“Rarely is the company that has a formal disaster plan, let alone one that covers a global Black Swan event.”
Tim Stewart, trsdigital
An article about growth and marketing in the middle of a crisis – the current one or the other – can seem deaf. But nothing gets better when we stand still.
Work can be a welcome intellectual distraction. It can also keep your employees busy or help you keep your job – a minimum level of security in uncertain times.
We don’t have to go far back to find another phase of economic disorder. The financial crisis at the end of the 2000s reinforced, combated or updated many lessons from previous turbulence.
Historically, epidemic slowdowns have occurred behaved differently (but consistently) compared to other causes. Nevertheless, nobody knows how it will develop.
This post examines what people have done in the past – and what marketing leaders are doing now – to get through tough times and thrive in the aftermath of the crisis.
What the big studies have shown
In 2002, McKinsey published a study of 1,000 U.S. companies for the period 1982-1999, including a recession in 1990-1991.
The study focused on what happened while the recession that affected performance to the recession. Those who were ahead were classified as “leaders”. As the authors found:
While most companies tightened their belts, successful executives who traded lower profitability in the short term for long-term profits concentrated again instead of cutting spending [. . .] However, successful managers spent significantly less during periods of expansion [selling, general, and administrative costs] than her former colleagues.
More discipline in boom times offered more flexibility in lean years. And getting it right in the lean years Bain reportshas a massive impact on the growth rate of companies after the situation improves:
The authors of the Bain study use an auto racing analogy:
Think of a recession as a sharp turn on a car racetrack – the best place to overtake competitors but require more skill than straight. The best drivers apply the brakes just before the curve (they take up excess costs), turn hard to the apex of the curve (identify the short list of projects that will form the next business model), and accelerate sharply out of the curve (spend and stop before the markets have recovered).
ON Harvard Business Review (HBR) study of 4,700 listed companies viewed the three years before, during and after recessions. They divided the companies’ answers – their “driving strategies” – into four categories:
- Prevention. Focus on cutting costs – every decision is viewed through a lens to minimize losses. They do more of the same with less and often reduce quality and customer satisfaction.
- Promotion. A careless optimism that ignores the seriousness of the situation and the early warning signs. Companies in this category add functionality when customers want more value.
- Pragmatic. A random combination of prevention and advertising features. These companies are usually too dependent on reducing the number of employees.
- Progressive. These companies get the right balance between prevention and promotion by evaluating every aspect of their business model and making short-term changes that now reduce costs and After Demand returns (as opposed to layoffs).
The HBR study compares Office Depot and Staples during the 2000 recession:
Office Depot reduced 6% of its workforce, but was unable to significantly reduce operating costs. Although the company created an incentive plan to increase sales, sales growth decreased from 19% before the recession to 8% after the recession – five percentage points below Staples’ sales growth rate after the recession.
In contrast, Staples closed some poorly performing facilities, but increased its workforce by 10% during the recession, primarily to support the high-end product categories and services it launched. At the same time, the company has curbed its operating costs and has emerged stronger, bigger and more profitable than in 1999.
As the authors noted, “companies that cut costs faster and lower than competitors don’t necessarily thrive. At 21%, you are least likely to stand out from the competition in better times. “
Dave Cote, CEO of Honeywell warns of it Myopia in times of economic downturn:
I have been a leader in three recessions and have never heard a management team talk about how the decisions they make during a downturn affect performance during a recovery. There will be a recovery and we have to be prepared for it.
Trying to prepare for recovery amid a crisis may seem like a luxury. In fact, 17% of the companies in the HBR study did not survive the recession.
But, as the Bain study concludes, companies that struggled after the recession had often “switched to survival mode, made major cuts, and responded defensively”. This “survival mode” meant “that later you would have to spend far more than you saved to recover from your long absence from the media landscape.”
“If your first response is to cut all costs, all people, all marketing,” warns Tim Stewart trsdigital“You have fewer tools for your remaining decisions.”
How do you find out which tools you need?
Framework for companies in a crisis
The above studies speak for a balance between cost reduction and investment. This is easy to recommend and difficult to do. However, each study provides a framework that helps make decisions.
