While many business fundamentals remain robust, it is fair to say that the global economy isn’t exactly thriving, and chances of at least a mild recession in the near future are high.
However, this doesn’t mean you have to give up on growth! There are multiple potential strategies that can help your business grow and prosper during a recession. Here are just a few you should consider:
To save money during a recession, many companies reduce Marketing spend. However, historically it is the companies that don’t cut their ad spending during a recession, but in fact increase it, that fare best during the downturn and that also bounce back strongest.
If all your competitors are cutting their budgets, and your business is increasing and fine-tuning its marketing efforts, then your business could win new customers and sell more to existing clients by being more aggressive.
Furthermore, during a recession you can often get more “bang for your buck” in terms of marketing spend. When competitors slash their marketing budgets, consumers will be less likely to see their marketing efforts, while at the same time seeing your presence and messaging even more frequently.
Bottom line: Don’t cut back on Marketing spend, increase it! Recessions are a great time to improve market share and achieve greater marketing return on investment at lower costs than in good economic times.
Take time to analyze your available data and balance the short and long term. Who are your best customers now? Who has the most potential? Look at channel, mix, and margin, as well as just revenue and profit. Think about lifetime value (how valuable they will be to you over the full lifetime of your relationship with them).
Recessions are also the best time to consider cutting or addressing difficult, unproductive, or unprofitable customers. After all, they’re either costing you money or there is an opportunity cost in spending time on them versus easier to work with, more profitable, more productive, or higher potential clients.
Finally, it is important to remember the old adage: It costs ten times as much to recruit a new customer as it costs to retain an existing one.
Customer acquisition costs have generally been getting more expensive, but recessions make it even more costly.
Therefore, making more out of the customers you already have, and reducing and eliminating customer defections to competitors, or other causes of “churn”, are smart things to do during a recession.
If the last couple of years of historically high inflation have taught us anything, it is that almost all companies could be better in the discipline of pricing: even “high performers” in pricing management still have opportunities to unlock additional value through more data driven approaches.
Companies can enhance their understanding of pricing by mining past transactions, performing customer segmentation, and analyzing preference, win rate, and competitive pricing data. These insights can then be used to dynamically manage pricing or customize and evaluate pricing for individual products, services, contracts, or deals.
Equally, during a recession, the best companies also replace broad-based price changes with strategic changes to either grow revenues or protect / grow margins.
During a recession, companies have several pricing strategies at their disposal. These include exchanging price for value, providing additional benefits like volume guarantees, bundling products and services, adjusting service levels, or passing on surcharges for customer behaviors that result in revenue or profit loss.
In a recession, smart companies also modify and streamline their product or service portfolios and offerings to optimize “mix” and best match supply and demand.
Examples of this include changing or eliminating product or service families based on cost structure, complexity, or strategic fit, and migrating customers to other (more profitable) items.
When done right, these moves can deliver streamlined operations, increase revenue, and lower costs as well as increase customer loyalty and growth.
Demonstrating your value to customers is important all the time, but especially so during a recession.
In times when customers are reevaluating their budgets and considering changes in their buying patterns, it is crucial to remind them of your value. This can be achieved by presenting hard facts and compelling data that support the benefits of your products or services, as well as their returns on investment. By doing so, you reinforce your value to customers.
At the very least, having conversations with your clients about this will flush out their concerns and intended decisions. This allows you to work with them and come up with strategies to maintain and even grow demand by identifying solutions to the issues and opportunities they raise.
Despite the current economic headwinds, many businesses and industries are still struggling with labor shortages and skill challenges.
Equally, companies that emerge healthier from recessions typically reduce activities that are performed manually and eliminate unnecessary or nice-to-have activities. In turn, this optimizes organizational and operational efficiency and effectiveness through enhanced and increased automation.
Scaling automation reduces costs, improves resiliency, frees up scarce human resources, and creates fuel to invest in key priorities.
We have been encouraging our clients to consider scaling automation within their businesses to address these issues that are drags on their revenue and profitability potential.
To achieve success in an automation program, companies should focus on the following:
Done well, scaling automation can unlock significant growth!
To achieve growth during a recession, consider the following growth strategies:
Growth during a recession is possible.
Core Catalysts is full of experts in growth strategy, helping our clients grow both their top and bottom lines.
If you need help with achieving growth in your business or would like to learn more, please reach out to us to schedule a discussion!
–Mark Jacobs, Client Service and Delivery