74% of Americans believe we are in a recession, so regardless of what the Washington politicians say, we’re in a recession even though the tight definition of recession suggests we’re not. Consumer confidence is low and the view from C-level suite surveys is less than optimistic.

Marketers have to be prepared to address the fact that it’s not business as usual. The reality is not a “recession” but rather, we are in a period of STAGFLATION. (Economists first coined the term in the 70s.) The current economy mirrors the definition of stagflation. The economy is in a virtual no growth situation and we are seeing higher levels of inflation and growing unemployment. I’m not trying to make a subtle distinction or minimize the impact a falling economy is having. It is also not my role to offer ideas on how to solve the problems. My goal is to offer marketing ideas to make readers focus on the problem as it affects your brands.

My friend Jake Beard, a reader of the AH-ha!, suggested that consumers face INSTANT ANXIETY every time they pull up to the pump. Perhaps, thanks to the plastic we carry, some of that anxiety is deferred until we get the next credit card bill, but the fact is the anxiety is still there and it is having a ripple effect on every brand.

As marketers, how do we face the challenge of INSTANT ANXIETY during a period of STAGFLATION?

We know that consumers are changing their driving habits. We know that when consumers have an 8% increase in living expenses and a 3% increase in salary, the result is less disposable income and that is going to affect every brand. What’s next?

The Marketing Implications

Call your Focus Team and Chief Focus Officer (CFO) together and issue a challenge to management that while it’s not business as usual, the glass is still more than half full. This being said, there are a lot of brands that are already cutting back on their marketing initiatives, which is the absolute worst thing you can do.

This week’s AH-ha! suggests that you let your competitors cut back while you find new ways to circle the wagons around your customers and create value-added ideas that will (1) maintain their business and (2) send a signal that everyone should do business with you.

I am not promoting wholesale price cuts. I am promoting smart marketing and suggest the following:

• Stay tightly focused on your customers because they pay the rent.
  
  
• Stay tightly focused on your business model and find ways to make it better and improve your bottom line.
  
  
• Stay tightly focused on putting the CREATIVE ANALYTICS to work in your business to better understand the underlying dynamics of the business. I will guarantee one thing: Your customers’ sales are not all down or all up. You have to KNOW who’s down and who’s up. And once you have those facts you must address each group of customers with the right message to influence their short-term and long-term buying behavior.

Social media, mobile messaging, SEO and all the other “engaging” tactics are nothing more than trying to connect with consumers. Marketing has been trying to do that since the beginning of civilization.

Your focus should not be about tactics and delivery systems. Your focus should be to understand the dynamics driving the economic engines of your customers and then deliver value-added tactics that will cause a shift in buying.

There will always be new ways to reach your customers. There will always be new sales people presenting new “tools”. Some on your team will want you to be on the leading edge and the first to try the newest thing.

When drugstore.com first launched, there was great concern that the traditional drug store would implode. Walgreen’s would be a dinosaur. Walgreen’s studied, dabbled and instead of matching drugstore.com created their own system called Intercom that made every Walgreen’s your local drug store regardless of where you are. They created their own Blue Ocean* strategy. Where’s Walgreen’s today? Where’s drugstore.com?

Today is the end of the 1st quarter and it’s a benchmark day because the hunt for sales begins again tomorrow with a new reporting period for most companies. How is your team prepared to handle stagflation, instant anxiety and all the other dynamics impacting your business?

Are you crunching the numbers? Probably. Are you crunching the right numbers? I suggest you better be sure because the next round of economic and social dynamics is already happening.

This week, look carefully at the numbers and ask yourself just one question: What do they REALLY mean and how can I use them to impact customer behavior?