “What seems different today is that many of the tried and true methods – networking, seminars, lunches and other person-to-person activities – are on hold,” says Falony. “We do not know for how long or if they will ever return like they used to. Now, we have to figure out how to get the kind of return from webinars that we used to get from in-person seminars. We are looking at ways to better use the information we get from our email campaigns and figuring out how to turn interest into a new client without meeting in person. It is really a different world.”

The article was originally published in the AAM Minute in May 2020, https://www.cpagrowthtrends.com/what-we-can-learn-from-the-2008-economic-crisis/.