How to successfully navigate through an economic crisis
How have some businesses successfully navigated through a crisis or an economic recession? Although fear is healthy, panic is deadly for a business. With challenges like Brexit and now the Coronavirus pandemic, many businesses are negatively affected.
History repeats itself. Therefore, we have done our research and analysis of past challenges businesses have faced. We identified the business tactics and marketing strategies that have proven to have helped some businesses thrive through the recession and flourish afterwards, and we are sharing these with you in the article below.
Throughout this article, you will learn how to be in control and plan for business success during an economic crisis or recession. Key points that we will cover are:
- Why you shouldn’t panic
- How to communicate effectively to attract and retain clients
- What steps you should take to make your business not only survive a crisis but thrive in it
- How to effectively manage your cash flow
- Business tactics and marketing strategies to continue to grow through a crisis and flourish
- How to be the brand a customer will always choose first even when consumers are more price-sensitive
If you are even a little curious or a bit uncertain about how to navigate through any disruptive crisis, this article is for you.
1- Understand your target audience’s crisis behaviour
When things go haywire act smart. In a crisis, it is a mistake to target and spend your marketing budget on a broader audience. Instead, you will earn your spurs by adapting leaner and efficient marketing methods. In good times one can categorise their target audience on the basis of standard rules of the book, such as demographics and psychometrics. However, in a crisis situation, it’s more about understanding the emotional reaction of your target audience towards the economic environment.
Harvard business review suggests a few possible psychological attributes which can influence and govern consumers buying decisions. Let’s name them for your better understanding.
- Consumers having disposable income
- Feeling confident about the future
- Trust in business and economy
- Embracing lifestyle and values that encourage consumption
In addition, according to Harvard business review, core customer segments in crisis can be the following;
The slam on the breaks – This segment is who is really affected by the crisis. Their anxiety level is at the peak. They focus on reducing their expenditure and postponing the things which seem irrelevant at that point in time.
The pained but patient – This segment is resilient and optimistic about the long term. However, they are a bit concerned about maintaining their current standard of living and look forward to the normal days.
The comfortably well off – This segment consider themselves as smart, who foresee the crisis coming. They feel secure about their ability to cope with the economy by adjusting their finances before a crisis hits dramatically. They could be people in the top 5% income bracket, but not limited to, fewer are wealthy but with stable finances. This segment has fewer liabilities and owns more assets.
The live for today – This segment lives on the cliff edge and ready to spend based on the experience. They are unconcerned about the savings, mostly urban and younger.
This can be further broken down into consumption categories
- Essentials: necessary for survival or well-being
- Treats: satisfaction considered justifiable
- Postponables: needed or desired purchase can be put off
- Expendables: not necessary or unjustifiable
The takeaway – the opportunities during a crisis primarily depends on understanding your core customer segments and how they perceive what will create value for them during a downturn.
2 – Don’t arbitrarily cut your marketing budget but adjust it
It’s understood that due to declined sales and less profitability during a crisis, companies tend to adjust their budgets. A common mistake is for businesses to dramatically cut their marketing budget. Companies should see marketing as an opportunity or as a crucial investment for the future of the company. It’s the time when companies need to formalise better positioning and messaging strategy to boost sales in the long run by positioning themselves ahead of the competition during a crisis. 2 basic things you can do:
Maintain your media presence – Invest in a communication strategy. If your competitors are not cutting down on marketing you will require enormous efforts to keep your brand’s voice and market presence in the longer run. I cannot stress enough, prevent the damage by considering marketing as an investment.
Bring more negotiation power – Negotiation is critical in surviving the crisis. What can you negotiate to enhance your marketing investments? What needs to be re-negotiated right now? You can possibly leverage less expensive PR to spread awareness for your brand which can give higher ROI in the longer run.
Invest your time to learn about the other side, for example; the situation, time limits, willingness to compromise. If you are hit by the crisis so are they!
