There is a flood of questions we’re asking right now; from how will the world be different post lockdown to how should we respond to changing environment?
The fact is that many economists and business leaders are predicting a global recession that will be deeper and longer than the one of 2008. In a recent TED talk, Ray Dalio stated that we are entering a period similar to between 1930 and 1945. This is because of the reduction of income and the increasing debt that governments are creating to deal with the impact of Covid-19.
A state of limbo
There are certain patterns that inevitably happen during a recession. Having a deeper understanding of how businesses might be feeling at this time helps to understand these patterns and inform our strategies. Even with the easing of the lockdown, many of us are feeling in a state of limbo. The trajectory we were all on at the end of 2019 has come to an abrupt end. And the new trajectory that will take us out of 2020 has yet to begin.
And yet certain trends are emerging. There is a good chance that our market will shift during this time. We need to relook at our market to see how it is responding to the situation and how that will inform our strategies moving forward.
The traditional way for marketers to segment their market is by building buyer personas using demographics, identifiers, goals and challenges. But during a recession, there is another factor which could turn these personas upside down. How your customers are feeling and how they respond to the situation could alter your market.
By understanding this, we are able to better plan our strategies to meet the needs of our customer’s responses. There are three types of responses that businesses will take during this period. These responses are determined by a few factors like the size of the company and the depth of its resources, the sectors they operate in, whether they’re susceptible to social distancing or not, how the changing situation might be impacting them and how responsive they are to change. These are the typical responses your customers may take during the next three to eighteen months:
These customers will radically reduce or halt all purchases. They are usually small businesses with few or no resources to draw on who have to reduce their expenditure. They may also be larger companies who are anxious about the situation who will cut expenses as an immediate first action. They may be in sectors that are currently most at risk due to the lockdown and social distancing.
These customers tend to be more resilient and optimistic but will still economise where they can. If the situation continues on its current trajectory or worsens, they will head towards the first group and radically reduce expenses. These are small businesses who have a few resources to draw on which may sustain them for three to six months. They will cut costs by reducing overheads including marketing spend.
They are able to operate remotely or have the ability to pivot and innovate towards online or remote operations. They may also look for new opportunities or business models in response to the volatile circumstances. They could be small businesses who find their products suddenly in high demand and are experiencing rapid growth. They may need suppliers to help them through this growth period. They could also be looking for partnerships to help them adapt to the situation.
These are medium and large-sized businesses who feel confident in their ability to ride the current storm. They are looking at a two-year cycle for the recession and have enough resources to get them through this time. They will also look to reduce their costs. They will become a lot more discerning with their purchases and may look to new suppliers who can offer more value. They may be looking for partnerships with other established businesses allowing them to adapt to the changing environment.
The most opportunities are going to lie in the optimistic and confident sectors. If we can anticipate how our customers will respond we can re-segment our market and take the appropriate action. We can also look to new opportunities in previously unexplored sectors or business sizes. We can see what we need to do to adjust our offering to meet the changing needs of businesses during this time.