Uncertainty. We all feel it—and react to it—in our own unique way. Whether we’re alone in our apartment or trying to get work done in a house full of kids, it’s easy to feel overwhelmed, confused, or scared right now—even if we’ve lived through our share of economic downturns. Because this coronavirus pandemic is a somewhat unprecedented situation. One that’s playing out before our eyes one day, one news report, one closure at a time.
As individuals, we’ve hit the reset button in a big way as our nation looks to slow the spread of the virus through social distancing. Many of us are rebalancing our priorities as we work from home, keep our loved ones safe, and wonder how long life without school, soccer practice, and trips to the movie theater might last. No one knows.
Meanwhile, our employers are trying to see through the fog of bearish sentiment, a volatile stock market, and what could develop into a recession. Add in the complexity of our evolving interconnected global economy and it’s enough to make anyone’s head spin.
So, how should your business navigate all of this? What lessons have we as marketers and business leaders learned from previous periods of great uncertainty?
One thing we know for sure is that this won’t last forever. Whether it’s in May, July, or sometime next year, this coronavirus scare will eventually come to an end. And when it does, some companies will emerge in much better shape than others.
Hold fast, friend. Here’s how to lead your company through what lies ahead.
Leadership: Act boldly. Don’t lose sight of the long term.
In analyzing the shareholder returns of public companies during the Great Recession, Harvard Business Review found that companies that acted early fared better than those that didn’t. As did companies that kept a long-term perspective, and those that focused on growth rather than cost-cutting.
So even though this downturn is different than what we’ve faced before, we can be confident that some companies will emerge stronger from it. The key is to be smart, not scared.
Communication: Honesty is the only policy.
You don’t have all the answers right now, and it’s okay to say it. Be vulnerable. But it’s also important to talk to your employees about how you’re planning to deal with COVID-19. And to give frequent updates as things change.
It’s also critical to communicate candidly with those you do business with. Be upfront with your marketing agencies, distributors, and other key partners.
Element Three President Tiffany Sauder sent out an email to E3 clients on Monday titled “Navigating Uncertainty Together.”
Your E3 team remains deeply committed to you—to supporting your marketing and business plans and to serving as thinking partners as strategies call for pivots and more creativity than ever before. We’ll work to stay close to you; please reach out if there’s anything we can help you solve.
The message of the email was that we’ll get through this. Together. With understanding, flexibility, and cooperation.
Strategic Planning: Planning is good. Agility is gold.
We wrote back in 2017 about how 12-month marketing plans are dead. That’s never been more true. Now is a great time to reassess your current marketing plan as well as future demand for your products. However, that doesn’t necessarily mean slashing costs left and right. In fact, John Quelch of Harvard Business Review wrote in September 2008 in his piece “How to Market in a Recession” that smart companies maintain their marketing spending in tough times:
“It is well documented that brands that increase advertising during a recession, when competitors are cutting back, can improve market share and return on investment at lower cost than during good economic times.”
Analyze what tactics are working for you. Where does it make sense to cut, and where should you double down? Marketer guru Jay Baer thinks digital marketing will be a staple for many as the market dips. You’ll also want to think about how you can emphasize reliability, durability, safety, and performance in the coming days.
Customer Research: Know your customers—and feel their pain.
Now more than ever before, you need to get inside the heads of your customers. This could mean getting creative because people won’t exactly be rushing into your focus groups.
For starters, listen to what your customers are saying in online forums and on social networks. With social distancing and even shelter-in-place in some communities, people are spending more time online—there’s plenty of information to glean from what they’re saying while they’re there.
You can also take advantage of research done on the psychology of bear markets past. Back in 2009, Harvard Business review published an insightful look into the customer segments that appear during a market downturn. Our own Joe Mills did a bit of a deeper dive into those segments, so I’ll simply outline them:
- Slam on the brakes
- Pained, but patients
- Comfortably well-off
- Live for today
Regardless of which segment a customer falls under, they prioritize their purchases by sorting products and services into four categories:
- Essentials: Survival necessities or central to their well-being
- Treats: Indulgences they can justify paying for
- Postponables: Needed or desired items that can be bought later on
- Expendables: Items perceived as unnecessary or unjustifiable
Marketing Execution: Tailor your tactics.
