As the global economy enters a recession, many organizations are facing uncertainty and challenges. But like Winston Churchill famously said: “Never let a good crisis go to waste”. The term ‘good crisis’ might be a little blunt, but a crisis often does result in shifts in the status quo. Shifts that organizations who are able to adapt and take action, can benefit from. In this article we’ll share a few base principles on how you could navigate these turbulent times, and create opportunities for growth.
Assess the present and plan for the future
One key strategy for weathering an economic downturn is to assess your organization’s current state and plan for the future. This includes understanding your organization’s strengths and weaknesses, as well as identifying potential opportunities and threats. To do this, you can use frameworks such as the four phases of crisis management: Orient and understand, Build resilience, Respond and repair, and Restore and rebuild.
Counter the recession with focused, yet balanced interventions
Now is a great time to identify new market opportunities, reevaluate your product offerings, and implement pricing strategies that optimize profitability. For example, you can explore entering new markets that have a positive outlook, even if it may seem risky. You can also consider reorganizing your product portfolio to ensure continued relevance and contribution, and implementing dynamic pricing models to optimize price points.
During times of turmoil and the associated uncertainty, our natural response is often anxious which clouds our decision-making abilities at the moment it’s most needed! We’ve defined a few guiding principles that ensure a suitable short-term response whilst positioning for the future. This mental framework is based on five key questions:
Where to play?
Identify and explore shifts in markets or market segments to ensure proximity to existing customers and explore emerging opportunities. Recently, we helped a vehicle leasing company in crafting, branding and launching a new proposition targeting an emerging customer segment.
What to offer?
Reevaluate your portfolio of products and services to ensure relevance and contribution. It’s smart to reorganize the visibility and promotion of your products based on profit margin instead of volume, since the margin is already under pressure during a crisis. For a global wholesaler we developed and applied a dynamic pricing model in order to leverage an optimized price point. An AI-driven dynamic pricing mechanism automatically enforces the most profitable price levels to optimize revenue, whilst further assisting to create a competitive price perception by their clients.
How to serve?
Reviewing the customer journeys in order to remove the inefficiencies is the key to success, since consumers become more critical during a crisis. Focus on maintaining and rewarding your loyal customers since they are the most profitable for your business, whilst one-time shoppers will only bring higher costs. In the midst of the Covid pandemic we helped a global leisure company to rapidly grow the number of B2B clients, while simultaneously and exponentially, growing the productivity of the existing sales team.
How to work?
Being flexible and agile is easier said than done, so having smart scenarios enables you to act quick when it’s needed. You can’t control external factors like for example a pandemic, but you do have control on your internal structure. Don’t panic and take drastic cost-cutting measures like firing people, but think of alternatives like reallocating customer sales people into customer service agents. In containing escalating operational costs, we assisted a large Dutch retailer to review and propose the correct blend between outsourced and inhouse marketing activities. This way we improved marketing effectiveness, time to market and general cost reduction.
How to win?
During times of turmoil, the ability of an organization to rapidly make decisions and execute upon those decisions becomes critical. Establish a fast decision-making structure, define clear spans of control, and visualize a shared set of performance metrics to act upon. To accelerate decision-making and drive the correct business behavior, we’ve identified the most impactful measures and developed fit-for-purpose dashboards to visualize those metrics as key leverage points.
It’s important to remember that there is no one-size-fits-all solution for navigating a recession. However, by assessing your organization’s current state, taking focused and balanced interventions, and using frameworks and mental models to guide decision-making, you can increase the chances of weathering the crisis and positioning your organization for future success. Our diverse team of industry experts, strategists, service designers, data scientists, UX designers and truly operational branding, marketing, commerce and CRM experts know the business, and operational challenges we’re facing right now. If you’re looking for pragmatic solutions to not only survive today, but to thrive in the future, please don’t hesitate to reach out.