Surviving and thriving in a downturn … 10 strategies for every business
January 24, 2010
Downturns are moments for rethinking, for focusing on what makes you special, for getting close to customers, for smart and bold moves, for shaking up the market, for asserting yourself competitively, for reaching out to new customers, for staying positive.
From Motorola to Tupperware, many great companies have their origins in downturns. They are moments when markets change, when competitors are reordered and when customers rethink what is essential, and what they’d love.
So here are 10 strategies for surviving, and thriving in a downturn:
1. Strength – downturns sort the wheat from the chaff, the robust business models from those developed on a wing and a prayer. Some companies will go under whilst others will be ripe for acquisition. Look at the airlines, the banks, the supermarkets.
2. Speed – some companies have the foresight and agility to respond to changing conditions, and others don’t. Virtual companies, franchised brands, and small businesses can flex business models, reduce costs quickly, and respond to changing consumer motivations.
3. Focus – we know we don’t need all our products, or even all our customers – 80:20 revenue, 90:10 profit – but we are usually too lazy to do the analysis, and make the hard decisions to focus on the value creators, and eliminate the value destroyers.
4. Icons – customers typically focus more on the big ticket savings – downsizing their houses, buying a smaller car, taking fewer holidays – rather than the small items, which can be less prone to reduction. Travel less, but still buy Starbucks.
5. Selective – whilst customers might buy less, they become more selective about where they spend money. In emerging markets, people might have little money but still want a Louis Viutton handbag or an Audi car.
6. Value – the mid market that combines smart quality with a good price becomes fashionable again, good quality and design but at better prices – a Swatch not a Rolex, Gap not Calvin Klein, Pret a Manger not Carluccios.
7. Innovation – applying innovation to other areas from business models to sales channels – reduce cost and risks by moving to a franchise model, improve speed and efficiency with direct sales, move to minimal (and eco friendly) packaging.
8. Upturns – follow downturns like night follows day – so as long as you can survive the slump, the winners in the next upturn are those who invest during the downturn, change the industry structures, redefine value. Low cost airlines become mainstream, online banking the norm.
9. Stories – brands are storytellers, typically about dreams, achievement, fulfilment – helping confirm to customers why they are buying. In downturns brands need to evolve to tell a different story – about practicality, restraint, choice and good value.
10. Champions – there is ultimately no better tactic than to be on the customer’s side during a downturn – emitting empathy and support, helping people to save money, in more human and collaborative ways, reflecting the time, balancing prudence and passion.