Bain offers a section based on your current market position and financial strength:
The HBR study is building a three-by-three block based on prevention and support-oriented strategies. Their recommendations are derived from sales and EBITDA (earnings before interest, taxes, depreciation and amortization) for the companies in their study:
The authors come to the conclusion: “Progressive companies remain closely connected to customer needs – a powerful filter through which investment decisions can be made.”
In other words, user research is more important than ever.
Knowing your customers – and how they can change – is key
“Behaviors and attitudes will change,” says Ben Labay, research director at the CXL Agency. When it comes to identification What has changed, Labay continues:
I think the first stop is analytics – who fell away, which channels, who stayed, etc., but surveys and surveys are also obvious decisions.
Don’t use a single data source: triangulate from a data mix to get a data-driven roadmap of how customers have changed behaviors and perceptions, and how they can respond and test accordingly.
Ross Simmonds from Foundation Inc. reflects Labay’s feeling:
Search habits change. Social habits are changing. Email habits are changing. Smart marketers will recognize this and empathize with the reality of journalists, customers and their industries. They will adapt the way they write, encourage and get in touch.
Customer segmentation is significant, not only to find out where buyers are withdrawing, but also to “reveal products that were mainly bought by people who are still willing to pay the full price. Use this information to inform the product portfolio and investment decisions. “
Of course, some segments will be more affected than others, as Ann Smarty has seen their advice::
The only thing is that we lost two travel customers pretty quickly. Both immediately felt the effects and immediately interrupted all marketing activities.
To identify risks and opportunities, write John Quelch and Katherine E. Joczyou may need to change How You segment your audience:
Marketers typically segment by demographics (e.g., “over 40” or “new parents” or “middle income”) or lifestyle (“traditionalist” or “go green”). In a recession, such segmentations may be less relevant than a psychological segmentation that takes into account consumer emotional responses to the economic environment.
Psychological segmentation divides buyers into four categories:
- Put the brakes on. The most affected segment that can reduce, delay or eliminate spending. It includes buyers with lower income and buyers with high fear of all wealth levels.
- Painful, but patient. The segment with short-term fears but positive long-term prospects. This is often the largest segment. Buyers save in all areas. Further bad news could push them into the brakes segment.
- Comfortably wealthy. The segment that continues to buy from nearly the same level, with some additional selectivity when shopping. It mainly consists of wealthy consumers.
- Live for today. A segment that is young and urban and focuses on experiences about things. They are generally not worried about savings, although they can delay larger purchases.
The settings of these segments in turn affect decisions about different product types:
Where are your consumers falling? There are many ways to find out. Our CRO team uses ResearchXL, a comprehensive framework for identifying test ideas, although its methods are widely applicable.
If you are looking for quick answers through surveys or interviews, we also have resources:
How can you best reach the most important segments once you have identified them?
Marketing strategies for new and changing segments
There are Options for each segment::
- “The prospects for value brand essentials sold to consumers who forego premium brands in favor of lower prices are pretty good.”
- “Value brands can also effectively target painful but patient consumers who previously bought high-end brands. Wal-Mart has been aggressively pursuing this strategy in the 2001 recession with its” everyday low prices “policy.”
- “Repair services can be marketed to the painful but patient group that will try to extend the life of a refrigerator instead of buying a new one.”
- “Market leader of the premium brand [. . .] can launch a “fighter brand”, a cheaper version of the premium offering, sold under a different name and supported by minimal advertising. “
- “Restaurants and other companies often configure offers based on key retail prices that are proven to be popular with customers, such as the 99-cent burger or the $ 399 dishwasher.”
Novel pricing strategies beyond $ 0.99 or two can help a number of companies::
- “Results-oriented pricing, a concept developed by consulting firms that combines payment with measurable customer benefits that result from using a product or service.”
- “Changes in the price base that would allow a customer to rent devices by the hour, for example, and not by the day”;
- “Subscription prices where a customer buys the use of a product – such as a machine tool – instead of the product itself”;
- “Unbundling a service so customers pay separately for different elements of a previous all-in-one package, as airlines did with checked baggage, meals, and in-flight entertainment.”
Other ideas include:
- Reduction of thresholds for volume discounts;
- Lending to customers;
- Have plans for a vacation;
- Reduction of article or portion sizes and subsequent pricing;
- For service companies, lower the upfront adoption costs of consumers and lower penalty fees.
