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Recession Business Strategy: What to Do Before, During, and After a Recession

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Recession Business Strategy: What to Do Before, During, and After a Recession

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Most people cringe at the idea of talking about economic catastrophe. But, having a recession business strategy in place – regardless of how uncomfortable the conversation might be – is one of the best ways to insulate your business regardless of the economic backdrop. We'll break down how to take a proactive stance, what to do when consumers stop spending, and how to emerge with powerful assets under your belt by adopting CX initiatives to power you through the downtimes. Get the details at Rocketsource.co/blog/recession-business-strategy

Most people cringe at the idea of talking about economic catastrophe. But, having a recession business strategy in place – regardless of how uncomfortable the conversation might be – is one of the best ways to insulate your business regardless of the economic backdrop. We'll break down how to take a proactive stance, what to do when consumers stop spending, and how to emerge with powerful assets under your belt by adopting CX initiatives to power you through the downtimes. Get the details at Rocketsource.co/blog/recession-business-strategy

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Recession Business Strategy: What to Do Before, During, and After a Recession

  1. 1. Recession Business Strategy: What to Do Before, During, and After a Recession Rocketsource.co/blog/recession-business-strategy
  2. 2. Ordinary leaders react to the current economic backdrop. Extraordinary leaders learn which leading indicators and data points to watch, when to pivot, and when to stay put. Historically, the yield curve has been one of the leading indicators used by analysts when predicting what will happen economically. Macroeconomic Activity Can Signal When It’s Time to Pivot.
  3. 3. This line represents the interest rate environment based on bonds and securities, and has predicted the last nine U.S. recessions. Although foreboding in nature, a flattening yield curve doesn’t promise that a recession is right around the corner. You cannot rely on this data point alone when deciding when to pivot your business strategy. The Yield Curve. Source: @CharlieBitello
  4. 4. Price-to-Earnings ratios can signal future performance and showcase whether the economy is strong or on the decline. Consumer spending moves in tandem with business success because people hold on tighter to their money as the economy starts to become unstable. Other Data Points to Watch. Source: @CharlieBitello
  5. 5. A recession plan is not a basic checklist or a simplified backup plan. Instead, it’s grounded in a solid framework that’s used regardless of the economic backdrop. It includes proactive analysis and strategic responses when the economy starts to shift. At RocketSource, our proprietary StoryVesting framework enables businesses to thrive in an economic boom and economic catastrophe. Use a Framework that Delivers Success.
  6. 6. Although recessions bring unique challenges, with the right combination of people, processes, and the ability to make crucial changes at the right moment, you’ll be able to grow—even during an economic downturn. Adopt a Thrive Mentality. “The key to a strong recession business strategy is to monitor the economic climate and pivot at just the right time without losing momentum.” - Buckley Barlow, Founding Partner, RocketSource “
  7. 7. Growing out of a strategic inflection point starts with empathy. Digging deep to uncover what modern consumers want will enable you to grow, even during an economic downturn. Applying data to your empathy maps takes the guesswork out of creating a recession business strategy. Data-Driven Empathy.
  8. 8. Lego was able to assess global consumer demands for durable toys and use that to grow during the 2008 recession. While most toy companies were struggling, Lego’s sales continued upward. Lego Pivoted and Profited During the 2008 Recession. Sources: FactSet, Lego annual reports
  9. 9. Another recession will come sometime, someday. But consumers don’t just magically stop spending all of a sudden. If you align your brand with your ideal customer’s wants and needs before, during, and after the recession, you’ll have nothing to fear. Be Confident in Your Strategy. “I’ve heard there’s going to be a recession. I’ve decided not to participate.” - Walt Disney “
  10. 10. Strategic inflection points are moments when growth stagnates—they happen in every company, but are more common or pronounced during a recession because all businesses are sent into an inflection point simultaneously. The ones that align with consumer demands survive while the rest struggle to make sales. Plan for Inflection Points.
  11. 11. GMC Struggled During the 1990 and 2008 Recessions While Japanese Automakers Grew. Consumers demanded longevity from their vehicles during economic hardship. While American automakers were known for their assembly line efficiency, their Japanese counterparts were considered more reliable. This sent the big three— GM, Chrysler, and Ford – plummeting downward during the 1990 and 2008 recession.
  12. 12. GMC Struggled During the 1990 and 2008 Recessions While Japanese Automakers Grew. Japanese Vehicle Production in the U.S. Sources: Automotive News, AutoData By aligning with the consumer’s preferences, Japanese automakers enjoyed steady growth while the big three—GM, Chrysler, and Ford—were scrambling.
  13. 13. Learn From Strategies Used in Past Recessions. 1. Focus on CX by reallocating funds from research and development. Many companies think that a new or improved product will win customers without considering the brand experience. 2. Look for strategic acquisitions or acquihires. Be on the lookout for ways to bring on additional talent or production capabilities at the right time to foster success. 3. Refine the 3 Ps—People, Processes, and Platforms. Do everything you can to avoid losing your top talent and invest in efficient platforms and processes.
  14. 14. Spending more on R&D may seem like the obvious move, but it’s just a part of the larger picture—CX. Focus on what the customers actually want, not what you assume they want. Listen to and learn from your customers and employees on how to improve the brand experience. Strategy #1: Focus on CX.
  15. 15. Acquisitions may seem risky during a recession, but it’s a huge benefit when executed properly. In 2008, Verizon acquired Alltel for $28.1 billion. The move led to upward momentum during the recession, and mostly steady growth since. Strategy #2: Acquire. Verizon Wireless Profits
  16. 16. People, processes, and platforms are the main building blocks of every company and are critical to success. Optimize each segment for growth by removing bottlenecks and investing time and money wherever it’s needed most. Strategy #3: Refine the 3 Ps. People Attract prospects, gain leads, and ensure that customers become loyal advocates for your brand. Processes The strategies and workflows that actually run the engine. Platforms Software systems, social channels, and other tools to create efficiencies of scale.
  17. 17. Knowing when to pivot your spending before, during, and after a recession requires you to be forward thinking. Using correlation analyses can help you know when to pull back on the throttle and when to push the accelerator. Spending Strategically During a Recession.
  18. 18. Results of Taking a CX Focus During a Recession. 1. You could increase lifetime value (LTV) and reduce churn rates. 1. You will likely have more cash on hand. 1. You could see a bond yield rating lift. 1. You could experience a brand sentiment lift. 1. You could see an increase in your brand recall rate.
  19. 19. “My Starbucks Idea” was started in March 2008 as a way to solicit user ideas and give customers a voice. This resonated with consumers because the company listened and made changes based on the ideas and user voting. They innovated on the customer experience in meaningful, impactful ways. The Results from Starbucks’ Pivot. Starbucks Market Share Sources: S&P Global Market Intelligence, Starbucks
  20. 20. In 2008, Howard Schultz returned as Starbucks’ CEO after an 8-year absence. Company profits were falling, and competition was fierce. He responded by launching bold, new experience initiatives. Starbucks: A Case Study in CX. “[Starbucks] must shift its focus away from bureaucracy and back to customers.” - Howard D. Schultz, CEO of Starbucks, 2008 “
  21. 21. The best way to prepare for a recession is to prepare your business and employees for change. Consider the following: 1. Get a third-party assessment. Allow your company to be critically analyzed to understand strengths and expose weak points. 2. Ensure that you’re equipped to react empathetically based on valuable feedback. 3. Focus on personal growth by providing opportunities for employees to have ongoing education. An educated workforce is a key driver of success, in or out of a recession. Assess Your Organization.
  22. 22. Insulate your business from disruption. Learn more at RocketSource.co

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