Interest.co.nz, tells us that a technical occurs when a country has experienced two consecutive quarters of negative GDP growth. It's fair to say, NZ is probably there. We guard our wallets more consciously. The average dollar doesn't seem to go half as far as it used to.
So what's a business to do?
It might feel natural to button down the hatches. Rip up the marketing plan. Hunker down til the tsunami passes. It might feel natural, but history (actual facts and stuff) tell us otherwise.
America are arguable the kings of recession (what a monarchy to lord over!)
They've experienced a fair few recessionary moments: tough stuff that's disrupted financial markets, upset commercials and commodities alike. Many a company folded. Then like a swarm of phoenixes rising from the ashes appeared such 'overnight successes*' as Burger King, MailChimp, Air BnB, Groupon, Uber and even Nespresso.
All these businesses held something in common. They recognised gaps in consumer spending and remodelled, repositioned and doubled-down to re-imagine their business.
MailChimp was a business focussed on large corporates. A post recession pivot saw it focus primarily on smaller businesses, building cost effective methods for SME's to connect with their audience. The monkey mail gurus grew by tailoring new services and a brand that connected with the actual needs of their newly defined market.
Then there's Nespresso. Love it or hate it, this simple coffee-maker became the at-home caffeine alternative for cash-strapped consumers, almost everywhere. Nespresso didn't just pop a few discount promotional campaigns onto Facebook though. Nope, they held their premium price, got George Clooney to smile that mega-watt smile of his, and built a deeply storied brand.
But what if you're not a silicon valley poster child or the founders of a capsule-plague? Fear not good readers, here is our non-technical guide to marketing in a technical recession
Some notes we made
Not every brand seeks hockey stick growth of a modern tech start-up, but almost every brand (where there is a passionate pioneer at the helm) wants their business to survive a recession. So here are our tippy-tip-tips:
- Dont be afraid to launch new products to market: Holy batman, what? We get it, new product launches and R&D are risky even in the good times. It probably feels like time to ditch the diamond-crusted idea and stick to your knitting. Unless your knitting isn't right for your market! Let's face it, your market is also going through their own recession experience. The key is to know what that market seeks, where the gaps are, where you can slot in with a new, better solution. The experts reckon mid-recession is the time to launch (we're not far from it!) Here there is light at the end of the tunnel, and when light appears, wallets begin to loosen.
- Be careful with promotional spend: We know that during a recession consumers reduce their spend on stuff, and on things. So why would a business increase budget for sales promotions and tactical campaigns? Hopefully they wont. Short-term tactics, and see-sawing price promotions, might turn heads but in a recession, they are unlikely to move the dial on revenue. Some promotion wont hurt, but this isn't the time to double down on a deal.
- Increase time and dollars spent on brand: Honest to batman, again what? Ok, stay with us here. Brand is the 'why' - it connects people to something deeper. Builds a connection. There is plenty of evidence supporting the idea that brands who switch their tactical spend to brand spend during a recession, will report bigger profit increases to competitors who did the opposite. It could even be time to examine your core [insert gratuitous link to another blog we wrote- here].
- Invest in the foundations of why, what and how: If the market is running a bit cooler, now is the time to get deep into the business. Build that storied brand (if it doesn't already exist). Aggressively define your customer avatar, understand their pain points and their desires, and make sure your offering is uniquely yours. Play with your COGS, look at margins, profit centres, consider the in-market pricing. Reconsider the strength of your channels to market, you support (feeder) channels, your buyer journey. There's often so much to reflect on, the recession will probably roll by in a hot minute.
All the tips aside, we understand that not everyone can invest or redirect spend during a recession. Hopefully though, with our tidbits above, you can assess the priorities of your spend based on the knowledge gained by so many, during similar times.
*as one client once put it, "it only took me 30 years to become an overnight success"...the same is true for recessionary hero brands. The key is they struck when the iron was hot (or cold)...when it was right.