3 – Rethink your product or service delivery to offer what your clients value the most
During a short term crisis, it’s important to be proactive rather than taking a leap of faith or holding back. It’s the time when you should ask yourself, is there a better way to serve your customers or stop doing what is not essential and focus on the things your clients/customers really value?
Few key points to focus:
- Communicate empathically to understand what your client/customers priorities are.
- Convey your strength so they feel empowered to do business with you
- Understand how the perceived value of your service/product has changed during a crisis and then adjust your value proposition. Likewise, building long-term customer trust in your company values not only in your product.
4 – Focus on existing customers and turn them into your brand advocates
Studies suggest that during a crisis, companies who were able to amplify their brand voice by maintaining or expanding their advertising and marketing spending were more likely to gain the market share in comparison to their competitors.
If that’s the case I suggest three critical phases for your brand’s success.
Phase I – Emotion is the key ingredient that drives our thoughts, actions and decisions. During a crisis, it’s obvious that people are going through rapid emotional fluctuations from buying excessive toilet paper to accumulating groceries. Consumers are making decisions on the basis of anxiety and uncertainty. This is the moment to reinforce an emotional connection with the brand and demonstrate empathy.
Phase II – This phase demands you showcase your actions. It should exhibit that you value your customers by taking actions, not merely by just saying that you stand with them. Instead, by coming up with the ideas which showcase that you’re on your customer’s side.
Phase III – At this stage, you have to ensure that your customers still perceive the positive value of your product and buy from you. For example, for businesses, affiliations with charities and other aiding organisations fighting against the crisis can influence purchasing decisions. This can potentially create more brand awareness and advocates for your brand.
5 – Increase digital marketing activities – Test, tweak, and repeat!
In a crisis, digital marketing is more likely to give you results. Divert and invest your time in digital marketing. Brainstorm to come up with creative methods through which you can attract and mark your brand impression on the audience. At this time when almost everything is locked down and people are mostly leveraging social media channels, it’s time to push on and create valuable content. The keyword here is “create value”.
Online marketing can provide you with useful insights about your customer segment by giving you better measurability and trackability than ever before. As we say, numbers don’t lie. It’s the right time to collect data.
For example, it would be a smart idea to re-target the audience and spend your budget on those who visited your website instead of running a campaign targeting a broad segment. Influencing the behaviour for someone who showed interest in your product is way cheaper than those who are not interested during the crisis.
6 – Improve affordability
After analysing the target audience and consumption categories in point 1. It’s important to support your audience by empathising with them. My advice to you is to not disrupt your brand positioning. Meaning, if you are a luxury brand don’t cut costs drastically, and diminish your value.
How to make sure entry is quick as much as possible.
- Reduce long term contracts
- Make sure to emphasise the quality of your services/products
- Offer flexibility by giving instalment options
If you are a SaaS company, you can possibly focus on giving a few features for free to generate awareness and brand credibility. This phase ensures that they still believe in your product and they will still buy from you when things start to get back to normal.
7 – Have a pipeline of innovations ready to launch quickly when the economy improves
During a crisis it’s not just about managing budgets effectively, there is something more to it. Consider using the ample time available to re-access strategies and business practices, by raising the right questions. Such as, is there really a need to bombard your audience with more digital ads, webinars or newsletter? Does this really leave an impact on your consumer psychology? Or does this worsen the touchpoints which your brand had delivered in the past?
For this, you need to bring innovation into your marketing mix. If you ask me it’s more about scrounging your business objectives and brainstorming as a team. You need to analyse how you can fill the gaps when the economy improves.
Use crisis as a pedestal to rejuvenate your marketing pipeline, give your pipeline some air to breathe. Analyse your past results, where you lacked and need more structure. Brainstorm, are there any channels we can eliminate from our marketing strategy and still achieve results from other initiatives?
A few questions you may ask yourself are:
- What have our customers complained about in the past?
- A deeper analysis of competitors, and areas/markets they conquered?