You can find more ideas here:
It can be easier to make radical changes during a crisis – for example, revising your pricing model. “Recessions offer opportunities for change” says Raffaella Sadun.
Share others your opinion:
When it comes to survival, it’s easier to get a company-wide buy-in to revise marketing strategies and reallocate investments. Managers can defy old ways of thinking and creatively search for superior solutions.
No matter what you choose, it helps – now and later – when these decisions strengthen your brand.
Why brand is more important than ever
“There is no better time to be real, authentic and human as a brand.” writes Dave Gerhardt. He continues:
It’s okay to keep working. We need business to boost the economy. But you can do better than easily editing the copy that your lawyers would write.
A 2-minute iPhone video from your CEO would have as big an impact as a well-maintained campaign or an email with corporate sound.
Laura Blue from LaunchLink PR confirms Gerhardt’s message::
In these times, brands have to pay particular attention to what and how they communicate with customers, partners and stakeholders. Do you really want to help or are you obviously pushing for a product or another agenda?
In uncertain times, companies have to stay true to their brand and their overarching mission – because that’s what really matters and what people will remember.
“Your products are probably not at the top of people’s priority lists at the moment.” says Kristen LaFrance.
But your community is important. Your people too. Authenticity requires imperfection. And at the moment there is no perfect train. So don’t try to make it. Focus on the things that make you proud of yourself, your brand, and your people.
What does a well thought out campaign look like? Hyundai’s assurance program, which was introduced during the 2007/08 financial crisis, is a good example. They offered car buyers the opportunity to return a bought or leased car if they lost their income within a year of the sale:
Sky achieves this balance now reaffirm your commitment to current customers and explain in a subtle way why they will not make your service an all-rounder:
The overlap between marketing and PR increases in times of crisis. “For so many companies,” explains AnimalzJimmy Daly: “Content marketing is their only PR. And it’s more important than ever to communicate with your customers, potential customers and the rest of your industry. “
Some marketing strategies Because a weak economy can undermine a brand:
Marketers serving middle or higher income consumers in the painful but patient segment may be tempted to move the market down. This could confuse and alienate loyal customers; it could also create strong opposition from competitors.
Marketers that diverge from their established base could attract some new customers in the short term, but are in a weaker position at the end of the recession. Your best way is to stabilize the brand.
De Beers has made such an investment, although a brand campaign only mitigated the drop in sales in the 2007/08 crisis:
Ally faced another challenge. When the recession ended, they had to remind consumers of lean times. Because their brand questioned existing banking options CMO Andrea Brimmer explainsThey had to “stir up dissatisfaction” because after the recession, customers “were fat and happy again and didn’t remember what they had missed”.
Brand campaigns can be difficult to sell – mapping is more difficult and the value creation time can be longer. As Simmonds says:
Many managers will consider brand-driven efforts or projects that have no direct impact on the bottom line to be unnecessary.
The questions customers ask in the coming months will focus more on business results than on trends and vanity metrics. It is very fair for clients to question the results of their agencies, teams and even CMOs.
However, Stewart notes:
Brand campaigns “convert badly” but are not supposed to convert. You build trust and confidence in what is needed right now. It will reassure those who cannot buy now but will buy again later – and attract more of those who can or must buy now but are being fiercely contested by everyone else.
So don’t save on the brand. But what can you do?
How to use hard times productively
Marketing budgets are always at risk – it’s easier to cut advertising spending than to close a manufacturing facility. But times of crisis also offer companies opportunities.
At the end of the day, Stewart says:
Business is about prioritizing resources. Establishment of a production method that makes this efficient enough for profit. Management of the means of production according to the circumstances.
So the temptation is to stop everything and free up the bandwidth for very real and very urgent crisis management. And in the short term, this can be the only option. You cannot take action later if your first step prevents a later step.
But it has to be a short pause and repositioning – not a hard stop. And this break must be as short as possible so that you can start with the new plan with as many original resources as possible.
Here are some things you can do.
1. Learn from forced efficiency
“I built my first startup in Argentina during the economic crisis revolution in 2001.” writes Frederic Kerrest“And my co-founder and I started Okta 2009 in the depths of the US recession.”
