How to Survive and Thrive in a Crisis

THE WORLD IS UPSIDE DOWN

The world has been hit by an unprecedented crisis not seen for a hundred years. The economy is reacting in equal measure, as everyone is forced into self quarantine to protect the most vulnerable amongst us.

Whilst most people living today have never experienced a pandemic, we have experienced at least one recession. As such we have data on what happens, what to expect, and the big mistakes that people consistently make when instinct tells us to run for the trees.

In this article I’m going to shed light on what you should be doing to protect your business and what you should not be doing. There are some very common knee-jerk reactions that you will want to avoid because data shows they can have such a detrimental effect over the long-term, that it takes up to 5 years to recover.


TWO PRINCIPLES YOU NEED TO KNOW

Before I talk about the do’s and don’ts, I’ll cover two principles that you need to know about for the rest to make sense. The first is The Growth Triad.

THE GROWTH TRIAD

The Growth Triad is a model that represents the three key components required for a business to grow.

• Marketing
• Sales
• Retention

Without marketing, you’ll have nobody to sell to.

Without sales, you’ll have no clients to retain.

Without retention, you’ll be working overtime in sales and marketing just to stay put. In other words, you’ll be losing customers at the same pace as you win new ones. Not a good place to be.

The Growth Triad works financially as well:



The three components of the Growth Triad multiplied together equals your revenue.

Traditionally, marketing focuses on increasing the number of clients. So a 25% increase in the number of clients equals a 25% increase in revenue:



At Grow, we focus on all three components of the Growth Triad, because as you can see, increasing all three by 25% yields exponential revenue growth:



And finally, over the years we’ve realised that no matter how strong your Growth Triad is, if you have a weak brand, or just a “logo”, the effectiveness of marketing, sales and retention is severely limited. Let me show you why.

When a company has a strong brand, it permeates the entire Growth Triad and makes marketing, sales and retention all more effective.


Even if these components are just 10% more effective, look at what it does to revenue generation:


160% growth as opposed to 95% growth. Therefore it’s really important to have a strong brand. If you feel that your brand is not giving you that advantage, then now would be the perfect time to look at brand strategy.

Of course, right now, all we want to do is survive; growth is a luxury at this point. But it’s important to understand the model as it’s even more relevant today than ever before. I’ll explain why in just a bit. Read on!

THE BUYER’S JOURNEY

If you’re in marketing, you’re probably familiar with the concept of the Buyer’s Journey, but it’s always worth a recap.

The buyer’s journey is the psychological process that buyers go through when choosing to buy from you, and become a loyal customer.

It’s a slow process of “woo-ing” customers rather than asking for marriage on the first date. You need to build awareness and trust first.



During the first stage of Awareness, a buyer may not even know they have a problem or that they need you. Consider how oblivious we were to our need for smartphones before Apple released the iPhone. They created awareness and a need. Now we can’t live without smartphones.

Engagement is the next step once your buyer becomes interested. They might start to interact with you on some level such as commenting on a post or simply reading your content. They will become aware of their need but not be ready to make a commitment to you yet.

During the Research phase, a buyer will be looking at your solutions but also your competitor’s. They will be considering their options, including other means of solving the problem that might be free or cheaper.

If you’ve done a good job in marketing and sales, they will decide to go with you; that’s when you get Commitment.

Adoption is the sensitive first 100 days when they’ve given you their trust and you need to prove to them that they made the right decision.

Retention is when the customer becomes comfortable with you and happy with your service. They continue to return to you to meet their needs.

Advocacy is the holy grail of marketing - where your customers are the ones spreading the word for you. A referral is 9 to 10 times easier to close than a cold lead, so getting customers to the advocacy stage is extremely valuable for the business.

Overlayed across the entire buyer’s journey are the marketing touch-points you can use to create trust.



I won’t go into these in detail here, suffice to say there are a lot of them! So you need to choose wisely what you say, when you say it, and where you say it. The way you speak to buyers in the Awareness stage will be very different to when you’re trying to win their commitment.

As I always say; don’t ask for marriage on the first date.

FIRST PRIORITY

So those are the two principles I wanted you to be aware of. Now what do we do with these insights?

What should your first priority be in a time like this, when marketing is considered a luxury and all you want to do is survive?

The first step is to look at the weak parts of the Growth Triad.

SALES

In a downturn, sales are the first thing to be hit. Your pipeline may look healthy, but you’ve probably found that everything has been put on hold. Nobody wants to make any commitments right now.

That’s going to have a painful impact on immediate cash flow.





RETENTION
Then a few weeks later you probably found clients starting to pull back and cancel with you, ask for reductions, or pause their payments.

This hit a second key component of your business: Retention.

You’ll notice the only thing left to sustain your business is Marketing. Yet funnily enough that’s the first knee-jerk reaction to cut! 

I’ll come back to that in a minute.

PIVOT

The first move you should make is to look at how your business can pivot to take advantage of the situation. Doing this well will support your business in recovering sales. Even in a downturn, there are some services that need to be fulfilled for your clients to survive.


