A marketer's guide to surviving an economic downturn
A by-product of the extraordinary times we live in is that there’s no shortage of articles telling you how best to weather the economic storm. After reading dozens of them from firms such as McKinsey, Salesforce, and others, you start to see certain patterns, that I’d like to explore further. They all boil down to three stages of response: Survive, Adapt, Engage. Let’s break them down each in turn.
Survival of the fittest
When markets go sideways, for whatever the reason, there is a benefit of making it out of the storm intact. Downturns tend to weed out the weaker competition. One of the most important things to consider is protecting cashflow to be able to survive that storm.
Unfortunately, marketing is always one of the first places organizations look at when reducing cash outflows since so much of their spend is variable, non-employee costs. While it’s tempting to dial down demand creation activities, the best play is to look to cost optimization not just cost reduction.
The Covid crisis has provided us with an example where organizations were able to eliminate live event and travel costs almost overnight, while preserving business-generating costs. An often-overlooked area of cost optimization is legacy technology spend. Shifting any remaining on-premises technology to pure cloud models is a way to free up cash. I’m talking about legacy platforms, such as web content management, marketing automation, customer relationship management, and email marketing platforms that rely on installed software to operate, and incur additional costs to maintain. Specialized skill sets to manage and maintain these solutions often drive 3-5 times the cost in terms of resources.
Budget proofing: Shifting to a solution that is a native SaaS solution reduces the number and cost of these resources, and these platforms require less expensive resource and are designed to achieve similar results without extensive customization.
Agility means being fast on your feet
Once survival is ensured, the second phase is for your organization to be highly adaptive and agile toward the shifting seas in the market. Organizations that can most quickly adapt to the new normal will come out well ahead of their competition. This means tuning your organization and technology infrastructure for agility and building a foundation for rapid market response will get you ahead. One such example is an education firm that was able to rapidly deploy free online training materials and courses in under a week for people impacted by the Covid-19 unemployment crisis.
Sensing an opportunity to position themselves as an expert in online learning, this organization was able to be in market with an offering well ahead of their competition.
Adapt quickly: Building a sense and response culture can be key to being adaptive for any size organization. Having your organization willing to execute at speed will separate the leaders from the rest of the pack when the economy starts to recover.
Shotgun digital transformation
The final phase in surviving an economic downturn is engagement. There are several memes floating around poking fun at how Covid-19 was responsible for sponsoring their ultimate digital transformation initiative. Like all good jokes, this meme actually has some basis in truth. The level of urgency and pressure that this crisis has put on brands has removed many of the organizational roadblocks that have held back digital transformation projects for years.
Engage today: Now is precisely the time to start thinking about how your organization can use a digital-first mentality to improve customer experience, remove friction from doing business with your organization, and accelerate how quickly customers can be deriving value from your products. This is a time to test new concepts, quickly iterate on what works and what doesn’t, and build feedback loops into your organization to learn what customers and the broader market are trying to achieve with your offerings.
While this is an unprecedented time of change for many, it is also an unparalleled opportunity for those willing to embrace it. Taking the time to optimize your technology, improve your adaptability, and take the plunge into digital transformation can put you well ahead of your competitors when things start to return to normal. While others are hunkered down, you can be widening the gap, and building lasting competitive advantage.