The additional challenges, Kerrest argues, have brought long-term benefits. There were obvious how scarce capital forced frugality. But there were others:
In 2010, Okta only had ten customers on board. We focused on their success throughout the year and repeated what they needed and how we can best deliver. By 2011 we had 50 customers; Today we have over 2,000. Use downtime to identify key product features, get your architecture right, and make sure your first customers see the value of the product.
The innovation vacuum is the perfect time to bring new ideas to the market, as there is significantly less competition for your idea on the market.
Successful product launches, notes Jeff Neff, have often taken place in difficult moments. They were “natural offshoots of the conditions created or created by the crisis, ie high gas prices that produced fuel-efficient cars, interest-bearing checking accounts that resulted from high interest rates in the 1970s and 1980s, or falling gas prices and gas prices. eating SUVs. “
As Rand Fishkin explained, Moz relied on some of these advantages to help overcome the 2007/08 crisis:
The structure of the company – relatively few employees in relation to sales, large liquidity reserves and relatively economical expenditure (at least up to our massive round of financing) – made us a great candidate for survival and growth in difficult times.
Fishkin went on to maintain competitive prices ($ 39 / month in 2007), and timing also mattered:
Moz managed a recession because it helped people with an emerging form of marketing that responded to recession concerns.
It helped companies save money on expensive ads by investing in high ROI but were difficult to measure and understand, content marketing and SEO.
Moz intervened in a rapidly growing industry at the right time. SEO’s reputation eventually moved away from slimy and manipulative, and Moz helped ride that wave and amplify it.
A certain timing is beyond your control, for better or for worse. Amazon for example, has raised $ 672 million in convertible bonds a month before the dotcom bubble burst, it gave plenty of resources and eliminated competitors.
Even if you’re not so lucky, you may have less competition for a while.
2. Benefit from less competition and lower costs
If you have the resources, competition can be more beneficial during a downturn. As Simmonds notes:
The world is affected by closings, quarantines, curfews and work-from-home mandates. This means more people behind a screen, which means more opportunities across sales channels.
Brands that double their investment while others retire are likely to see lower costs for results, and brands that use this time to add value to their audience instead of selling, selling, selling build trusting relationships on and earn the budget of their customers / wallet through long-term focus.
We also encourage people to use this downtime to “put money in the bank”, ie add to their library, have content ready when things are cleared, and maybe do some work on their websites that they would otherwise do don’t have time do this, e.g. B. Clean, update, clean internal links, etc.
Aaron Orendorff from Common thread collective offers a limitation:
CPMs have bottomed out, dating back to Facebook and the golden age of Google. The problem is that a low CPM doesn’t mean a high ROAS. This means even less a high transaction volume or a high turnover.
This is because difficult times cause hesitant buyers. For anyone who has seen a 10% or more ROAS drop in the past seven days, it is important to determine exactly where these decreases are occurring.
Orendorff recommends performing a funnel analysis in reverse order to determine the top sales opportunities (not just a low CPM):
- Cost per acquisition;
- Cost per one-time check-out;
- Add the cost per single item to the shopping cart;
- Cost per click;
According to Orendorff, this can help companies to test communication on key pages and send “messages at the moment”:
Assess the impact of banners, headers, and push notifications that address concerns such as shipping and product safety. Look for opportunities within displaced groups such as musicians, chefs, and small league athletes (i.e., micro-influencers or content producers).
Consider “show it off” at social events, especially products that depend on social, non-distancing motivations. Think about options such as family-friendly and child-oriented spending for an audience at home. Or the option with special packaging and bundling for “care package” gifts.
The winners will be those who can creatively, sensitively, and analytically remove obstacles while giving window-buyers with tight fists every reason to say yes.
How They run campaigns that can also change. Stewart again:
The half-life of learning is becoming shorter, the audience more volatile, and the current sample is less representative of the current and later population. Decisions have to be made with less data in shorter periods of time, which is more difficult.
This may mean that the test platform and test team do not conduct real tests and strict standards for statistics. They use their expertise and technology to be flexible and reactive and to support these decisions with small amounts of data, decisions that have to be made.
In normal times, it is the opposite of what is supposed to happen. However, in times of uncertainty, it offers an option for flexibility and guidance based on current user behavior based on guesswork.
Flexibility is also critical for decision making and leadership.