- What do our customers wish we could have? How can we deliver more value?
- Are there any new technologies that can enhance our marketing performance?
- What would the new future look like and how can we adapt or fill a gap in the new market?
Embrace the challenges and hopefully, it will give useful results to innovate your marketing pipeline.
8 – Stay flexible, adjust your strategies and tactics
Success is when preparation meets the opportunity. Under crisis choosing the right mechanism for growth is crucial. Common ways for inorganic growth could be joint ventures (JV’s), mergers and acquisitions (M&A) and strategic partnerships. Yes, it’s a daunting task but past results validated this strategy. Partnerships are like a marriage. You want to make sure your partner is happy otherwise it won’t last long.
According to PwC, before jumping for something like this, it’s critical to understand:
- Capabilities: Filling a gap or building on strengths
- Control: Weighing investment, access, and ownership
- Cost: Determining the business ROI
- Conditions beyond a company’s control: Predicting success based on external factors
- Keeping the right pieces: The role of divestitures in growth decisions
- Best of both worlds: When a partnership and M&A make sense
9 – Analyse and track everything
To keep you and crisis business strategy on track, it’s necessary to analyse and tweak your marketing measures on hand. It’s inevitable not to maintain KPI. During a crisis, social listening will pay rewards for your brand reputation and business growth.
- KPI for analysing the impact of your strategy
- Correlation metrics to measure the numbers before and after PR activity
- KPI to measure the audience sentiments after implementation of the strategy
- Brand mentions of social media accounts and hashtags
- KPI to measure your online mentions
- Maintain a log of audience feedback to better understand the key areas you can hit in the crisis
10 – Be open to a new business model
When going through a rough period don’t forget to adapt. Adaptability is the key. Businesses either fail or end up losing big when they become resistant to change. Identifying sustainable paths to grow your market share will deliver benefits for your firm. Before making any changes, try to analyse the situation from an open mind perspective and ask a few questions before finalising things:
- Are there any parts of your current business model that won’t work? Why? What to do about it?
- Test your new business model assumptions so that they can fit your crisis sales strategy
- Evidence to show your innovation will sustain after the crisis is over.
- What limits the new business model when things start getting normal.
Nevertheless, it’s also important to analyse your internal capabilities before bringing any change in your business model. What else will be needed to provide a complete solution that supports the implementation of the innovation? It’s just not about the crisis and temporary solution, it’s about the long game.
11 – Stay positive, Nothing last forever, Your attitude is key
Your attitude will decide your company’s altitude. It’s not the first time we all have faced a crisis, we all are in this together. Feed your mind with positive thoughts and pump up your body with regular exercise, even if you are at home. Follow a daily routine to commit yourself to the goals you want to achieve for your company’s success. Lastly, spend time with the family to ease your mental stress.
In nutshell, to successfully thrive through the crisis or recession you can follow this approach. Before jumping to any conclusions as a brand it’s mandatory to follow these steps for the long term rewarding results.
Phase 1: Focus on building a brand strategy first. Often companies won’t realise this basic and crucial step, they directly jump to the marketing and sales in anxiety during a crisis. To have your own brand voice during a crisis can potentially distinguish from your competitors.
Phase 2: This stage focuses on building your identity and personality. It’s about how the audience will feel when they come in contact with your brand for the first time. It’s broad, therefore, do not rush. Effectively, use the crisis as an opportunity to guide and find the gaps where you can improve substantially.
Phase 3: At last after the completion of both the phases you are ready to test and tweak your marketing and sales pipeline
If you would like to receive a complimentary in-depth brand assessment with 3 Colours Rule agency,
Would you like to find out what is preventing your brand from achieving your business goals? What if during a 30min call with us we could identify the areas of your brand that need improvement so that you can attract the right clients? We will use our D.A.C. (Distinguish, Attract & Convert) growth system to swiftly evaluate your brand strengths and weaknesses. We will provide you with directives and your brand score so you can measure your progression.