Now that we’re familiar with the consumer segments and purchase categories, here’s an abbreviated look at how to tailor your tactics for each of them. Read here for the full chart from HBR.
Slam-on-the-brakes
- Essentials: Emphasize price; offer smaller sizes; expand private labels; promote value products; introduce fighter brand
- Treats: Shrink sizes; hold prices down; advertise how “you deserve” this small indulgence
- Postponables: Offer layaway plans; promote low-cost financing; promote deals; challenge foolish postponements (like tires)
- Expendables: Offer DIY alternatives; continue awareness advertising
Pained-but-patient
- Essentials: Offer a lower-price option; promote bonus packs; emphasize dependability
- Treats: Reward loyalty, even if they consume less; advertise products as morale boosters; advertise products as affordable luxury alternatives
- Postponables: Offer simpler models, lower prices; promote repair services
- Expendables: Continue awareness advertising; invest in core product improvements
Comfortably well-off
- Essentials: Continue awareness advertising
- Treats: Emphasize quality; advertise as a product you deserve
- Postponables: Promote savings from buying now; advise they’re “missing out” by postponing
- Expendables: Enable discrete purchasing so they don’t feel like they’re flaunting in front of less wealthy people; advertise benefits of impressing wealthy friends
Live for today
- Essentials: Continue awareness advertising; remind them “you can’t live without it”
- Treats: Offer convenient billing; promote as opportunity to seize the moment
- Postponables: Offer monthly payment plans; promote quality-of-life benefits of buying now
- Expendables: Offer exciting new “must-have” products; advertise aspirational products
Messaging: Great lessons from the Great Depression
Okay, so it’s clear that different consumer segments will react in different ways. But as we look a bear market in the mouth, it’s never a bad idea to emphasize the value of your products. It may not be sexy, but it can sure be effective!
Back in 2009, marketing strategy consultant Marc E. Babej wrote a post called “Recession-Ready Marketing Tactics” for Forbes in which he studied marketing messages from the 1930s to understand how companies promoted products during the Great Depression. Here are some highlights of his research insights:
Don’t be shy in talking about price
If your product saves people money, say so. In no uncertain terms.
Emphasize value
Value involves a correlation between price and product benefits. So if your product doesn’t have the lowest price, explain why it makes sense to pay a bit more. Is it related to safety? Performance? Peace of mind?
Value even applies to premium products
Even upscale products like the LaSalle automobile were pitched on value, Babej notes. So describe the durability, reliability, and quality of your premium products.
Value broadens the appeal of less expensive products
Babej noted that an array of Hollywood stars advertised less-than-glamorous products like Dodge automobiles. If it was good enough for Ginger Rogers or Spencer Tracy, middle-class consumers reckoned it must be good enough for them.
Add value with a little something extra
Companies like Bisquick and General Mills sought loyalty by throwing in small giveaway items like a Shirley Temple child’s mug.
We’re all in this together.
This uncertainty isn’t going away anytime soon. So, it’s a matter of how we choose to react. Now is the time for building camaraderie on your team and taking care of those around you (as Disney recently did in donating excess food).
From a strategy perspective, pinpoint what value your brand provides to customers. Talk with your partners about how you can work together in new ways. Dig into your data and look for any anomalies that can give you a clue to untapped product opportunities. And keep your eyes open for any deals in real estate, acquisitions, or talent that may become available.
You can also build lasting customer loyalty by treating your customers well in hard times. Remember Hyundai’s assurance program where they let buyers return their vehicles if they lost their income? The Korean automaker earned consumer goodwill and gained market share as a result.
Most of all, keep taking care of your employees. If they’re working remotely, set up virtual meetings for people to stay in touch, reinforce your culture as much as possible, and show employees you’re all in this together, no matter what.
