What do you envision for 2023? You might be looking forward to launching a new campaign or expanding your team. Economist’s vision of the coming year is a bit grimmer. They’re almost certain the U.S. will enter a recession.
The looming recession could spell trouble for businesses barely recovering from the economic turmoil the COVID-19 pandemic caused.
With a record of driving sustainable growth across clients, agencies, and global markets, Chris Foster, Global CEO of The Next Practice, has experience operating in a volatile economic environment. We sat down withChris to discuss how brands can leverage the growth triple play – Purpose, Data Analytics, and Creative Solutions – to get through the recession and come out stronger.
Q: Purpose – the first component of the growth triple play, is often mentioned by CEOs. What are some concrete ways companies can infuse business strategy with Purpose to help weather the economic downturn?
A: Purpose always resonates with consumers. An example of this from my career is the Tide Loads of Hope program, which helps to restore the gift of clean clothes to areas that have experienced natural disasters. This program has been a mainstay of Tide marketing for the last 15 years. Continued commitment and investment have enabled the brand to maintain top-of-mind relevancy and share of the market through the economic downturn.
During a recession, a lot of companies’ knee-jerk reaction is to cut the marketing budget, but this isn’t always the best course of action. A recent McKinsey study found Gen Z values a brand’s commitment to social causes as much as it values the quality of products and services. In the coming weeks, brands will need to solidify their core values and reconfigure their budget to invest in high-impact growth and cut low-impact expenses. As other companies indiscriminately cut their marketing budget, you’ll increase your share of voice and have more opportunities to highlight high-impact, purpose-driven work.
Q: Let’s move on to the next component of the growth triple play. How can companies use data analytics to inform their recession strategy?
A: When the economy is booming, we like to think record sales are the result of our genius marketing strategy. While marketing strategy is a huge part of success, this mindset fails to consider the consumer. Data analytics has revealed that consumers largely fall into these four categories during recessionary times:
Slam-on-the-brakes: These consumers reduce their spending in all areas. They might not have a lot of income, or they can be high earners who are simply anxious about the state of the economy.
Pained but patient: This segment also cuts spending in all areas but to a lesser degree. They’re optimistic for the long-term but aware of the short-term implications of spending.
Comfortably well-off: The comfortably well-off consumer represents only about 5% of consumers overall. They feel they can weather most economic hardships and though they might cut back a little, spending remains relatively the same as in pre-recession times.
Live-for-today: Members of this demographic skew younger and are more likely to rent than buy. They may extend their timelines for certain purchases, but their spending is largely unaffected by market forces unless they’re directly impacted. For instance, they lose their job.
Companies need to figure out what each category considers as essential, treat, postpone able or expendable purchase and position products and services accordingly.
Marketers and companies should use data analytics to identify these key segments, to ensure your efforts are best directed throughout any recessionary times.
Q: As you mentioned, marketing is another important aspect of surviving and maybe even thriving through a recession. Where do creative solutions fit in?
A: Understanding recession psychology is grasping that sales hinge on consumer levels of confidence in market recovery and trust in your brand. A recession is the time to create connections that strike an emotional chord with consumers. You might even want to provide them with tips for managing during tough economic times.
Groupon rose to prominence during the 2008 financial crisis by seizing an opportunity to make goods and experiences consumers would place in the treat category more accessible.
Groupon sent out daily email discounts on goods and services across 300 markets and saw $500 million in profit during a recession.
The lesson from stories like Groupon’s is clear: Demonstrate your loyalty to consumers during times of hardship and you’re more likely to have their loyalty in times of prosperity.
We appreciate Chris taking time out of his busy schedule to share his tips for leveraging the growth triple play to navigate the impending recession. Contact The Next Practice to learn more about what our team and the growth triple play can do for your business.