When the economy slows down, business owners and executives may start to worry. How will they sustain revenue or continue to grow if consumers cut back on their spending? Recession woes can prompt business leaders to take actions that mirror consumer behaviors. They look for ways to reduce spending, including delaying big projects and instituting hiring freezes.
A slowing economy impacts some companies more than others. Yet should a recession occur, most leaders and their teams will need to find ways to overcome its challenges. Despite the conventional wisdom, a recession doesn’t mean that all hope for growth is lost. A slowing economic climate can create business opportunities if leaders know how to capture them. Here are four ways to do that.
1. Boost Marketing Efforts to Your Existing Client Base
A slowing economy doesn’t mean consumers won’t spend at all. However, people might look for different ways to prioritize household budget items. Other shoppers won’t change their spending habits much since they have enough disposable income to ride out a recession. Even though some customers may shift their buying behaviors, they won’t usually purchase products and services they don’t know about.
In growing economies, businesses find it takes more effort and advertising dollars to sell to new customers than current ones. The same principle is just as true during a recession, if not more so. Shifting your marketing gears toward existing clients during slow periods can help your business sustain its revenues.
Implementing growth marketing strategies focused on customer retention stands a higher chance of delivering tangible results. Research indicates the success rate of selling to current customers is between 60% and 70%, whereas that figure falls to between 5% and 20% for new customers. Marketing that targets existing clients can translate into growth for new products and future referrals.
2. Build Online Communities
Say you’re in a room with a stranger and someone you already know and trust. You’re more likely to engage with the person you know. Interacting with a familiar face feels more comfortable, whether it’s because of established rapport or a sense of security. Striking up a conversation with a stranger means going out on a limb. You don’t know what you’re getting into, and the risk of the encounter going poorly is higher.
Translate this scenario to consumers looking for solutions to their problems. They’re either going to stick with the brands they’re familiar with or ask someone they trust to make recommendations. Companies that spend time building brand trust and identity are tapping into the power of social reference groups. The psychology behind affiliation also plays a role.
During times of uncertainty, companies can leverage brand building through social media and digital PR. The goal isn’t to get people to immediately buy something or to put your products and services front and center. It’s to show consumers they can put faith in your brand.
Creating online communities around a company’s identity generates enthusiasm. It also reinforces the belief that what a brand offers is dependable. Once people know they can trust something, they’ll buy.
3. Network Your Way Into New Markets
Marketing to existing customers usually takes less money and is more effective. But that doesn’t eliminate the possibility of discovering new markets during a recession. Diversifying your product lines and client base can help you weather the storm. At the same time, spending thousands or millions on advertising to prospects may not be the best approach.
Instead, networking with like-minded business owners and executives can lead to new opportunities. Maybe one of their vendors isn’t performing according to expectations. If your company offers the same type of solution, you might form a new partnership.
Or perhaps a company is looking to branch out and offer additional services but doesn’t have the internal resources or expertise to pull it off. They need someone with that knowledge to assist with an initial rollout so they can use their own resources to continue delivering current services. If your company can provide those assets, you may be able to diversify your business. Instead of only selling to end consumers, you can start a business solutions division.
4. Tap Into Employees’ Insights
As the economy starts to show signs of trouble, employees’ anxieties about job security might increase. Staff morale can also decline as stress from inside and outside the work environment accumulates. One way to combat potential disengagement is to involve employees in the strategic process. If they’re actively participating in coming up with solutions to keep the company afloat, they’ll gain a sense of purpose.
You’ll also benefit from staff members’ insights and ideas that could turn into growth opportunities. Employees see how customers are reacting and hear what they’re saying. Your staff may have additional information you can’t glean from market research or customer surveys. Employees may point out an issue with how the business is positioning a product or identify a back-end process that’s causing frustration.
Turning these problems into solutions may serve as “aha” moments and eliminate market roadblocks. For instance, employees may point out that customers respond better to price structures that emphasize the monthly cost of a product. Offering installment plans instead of requiring all customers to pay the total cost up front may stimulate more sales. Brainstorming with staff members will enable you to increase the diversity of ideas and strategies.
Growing in a Recession
Recessions impact businesses of all sizes. A decline in sales is one of the typical side effects of a slowing economy. Nonetheless, growth possibilities are still available for leaders willing to shift their focus. Some of those opportunities include using growth marketing strategies and leveraging employees’ ideas. By paying attention to market signals and changes, businesses can find ways to keep revenue flowing.