Data from the National Center for the Middle Market paints a pessimistic portrait of 2020 growth within middle markets—but marketers can buck the trend with a lasting annual plan
For middle market companies (those with revenue between $10 million and $1 billion per year) to survive the pandemic intact, they need to balance their short- and long-term expectations. According to data released by the National Center for the Middle Market, more than 75% of respondents—a collection of executives from middle market companies—believe that the pandemic will have immediate impacts on key areas of their business, which include 2020 projected revenue and basic operations. Some are blunt: 25% believe that COVID-19 will “prove catastrophic” for their business.
But the data provides hope if companies can wait things out: Four out of five people surveyed believe that after six months or less, things will start getting back to normal. Tom Stewart, executive director at the National Center for the Middle Market, spoke to Marketing News about how marketing plans can weather the pandemic and how to maximize customer experience—even when one in six respondents don’t believe they’re up to the task.
Q: The majority people surveyed expect revenue to decline and initiatives for expansion to be tabled—both of which are directly supported by marketing. How much of that trend can be directly applied to 2020 marketing plans within middle markets?
A: Let’s see if we can turn the clock back to the beginning of the year. That plan envisioned expansion, but also has little bits of caution in it. Let me give you a couple of data points on that. The middle market companies that we talked to [for] the COVID-19 study had envisioned 5.8% top-line growth. Generally speaking, middle market companies tell us a lower number than they end up delivering, so they usually give us a cautious forecast. More than a half of them expected to enter new domestic or international markets, and I don’t have to tell you, market expansion is very much a marketing job. It’s building leads. It’s opening an office. It’s obviously getting salespeople out there pounding the pavement or pounding their keyboards, whatever they’re doing. But if you’re going from Dayton to Denver, or from Indianapolis to India, you’re bringing in marketing plans.
First thing is, those plans are on the shelf. When we went out to ask these guys about the [virus’] impact on growth, it was too early for them to tell us what that 5.8% is going to be. But 78%, four out of five, said [growth is] lower. Obviously, some people are doing fine. If you’re in the business of producing surgical supplies, you may be doing great. But for most people, we don’t know how much. The other thing is that seven out of 10, 70%, said that they were going to pull back on the growth initiatives … or are just putting it on hold. I think a whole bunch of [plans] are on the shelf. Does that mean they’re dead? Maybe not. Who knows what the shelf life of a marketing plan is. It may be that in three months or six months, you could just take it, blow the dust off, change the dates a little bit and go with it. My own guess, based on what we’re seeing, is that [those] are going to be in a minority.
Instead, what you ought to be doing now is, No. 1, there’s a brand, right? They’re the custodian of the brand, and as people are improvising, as people are working from home and our relationships with customers are reduced—in some cases because there ain’t no customers or [they] are being delivered to new channels—it’s really important to try to figure out how you express the brand when you’re working from home in the Zoom room. How do you express the brand when your kid is interrupting to help them with homework? What does your brand mean to your customers now?
Q: How can you accomplish this given that your data shows 16% of respondents are having problems being effective in handling customer experience during the pandemic?
A: One question that we asked was, “Where does it hurt? Where are the impacts?” And the No. 1 impact that we saw was in operations, then cash revenue, then employment and payroll. But then we also asked, “Where are you having the hardest time being affected as a manager? Where are you flailing?” The thing that was fascinating to me was that the order of things changed. Supply chain came in first. And customer experience showed up as the third area—16% said that they were not at all effective or not very effective. That’s a pretty big number. It looks like companies are saying they’re really being clobbered on things inside their four walls, but where they feel impotent is about things outside the four walls: supply chain and customer experience. Part of that maps to what I was just saying about omni-channel—you suddenly discover, “Oh, my God, I thought I was better at this,” or, “I don’t have capabilities here.”
Think of these five things: empathy, expectations, emotion, elegance and engagement. Every one of those can be somewhat attenuated, strained under [the virus]. I have a friend who says that he thinks companies right now ought to be making what he calls “love calls”: I’m don’t have anything to sell you right now, just want to find out how you’re doing. … You don’t want to do them cynically, but they might throw up a side benefit of discovering customer needs you never knew about.
Q: This speaks to the challenges marketers are facing in justifying their jobs. For example, I’d imagine the most effective marketing strategy in facing grocery delivery deficiencies is to hire more delivery people, not to powwow with the marketing department on how to mitigate brand damage.
A: I do think that there are many roles. That goes back to the beginning of this conversation. You had these plans that were created for a climate that was very different from what we have, and you can’t execute them. But underlying those plans were some key things about who you are and what your identity is. And maybe you’re not going to be rolling out these expansion plans, but really think about what the brand is, how the brand gets expressed now and how you connect with customers in a way that is meaningful. If you don’t do these things now, when you come back and try to dust off those plans [you will have lost] some brand equity and some marketing value.
As business returns, some companies will recover only after restructuring. And 80% of the people we talked to said that within six months, they thought they’d be fully back. On the other hand, this isn’t in this [report,] but 44% said that they thought that restructuring is more likely. Recovery may mean different things. But either way, whether you are recovering or going to restructure, marketing has got to start thinking about what that end state is going to be. Marketing can have very significant impacts right now in minimizing the damage to customer experience and the damage to brand that’s happening now to make sure that the brand is conveyed as best as possible. But then, with that ability to see into the future, the best marketers need to be thinking about, OK, when it’s September, how are we going to get this thing back? … That could be repairing weaknesses or building new capabilities, but you want to do that with a vision about what we think we’re going to need to say and do come September.
Q: You mentioned the data point that 80% of respondents believe things will be back to normal within six months or less. What steps can marketers take, particularly in the middle market, to ensure that their plan remains relevant at that point?
A: Some of the great advantages of middle market companies is that the war between sales and marketing doesn’t really exist. We did some research on that. We asked about whether their sales and marketing struggle, and that conflict starts showing up at about half a billion dollars in revenue. The marketers [in middle market companies] may be a bit more sleeves rolled up and may have better working relationships with sales. This is a real opportunity for that alliance to become stronger, and that’s going to be easier to do for mid-sized companies. … Go to work for your sales director—join hip-to-hip, six feet apart—and figure out what you need to do together to get through this.
Illustration by Bill Murphy.