Ready for Continued Frugalnomics? Cutting Costs Remains Top Buyer Priority for 2012

For those who thought 2012 might offer some much needed relief, a new survey uncovers Executives’ pessimistic sentiment going into 2012, indicating significant economic concerns and a strong focus on cutting costs and improving efficiency versus driving growth.

This latest survey of over 600 senior executives worldwide, published by Doremus and the Financial Times in December 2011, confirms that Frugalnomics, a business focus on reducing costs and the bottom-line, is increasing for the New Year.

Tracing the percentage of those expecting improvements for the coming year in the global economy, local economy, their industry and for their individual company, Executives reported a significant drop in positive outlook, returning to pessimistic levels similar to those of 2008 and the beginning of the Great Recession.

Respondents indicate that the current negative outlook is driven by persistent low consumer confidence, the European debt crises, potential impact of US debt and unemployment.

As a result of continued uncertainty and negative economic outlooks, nearly half of the respondents indicate that cutting costs and improving efficiency remains their top priority, especially among the largest companies, where cost cutting / efficiency is cited by more than twice as many Executives as are any growth priorities.

If the research is any indication, Executives will struggle with increased Frugalnomic pressures into 2012. More overloaded and risk adverse, Executives will struggle to find the time and stomach to consider new investments. And even when there is a will to make a new investment, there might not be a way, as budget constraints and more financial oversight drive increased justification requirements and higher hurdles.

Frugalnomics Requires New B2B Sales and Marketing Strategies
Over the past several years we have seen the impact of Frugalnomics on B2B sales and marketing, making it more difficult to connect, engage and sell to more overloaded, skeptical and frugal buyers. This has resulted in longer sales cycles, stalled deals, increased discounting and more competitive deals.

These are all serious issues to overcome, and with every challenge there are borne new opportunities, especially for those solution providers that can help fight Frugalnomics. Executives must deliver bottom-line results, and buyers need ideas on how to improve efficiency and drive success. The solution providers that can proactively help buyers diagnose and prioritize opportunities and justify the value of proposed purchases will be the clear winners in 2012.

To succeed, B2B sales and marketing should provide new diagnostic and value-focused content and tools to help facilitate the buyer’s decision making process:

·    Help Overloaded Executives See the Light – most Executives have experienced cutbacks, and have been forced to do-more-with-less.  As a result, there are fewer resources than ever to uncover new opportunities, consider new project proposals and assess purchase options. Proactively and provocatively diagnosing and prioritizing cost saving and other business issues and consultatively recommending the right solution can help make the Executive a cost-savings hero, and help your team get the deal.

·    Break the Status-Quo - With limited funding for new projects, and higher perceived risks due to the economic uncertainty, for many it’s easier to forgo new projects / investments and maintain the current status quo than to commit to a new investment. With the right content and tools however, you can challenge the Executive that there is a “cost of doing nothing”, to outweigh the potential risk of a change and get the buyer to commit to and prioritize the proposed project.

·     Prove Cost Savings – With the focus remaining on how to reduce costs, it’s crucial to show how your solutions can help the frugal buyer further drive savings and improve business efficiency. With financial considerations taking center stage on every purchase, it’s crucial to quantify the bottom-line impact, significant return on investment and fast payback of proposals to economy-focused Executives.

·    Quantify Competitive Value – Today’s Executive remains cost conscious, and wants the lowest price / best value from each dollar spent.  It is imperative to migrate the discussion beyond price and sure discounting demands by proactively proving lower total cost of ownership (TCO) and greater value than competitors.
The Bottom-Line
Economic gloom and doom is back, with Executives entering 2012 almost as pessimistic as they were at the start of the Great Recession in 2008. Low consumer confidence, the European debt crisis and other concerns drive Executives to remain focused on cost-savings versus growth, with Frugalnomics in full-effect.

For B2B solution providers, this means buyers remain challenged, more overloaded, skeptical and frugal than ever before.

Successful B2B sales and marketing, recognize that buyers are uniquely challenged and will deliver new marketing content and sales enablement tools to buyers diagnose and prioritize issues, quantify the cost of doing nothing, justify proposals and prove competitive value.

Implementing specific programs to fight Frugalnomics is essential for B2B solution providers to achieve better connections, engagements and sales performance, despite continued economic and buyer challenges into 2012.

Source: Decision Dynamics Report (Doremus and the Financial Times) –December 2011


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