As we deal with the coronavirus pandemic and its threat to the health and wellbeing of people all over the world, the shadow of another crisis looms large. Dovetailing with the pandemic is the threat of an economic downturn precipitated by the pause in economic activity, mass unemployment and supply chain disruption wrought by the virus. While it’s almost impossible to predict exactly what effect the pandemic will have on the world economy, many businesses are preparing for a period of recession.
While these predictions spell doom and gloom for the economy, businesses can take measures to protect themselves and emerge stronger on the other side. While there will be a number of industry-specific steps you can take to safeguard your business, protecting your brand is one measure that’s absolutely crucial across the board.
One of the best ways to mitigate risk
According to Harvard Business Review, “building and maintaining strong brands—ones that customers recognize and trust—remains one of the best ways to reduce business risk.” They cite household names like Colgate-Palmolive and Johnson & Johnson as examples of two brands who have weathered recessions well by doing exactly that. In a crisis the natural tendency might be to cut prices or alter your brand’s offering to appeal to customers in any way possible. However, by changing your offering and changing what your brand stands for, you risk losing your core customer base, the people who drive a lion’s share of your revenue. Really, your business decisions at this point should be all around how to hold on to these customers. Focusing on strengthening the proposition you already have, and which already works for you is a far less riskier course of action. Companies that scramble to change their offering quickly in order to win customers generally end up losing their most valuable customers and weakening their brand in the long term.
So, what do your customers really value?
Rather, the first step in weathering a recession is understanding the psychology of it. After all, “a recession affects minds before wallets” and navigating economic uncertainty means helping your customers do the same. At times like this people become wary of spending, particularly on discretionary items, but people will always spend on the things they perceive as offering more value. What do your customers value about your brand? Why does your offering appeal to them? The opportunity for brands right now is to revisit, assess and bottom out on their value proposition and in particular ‘value’ as defined by your customers; rather than your perception of what that is. Whether you are a cost-saving or luxury brand, your sales will still depend on how much value you bring to your customer. Critically ‘value for money’ is not always synonymous with ‘cheap’. Analysis following the Great Recession of 2007-09 revealed that luxury fashion brands did as well as mainstream labels and recovered more quickly afterwards. By strengthening your brand proposition your core customer base will rely on you in bad times as well as good.
Using your brand values to guide decision-making
As businesses and individuals alike reassess their futures, now is the perfect time for businesses to take a look at their brand values, gain clarity on what they stand for and put these values into action. Brand values are not merely inspirational words you choose at random, they form and create your unique culture and should guide every-day decision-making. This is important for a number of reasons.
Internally, it’s crucial that your staff stand with you. Whether you are trying to motivate a team facing anxiety about the future, manage new processes (such as working from home), or dealing with layoffs, the way you handle these challenges creates your brand; be that positive or negative. Your values are only meaningful if they inform decision-making in times of difficulty. Be true to them now and your staff (current and future) will have real faith in your organisation.
Your values communicate to your customers what drives your organisation and what kind of relationship or service they can expect from you. The important thing to remember here is that even if processes are disrupted, this expectation remains. For example, if one of your values is ‘care for the customer’, understanding and responding to the struggles your customers might be facing can be very impactful. Consider undertaking some additional research or even testing new innovations. Ultimately you should be using your values to guide you as you look for new ways to connect and engage with your customers. Don’t be afraid to be flexible in how you approach this. Small actions and authentic messages are meaningful to customers. In the long term, this will build brand loyalty and strengthen brand reputation.
What about my marketing budget?
But what about the actual brand landscape? In times of economic downturn, companies have typically cut spending on managing their brand; but this proves to be a boon to those who instead continue to, or even double down on brand management. Because of a slightly quieter landscape, advertising rates often drop due to reduced demand, competitors stop advertising as much, and those brands who do put themselves out there shine brighter and inspire reassurance in their customers. Therefore, the environment for brands is not quite as inhospitable as we might think.
Furthermore, compared to the recession of the 2000s, the media landscape has changed a lot. We now have far more sophisticated tools to understand and target our most important customers. Now is the time to leverage that knowledge. Again looking back to 2009, brands like Match.com and Walmart grew their companies by using data-driven techniques. Today, with the use of analytics, any company can better understand their customers, what matters to them and crucially, how their habits have changed. This allows you to gain valuable insights on how best to reach your audiences and, if necessary, evolve your approach rather than being silent.
Take the long view
What might be the most important thing for businesses to remember is that while it may be easy to shift into a negative mindset, what makes a business strong is its resilience to change. Be smart about how you can use this time from a business and brand perspective. Your brand is a long term business asset with real value. Your customers want to support the brands they are loyal to. Don’t compromise your brand by implementing short-term measures, take the long view. Strengthening your brand is key to surviving and thriving in these challenging times.
Unsure how your business and brand can best position itself for bounce-back? We’d love to chat at 01 539 7939.