Ask yourself the following questions:

1. What do we do really well that would be valuable to our customers right now?
2. Are there customers that don’t fit in our current target market, who could fit now?
3. Maybe there’s something that we do which we don’t charge for as a service, but would now be very valuable?
4. Maybe there’s a small part of our business that hasn’t been hit by the situation, that we could build out?

Think of ways in which you can pivot your business to capitalise on the situation. This will support sales in the short term, and may change your business forever.

At the very least, a bit of extra cash in right now will buy time to weather the storm.

ADD VALUE

People will remember what you did during these times. They will remember if you supported them selflessly, or acted with greed.

A selfless act right now is even more impactful than it would have been when times were good.

Think about how you can selflessly support your existing clients. If you do, they will be yours for life.

BECOME INVALUABLE

Better yet, become invaluable. Position yourself so that they can’t afford to lose you.

Here are some examples:

Build a Community
Build a client community where your customers have a way of asking their peers for advice. This has proven invaluable to us and our clients, and creates a strong reason to stay. The value is immense, and the cost to you is nothing

Critical Support
Is there something you can offer that is critical for their survival? Companies in this position are thriving right now, and have a clear advantage. Ensure you are not purely a luxury that can only do business when times are good.

Opportunities
Can you help your clients to survive in these times? Can you guide them through this? Can you create videos or provide consultation to support them? Think about the value here before the financial opportunities for yourself.

Get Cut Last
If you’re their best friend they’re not going to want to cut you. Focus on building those relationships and bonds so that they will only cut you as a very last resort.

RESTORATION

If you do just a few of those things, your retention will recover.















You’ll start to restore some stability.

LOOKING AT THE DATA

In 2008, three advertising data experts came together at a seminar hosted by the IPA. They modelled reports on hundreds of real companies who cut advertising and marketing budgets. What they discovered was that companies who cut their marketing budgets by half, took three years for their profitability to recover. Those that cut their marketing budgets in full, took 5 years to recover.



They demonstrated how cutting budgets in the short-term has cash-flow benefits, but there is a clear time lag between the effect of cutting marketing and the impact on profitability.

It takes about 1 year before a cut in marketing starts to impact profits.



The data above further demonstrates this fact. You can see there was a short-term cash flow benefit but a long term cash flow hit.

The reason this happens is because cutting marketing budgets naturally results in a company’s share of voice reducing. With share of voice falling, it creates space for competition to steal that share of voice and start persuading your audience to choose them instead.

Share of voice has an immediate impact on cash flow, as it has a direct cost.

The problem is that share of voice is strongly correlated with share of market. Again, they saw a one year time lag between share of voice falling and share of market declining. Unfortunately, it’s share of market that dictates profits.

So be forewarned; cutting share of voice will have a substantial impact on profitability in the coming years.

Conversely, the data showed that those who increased their share of voice, were able to take advantage of the situation, especially when their competitors were cutting share of voice. Those companies increase share of market over the next few years and were able to strengthen their position against the competition.

BIG OPPORTUNITIES NOW

Naturally, as other companies around the world are cutting their advertising budgets, it has caused a substantial reduction in the price of ads. The data below shows how the cost per click of ads on Facebook has fallen by 50%.



At the same time, the amount of time spent on social media has increased, as more people are confined to their homes and whiling away their days on the internet. Facebook reported that time spent on their various social apps increased by 70% during the lockdown in Italy.

This is a perfect storm of reduced price and increased exposure that only the most savvy marketers are taking advantage of.

Combine that with the opportunity of taking share of voice from your competitors, and this is something you can’t afford to pass up.

ACTION STEPS

So what should you do, and what shouldn’t you do, to take advantage of this situation and avoid feeling pain for years to come?

FOCUS IN THE RIGHT PLACES

Coming back to the buyer’s journey, there are some areas you need to focus on and some you need to cut back on.



At this time, you need to focus your resources on front-of-mind (awareness and engagement) and retention.

This means creating content, focusing on thought leadership, and adding value to your existing clients.

You should also use this time to build your database of target customers which you can hit hard when the market recovers.

DO’S

Here’s what you should do:

• Do take advantage of the lower cost of ads
• Do take advantage of your audience being online at home
• Do add value and ideally make yourself invaluable
• Do strengthen your share of voice as much as possible

DON’TS

Do not:

• Don’t drop prices
  
  • It will only hurt profits
  • The effectiveness of offers wears off over time, leaving no gain but a hit to profits
• Don’t reduce your SOV (Share of Voice)
  • It will take years to recover
• Don’t focus on lead-gen at this time
  • Build your SOV for when things recover

ACT NOW

As they say, every cloud has a silver lining. I’ve outlined the silver linings that fast-acting and savvy business owners and marketers will take full advantage of.

Remember, if you’re cutting budgets you’re at the mercy of your competitors. Should they decide to leverage this situation, they will eat up your share of voice, at a half-price discount, and you will feel the repercussions for years to come.

If you have the cash reserves to maintain your marketing, do so. Especially the top of funnel and retention initiatives. If you have sufficient cash reserves to increase your marketing, now is the perfect time to strike, and the result will be greater market share for your business in the years ahead.

Let me know what you decide!