Are You Ready For a Recession?
In the wake of recent predictions of a coming recession, how prepared is your organization? No one can pinpoint when a recession will occur, but nearly every economist agrees that there will be one sooner or later.
Team up with your CFO. Reach an agreement that the department will monitor the following indicators to forecast an impending recession. Most economists suggest this is wiser than relying on just one or two indicators.
Signs To Watch For
Your CFO’s office should monitor signs of 1) a flattening yield curve, 2) changes in the real estate market, 3) changes in consumer spending, 4) a comparison of the performance of price to earnings ratios of initial public offerings (IPOs) versus the predicted performance offered at time of sale by venture capitalists.
When you and your CFO agree that a recession appears to be beginning, meet with your senior staff. Discuss how you propose to deal with it from a marketing and internal communications perspective.
Being quick to weather and adjust to a recession will help position your company so it not only retains more of its market share than competitors but also gives it a foothold among a wary public. This will likely mean accepting a smaller profit in order to retain and possibly increase your market share. Once the economy improves, you will be in a much stronger position with your customers.
Get Management On Board
Getting senior management to understand and agree to this may be the biggest challenge marketing executives will ever face. It would be ideal to come to an agreement in advance.
Your marketing plan, which should have been put together earlier as well, should take into consideration the fact that unemployment will rise. With more people out of work and on leaner budgets, sales of necessary items and customer rewards will be even more important.
Sales of high-end and luxury products are among the most affected for obvious reasons. If your business is focused on entertainment and dining or other areas fueled by discretionary income, chances are you’ll be severely impacted as well.
Sales and super specials, led by personalized communication to your customers via every mode they prefer, will be more important during these times. For example, if you’re a regional supermarket chain that also has gas stations, consider extra rewards so customers might buy gas at even lower prices if they purchase certain products or shop on certain days.
Internally, it’s also critical to maintaining clear and regular communication with the backbone of your company: your employees. In addition to keeping them aware of what’s going on, consider providing them with specialists who can consult about things like finances, family issues, stress, etc. They need to know you care and support them during these times.
Since 1950, there have been 10 recessions and the average duration was 11 months. For people most severely affected, this will feel like an eternity and it’s possible that you may have to furlough some employees as well.
That’s why taking care of employees like family will not only endear them to your company for life but will create good word-of-mouth to your target audiences and resonate soundly with them. When the recession does end and the economy begins to once again flourish, you will have gained a larger market share through your larger base of loyal customers.