Rethinking in a recession: What we can learn from the past
Last week, we introduced our new series Rethinking in a Recession. And over the coming weeks, we’ll discuss what marketing teams can do to react, adapt, survive, then thrive in these challenging times.
To begin the series, let’s glance back 11 years to consider the 2008-9 recession and what lessons from then can teach us today.
The uncomfortable truth
Recessions are difficult. During them, most companies suffer.
In a study of the three global recessions up to 2008, Harvard Business Review found that:
- 17% of companies don’t survive recessions.
- Approximately 80% of companies don’t regain their pre-recession growth even three years afterward.
- Only 9% of companies flourish after a recession.
So, what’s the secret to being in that top 9%? The study concluded that mastering the delicate balance between cutting costs to survive today and investing to grow tomorrow will give companies the best chance to do well after a recession.
This means you need to be reactive, as well as proactive, to stand the best chance of weathering this storm.
Find the balance
If there is one mantra for marketers that seems to have stuck following every recession in the 20th Century, it’s the words of Bruce Barton: “When times are good, you should advertise; when times are bad, you MUST advertise.”
There are many reasons for this call to arms. Advertising costs tend to be cheaper during recessions and share of voice is important when times are tough. There are endless case studies to support the logic – Kellogg’s, Pizza Hut, Taco Bell, Procter & Gamble and Chevy have all famously benefited from increasing advertising spend during a recession.
Not everyone can be a Kellogg’s, however. And while advertising opportunities will arise over the next few months, teams must remember to offset the spend against other savings in cost and effort.
Automation can play its part here. If marketers can react to this recession by automating a portion of their customer journeys, then they will be left with more time to focus on other ways of attracting and retaining customers.
Recessions cause us all to be a little reactive. And an unexpected reaction to previous recessions has been the adoption of new technologies.
Such technological advancement was evidenced by The National Bureau of Economic Research, who found that demand for tech skills in job ads increased from 2007 to 2015. Companies who had survived the 2008-9 recession were embarking on their path to digital transformation in order to thrive in the new world order.
Today’s recession has arrived in a post-digital era. Investment in new technology is now a bare minimum, rather than a nice to have. And companies who don’t invest in their digital infrastructure might find themselves compromised as this recession plays out.
A second case of technological innovation comes from Amazon, whose sales grew by 28% in 2009. This is largely attributed to product innovation and the Kindle specifically.
Remember when bookshops hurriedly placed e-readers in the fronts of their stores? For Amazon, 2009 was the Kindle’s year. It massively grew market share, culminating in Christmas Day when Amazon customers bought more e-books than printed books for the first time.
For customers, the arrival of the Kindle positioned Amazon as an innovative company who could provide low-cost alternatives to a stagnant and expensive market. Today, marketers can learn from this by thinking about ways that their product can be positioned. If a product makes life more convenient, more ethical, or more fun, then today’s customer will be listening.
Different customers will of course react to the same things differently. So, we should be thinking about testing different messages to different groups of customers. Or utilising existing channels differently. Email is one versatile way to test new positioning and sales techniques.
In 2009, then-Marks & Spencer boss Sir Stuart Rose declared that Britons were “fed up of being fed up“. With the economy not yet recovered, the end of 2009 duly witnessed a surge in champagne sales. Record takings were also reported at the box office, with Avatar providing the ultimate escapism. People were seeking enjoyment.
Pleasure seeking is, after all, the main motivator of human behaviour. And there is no better time to remember this than where we find ourselves now. 2020 has been tough for everyone in different ways and this struggle goes against the grain of society.
So, we’ll need to think about how we can help our customers avoid pain and find pleasure in their day-to-day. Brands should be looking to their data, finding those key drop-off points and identifying windows of opportunity to make life easier, or more enjoyable for their customers.
Recessions arrive with masses of uncertainty. They are difficult to navigate and there is no tried and tested formula for survival. 2020 will undoubtably have its Woolworths, MFIs and JJB Sports. But it will also have its success stories.
Considering the above, teams who are flexible, nimble and who take a pragmatic approach will already have the tools they need to navigate what comes next.