3. Evaluate your organizational structure
“One [piece of] Advice,” Sadun notes, “would [to] Think really carefully about your organizational structure, because this way you can deal with uncertainty. “
Decentralization, Sadun says, is key: “Decentralization aligns decisions with expertise.” Companies continue to tend to hoard decisions in times of crisis, which limits an organization’s ability to adapt and to experiment.
At management level, Ronald Heifetz, Alexander Grashow and Marty Linsky argue about crisis demands a precarious balance::
Keeping an organization in a productive zone of imbalance is a delicate task. In the practice of guidance, you need to hold your hand on the thermostat. When the heat is consistently too low, people don’t feel the need to ask uncomfortable questions or make difficult decisions. If it’s constantly too high, the organization risks collapsing: people are likely to panic and crouch.
According to the authors, crisis management is “an improvisational and experimental art” in order to “distinguish the essential from the consumable”.
“If you get ahead quickly and with less information, mistakes will occur,” admits Stewart. “Accepting that is the key. Interrupt normal goals and success criteria. You are no longer in a growth and acquisition position, so KPIs based on sales goals etc. are controversial. “
Inactivity is almost guaranteed to cause bigger problems because lack of action will still make you a decision and an inflexible one that may be fatal to the choices you can make later.
If you stick to a rigid plan that was created when the information was different, it may also affect your chances of success (or survival).
Bill Sebald from Greenlane Marketing prepares – as much as you can – for uncertainty:
I have not seen the situation today in my life. It seems impossible to predict what will come next. This makes it pretty difficult to design scenarios and contingency plans. Greenlane is therefore pursuing the “business as usual … with some improvements” approach. We also expect curve balls.
The knowledge gained in a current crisis can help companies to steer the next one.
4. Prepare for future downturns
“Do you know what the red flags in your shop are?” writes Brian Moranwho closed his publishing business after the 2007/09 financial crisis.
Saw this crisis A 9% global drop in spending, with US advertising spending falling 12% and agencies losing between 3 and 30% of sales.
Moran shows different ways to keep flexibility and ask difficult questions In front The answers are a foregone conclusion:
- “Take the time to review your contracts and agreements. Is there an out clause? Can you renegotiate agreements into annual contracts? Even if it means paying a slightly higher rate or fee, you will appreciate the flexibility when the economy goes into recession. “
- “Look at each segment of your business and ask a simple question:” What if? “What if a recession hits our business? What if the bank draws on our line of credit? What if our biggest customer gives up our business and takes our claims with us? What if we lose our top seller?”
David Rhodes and Daniel Stelter suggest asking similar questions::
How would a 20% drop in sales volume and a 5% drop in price affect your overall financial performance? “You’d be surprised that even with a healthy company with operating margins (before interest and taxes) of around 10%, such a decrease in volume and prices could turn current profits into huge losses and send cash deep into the red.
Fragen, die Angst hervorrufen, sind als Hypothesen weitaus angenehmer zu beantworten.
“Crash-Diäten funktionieren nicht”, sagt Stewart. “Reduzieren Sie etwas Fett, indem Sie mehr trainieren. Reduzieren Sie weder Protein noch Energie, um das Wachstum von härteren und schlankeren Maschinen voranzutreiben.” Mit anderen Worten, in Krisenzeiten nutzen intelligente Unternehmen Daten und optimieren mehr denn je, nicht weniger. “
Sie suchen nach dem richtig Gleichgewicht zwischen Kostensenkungen und Investitionen, organisatorischer Flexibilität und Stabilität. Es hilft, Ihre Kunden besser als je zuvor zu kennen. Zu wissen, dass auch diese Krise vorübergehen wird, tut dies ebenfalls. Und fest an Ihrer Marke festzuhalten ist nicht verhandelbar.
„Stress und wirtschaftliche Unsicherheiten haben bereits einige Kunden dazu veranlasst, während der Umgruppierung um eine Pause zu bitten“, sagt Sebald.
Das werden wir natürlich ehren – darum geht es bei guten Partnerschaften. Auch in dieser Zeit stehen wir allen zur Verfügung. Für Unternehmen überall hoffe ich, dass dies bald abgeschlossen ist. Aber die Wahrheit ist, dass wir alle zusammen sind und füreinander da sein sollten. Die Welt hört nicht wirklich auf.
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