Now that more economists are forecasting a recession, marketers and brands should prepare. While some economists had forecasted a recession, the coronavirus has heightened anxieties among economists so that the discussion among them now is whether it will be a short or long one.
Internally, brands preparing for such a decline need to answer some questions. Which needs will be most important to the brand’s target audience(s)? Which ones might we postpone? Are there any things that might induce consumers to buy now rather than wait till later?
In advance of a recession, a brand can start cutting expenses and delaying those that aren’t urgent and can wait. When faced with a decision to purchase equipment, consider renting instead. Begin building up cash reserves now and do whatever possible to reduce debt.
Ramp up communications, not just internally, but also with suppliers and vendors. Gather their thoughts, ideas and suggestions on everything from dealing with the recession and extending credit when it arrives to the kinds of incentives that might be most appealing to them.
At the same time, gather and empower employees. Brief, invite and gather information from them. They’ll be assured in knowing that the company cares about them and welcomes their input.
Tasty, a Chicago catering firm, did just that with their employee council a year before the recession hit in 2008. Its CEO had gone in with the idea of cutting salaries 10%. However, after meeting with employees, the company agreed with their suggestion to reduce everyone’s hours from 40 to 25 per week so no valuable employees would lose their jobs.
When the recession did hit, Tasty not only implemented the plan it had in place along with the proposal the employee council had agreed to. The caterer also offered to loan funds to employees who were struggling financially.
Tasty also increased its advertising when the recession started. They did so much that two of their competitors commented that they were doing so well and offered to sell their businesses at sharply reduced prices. The caterer not only took these competitors up on their offers but Tom Walter, Tasty’s CEO, later told Chief Executive magazine that his company emerged from the recession even stronger than ever.
A new thing Tasty rolled when the recession hit was to diversify its offerings. The caterer began presenting wedding packages which is one of its major sources of business today.
Relationship marketing is also important to Tasty and even more so during the recession. NPO or net promoter scores measure a consumer’s loyalty to a brand. Walter and his senior staff spent 80% of their time talking and meeting with customers and potential customers. He acknowledged that most CEOs think about cutting back during a recession but credited NPO for their success. “As the economy rebuilt, we wanted to be ahead of growth, said Walter.
Walter kept an eight-page log of the company’s actions and experience during the recession, so he told the Chief Executive he’s got it ready for when the next one hits.