We are currently in a recession that is being felt across all industries. An April McKinsey & Company survey indicates, “Consumers are feeling the impact of COVID-19, with about 34 percent noting that either their income or ability to work has been negatively impacted.” Rising unemployment and consumer economic uncertainty are rippling through organizations in both B2B and B2C arenas.
However, consumers and businesses are still spending. How and what they are consuming is changing. Those changes will likely stick around after the pandemic is over. The same survey indicates, “The next normal has started emerging, with consumers indicating that they will adopt long-term behavioral changes that will last beyond the current situation. Consumers who have switched to new brands or retailers largely intend to stick with them, with almost two-thirds of consumers indicating an intent to continue.”
Businesses are following suit – making purchasing changes based on supply chain availability and selling changes based on necessity. Additional survey data on B2B sales indicates that “Almost 90 percent of sales have moved to a video conferencing(VC)/phone/web sales model, and while some skepticism remains, more than half believe this is equally or more effective than sales models used before COVID-19.”
Do you know how to move forward in a restart? Ask yourself these questions:
- Do you know how to control your spending without thwarting growth?
- What will you do to preserve essential customer relationships?
- Are you equipped to find revenue in new ways?
- Do you understand where new revenue opportunities exist?
- Can you change your way of thinking to adapt?
In a recent webinar Paul Single, Managing Director at City National Rochdale, explained the forecasted economic curve as being shaped like a Nike swish – with a sudden drop-off and a slow but continuous upward swoop. While the economic rebound will almost certainly happen slowly, your business needs to be poised for revenue growth now to capitalize on opportunities as they arise.
Practical business readiness transcends this current pandemic-related recession. Having the right plan in place prepares a business for any kind of restart – an economic rebound, a response to national policy change, a transfer of ownership, or even a corporate re-branding.
Evaluate Spending Surgically
According to recent budget data, the most significant COVID-19-related cuts that will happen have already happened for the most part. So, if your business has made it this far without substantial reductions, now is probably not the time to cut spending. Cuts that are going to continue must be done carefully to avoid hampering growth potential as the economy restarts. Evaluate the potential impacts of budgetary decisions over a longer time horizon to determine if they make sense. Invest in the most critical revenue-drivers for your business, including personnel. Analyze your existing revenue base by customer type, product line, channel, and region and then pursue significant opportunities first to avoid missing out on low-hanging fruit.
Think twice before cutting sales and marketing because, without them, you may not have a business to save. Heed a lesson from a Harvard Business Review article written during the last recession when it cautions, “Although it’s wise to contain costs, failing to support brands or examine core customers’ changing needs can jeopardize performance over the long term. Companies that put customer needs under the microscope take a scalpel rather than an ax to the marketing budget, and nimbly adjust strategies, tactics, and product offerings in response to shifting demand are more likely than others to flourish both during and after a recession.”
Invest resources in maintaining existing accounts before going after new accounts. Focus on retention and cross-selling, especially with strategic customers. Proactively reach out with honesty and transparency to all customers. Remember, it is easier to manage the conversation when you start it, than it is when you are responding to it, especially if the response is to a complaint or cancellation request.
Prioritize creating value in a way that resonates with your core audience. Figure out how you can change your offerings or approach to appeal to recession-buyers. For example, consider offering a free trial option, extending the duration of your existing trial, improving support, increasing service tiers for better customization, and rewarding loyalty.
The average business customer is operating with a different mindset right now than ever before. A timeless Harvard Business Review piece, How to Market in a Downturn, reminds us, “In frothy periods of national prosperity, marketers may forget that rising sales are the result of clever advertising and appealing products alone. Purchases depend on consumers’ having disposable income, feeling confident about their future, trusting in business and the economy, and embracing lifestyles and values that encourage consumption.” The same is true for businesses to some extent, as well.
While there is an element of “typical recession psychology” at play currently, there is an added fear of the unknown when it comes to the disease itself, especially in the B2B space. Business owners and executive leadership teams are grappling with understanding how their day-to-day processes must change in response to new health and safety concerns, the impact supply chain interruptions will have on their ability to get products to market, and how widespread sick leave could affect their operations. These concerns are shaping their buying patterns significantly.
Align your brand and your offerings with your audience’s new needs by addressing these anxieties. Reposition your offerings to match your customers’ “essential needs” and determine how you will draw out the spending that businesses are less likely to offer up freely.
Once you know how you will position your products, get them in front of your audience where they are now. Selling will likely occur in more digital arenas than before, necessitating different sales approaches and resources. Create high-quality digital sales tools to arm your front line to succeed in the wake of changes and shift marketing dollars towards online channels.
“The way we have always done it” does not work anymore. You cannot rely on your old understanding of the industry or the competitive landscape.
Market research is still incredibly important, but historical data will not help to inform decisions right now. Figure out how your team will adapt when there is less data than you are used to having available and develop new intelligence around how to conduct competitive research. Where possible, go to the source – ask your target audience what they need, where they are considering getting it, how much they will pay for it, and when they want it. Understand without bias what you do well and what you don’t and use this insight to shape future offerings.
Create a Roadmap
Whether you start over entirely or adjust your plans depends on the specific business. Either way, seek input from others, especially those that know more than you. Successfully pivoting requires getting the whole team on the same page.
Consider the priorities and perspectives of the entire company when creating your plan. Getting widespread buy-in will make it easier and faster to implement. It also reduces the likelihood of leadership conflicts over what to prioritize. Consider leaning on a consultant to provide impartial advice during a restart and use that strategic guidance to create a roadmap to remain nimble and prioritize actions.
Use the Revenue Action Development Plan to achieve your B2B sales goals and drive sustainable revenue.