We are currently living in uncertain times. In a capitalist society, there are bound to be financial highs and lows. And as of 2022, we have been hitting a financial low. Some are saying this is the first recession since the historic Great Recession of 2008. Whether we are heading for a recession soon or at this very moment, businesses need to be equipped to navigate potential economic crisis. In this article, we will go over some tips on how to not only keep your business afloat but thrive through this trying year or future years of uncertainty.
Identify your customer base
One of the first things you want to do is identify exactly who you are selling products and services to. Recessions tend to change most people’s spending habits, especially the habits of those who already struggled economically while things were normal. So, you want to examine exactly who is buying from you and get a feel for what value you can provide to these customers as you undertake your marketing efforts.
For example, some people are going to be extremely frugal. Frugal customers may only be looking to fulfill the most basic needs as they may be significantly affected by the recession and maybe working with a very tight budget. How are you going to market them? Or, what about your wealthier customers--those in the top 5%--who maybe change their spending habits a bit but largely remain comfortable? Are your customers carefree with money or are they more careful? All these factors will need to be considered when identifying your business’s customer base and planning your marketing strategy. After all, if you don’t know your customers, how will you know what to offer them?
And remember, you want to focus on the customers you already have rather than new acquisitions. A 5% increase in customer retention can lead to more than a 25% increase in profits. So don’t underestimate the power of customer loyalty!
Axe the products and services you don’t need
Once you’ve figured out who your customer base is, you want to examine your products and services. Mainly, you want to look at what you should and shouldn’t keep. Now, every business is different--certain businesses are recession-proof and inelastic such as those offering healthcare services, baby products, or financial advice. Others are recession-vulnerable, like the automotive industry, or restaurants and bars. It is up to you to determine if you are recession-proof, recession-vulnerable, or somewhere in between.
When it comes to your business’s products and services, you want to identify which are in demand and which are not. You want to streamline what you offer by getting rid of anything that isn’t cost-effective. Look at the industries that are doing well, is there some way to incorporate that success into your products? Is there maybe a way to market your products differently in a way that appeals to a recession-impacted audience? And remember to always be testing and innovating your products; as your customers' needs evolve, so should your strategy.
Focus on marketing
It is common knowledge that, during a recession, businesses will cut back on spending across the board. For quite a few businesses, one of their first instincts is to cut back on marketing. While it is true that during a recession you should cut back on spending, you should keep investing in marketing. In a world where everyone else is cutting back, you want to be the one that stands out. Take advantage of the current marketing ecosystem and be the one to spend when others do not. Also, do not underestimate the power of organic marketing. Word of mouth goes a long way when you have a smaller budget than normal.
One of the most important things to remember while you are marketing during a recession is to have empathy. Appeal to your customer's emotions. Customers are cautious and worried, and you want to consider that in your marketing strategy. For instance, the company LendingTree launched the Lend-A-Hand Alliance Cohort in 2021 to support nonprofits in Charlotte, North Carolina. They invested $3.75 million in these non-profits to help them continue operating. Now, you don’t have to do exactly what they did, but finding ways to help your customers and surrounding community is a marketing tactic that not only benefits your reputation; it is the right thing to do. In a recession, being ethical is especially important.
At the end of the day, a recession can be a great opportunity to get ahead of the game. If you keep in mind who your customers are and what products and services you should offer, as well as invest in an empathetic marketing strategy, you should be a step ahead of the rest. Of course, not everything works 100% of the time. If you find your business is not thriving, remember that a recession is, on average, only 15 months long. So, if at first, you don’t succeed, try and try again.