I had barely stepped off the plane to begin a new corporate career in America when I fell into the biggest business recession to hit the nation in several decades. I had arrived in the U.S. in the first month of 2007, bright-eyed and bushy-tailed, transferred by my employer – the Nielsen company – to create the same kind of business traction that I had generated in my home country of New Zealand, only to find myself inside a national business slump that impacted all sectors of America.
In recent months, the media chatter about our economic climate is more than hinting that we could experience a similar recession, possibly by the end of the year. This triggered 2007 flashbacks and more than a little PTSD about entering another round of adapt-or-die recession-proofing. During my workout last night I was able to power-walk my triggers away and gain a little more perspective about how the 2007/2008 recession could actually help us today to sustain our businesses and take advantage of the opportunities that will ultimately arise if we do experience another economic slump.
A 2007 retrospective: How did the pre-recession businesses behave?
A number of tell-tale budgets started getting claw-backs throughout the year with the majority of headcount cuts occurring in the last quarter:
- Employee-based spending; including the provision of office snacks, client meals, parties, off-site team events, corporate swag, and even employee cell phone bills were reviewed line by line (this was before the access of unlimited accounts where Sales were made to justify which calls were for business, and to pay for any personal calls).
- Market Research budgets were almost immediately reduced or entirely removed, and in many cases substantially so.
- Marketing budgets were slashed and team headcount was cut to reduce outgoing spend.
- And if the business continued to struggle we saw key front-line employee reductions across Sales departments – oftentimes by slashing more experienced sales members who were more successful but who demanded larger salaries. This misstep was often the death-rattle for a number of companies.
The way we did business changed. It was the first time in my sales and marketing career that we were asked to influence and pitch directly to the CFO of an organization. In Market Research we would usually work directly with the decision-makers in the research, marketing, or product departments -namely the people who owned the pain-point and own the business budgets to find a solution. However, as their finance departments put more pressure on these teams to reduce spend and increase results with less budget and less headcount, we were being asked to take over the pitching for budgets on behalf of the internal stakeholders.
The entry of the CFO in the upfront MR decision-making process during that time resulted in vendor and budget decisions being made purely on cost-savings. It opened the door for newer MR competitors to make wins based on lower budgets and the perceived value of shiny new objects. However, not all data is made equal, a fact that would eventually show through over time.
So how did we respond to the new way of doing business? We used market research to better understand what the CFO of an organization needed to make a quick business decision and to identify what we needed to change about our business to satisfy this key target. It seems elementary now but what we found was that Finance needed to see:
- Why a service or solution was priced accordingly
- What does ‘good’ look like in market research (with an increased focus on benchmarks for context)
- How they can quantify the ROI of a service/solution down to tangible results through-out the project (to optimize on the fly) in addition to the traditional end of the project review
What did we do to satisfy these requirements?
- As a business we responded by emphasizing the value of data science – why not all data is equal – but to also provide a more laymen’s explanation so contacts outside of the research departments would understand why quality is important.
- We created more benchmarks, thought-leadership, and an analytical focus to make sure we could contextualize market and campaign results.
- We increased the standard reporting cadence with more regular campaign assessment meetings with customers to identify in-field optimization opportunities rather than paying it forward for the next campaign.
- We created more deliberate KPI’s around what we were measuring so teams could demonstrate how their business decisions were directly impacting their bottom-line.
We also increased our investment in a department which I ended up working for the next 8 years of my Nielsen career – Brand Effectiveness – which provided the method and metrics to help Marketing and Finance to understand the impact of their campaign activities.
So, what should we expect from a future recession?
The good news is that business has evolved significantly over the past decade since the 2008 recession. The increase of data-driven sales and marketing tools has provided more automation and quantification of marketing effectiveness. And notably, the experience economy has been in full force across most enterprises and the growing role of customer experience has changed how businesses use data to make decisions. Alongside that, the increased use of market research technology like FocusVision solutions has enabled entire organizations to implement Customer Experience initiatives that bring a customer’s needs to the center of business decisions in real-time and can align these to a revenue goal.
Survival of the most familiar: Market Research and Customer Experience initiatives will hold the key to success
I predict that the businesses with the most pervasive and adaptive Customer Experience programs in 2019 will be the brands who sustain and grow during recession times. In 2008 we found that impulse buying reduced as consumers had to make more discerning decisions about where they would spend their disposable income, so the brands who knew their customers best were the ones who were able to persuade customers to buy their products.
Some great initiatives were born of this time when people had to do more with less, where a number of loyalty programs were created to foster retention strategies, to nurture affinity and encourage customer referrals. Brand owners created stronger brand identities and customer communities which had previously only been used for brands like Mac and Apple. Brands developed personalities and values, which aligned with those of their customers, and has since become common-place. Broad scatter-gun media buying was replaced by highly targeted placements, MMM (media mix modeling), and ad creative personalization — all requiring better insight into the customer.
After living through the last recession and experiencing the evolution and progress which was forced upon us I’m actually excited to see how the market will adapt and evolve if the economy flattens again. The businesses that can keep their customer central to their decision-making process and can adapt quickly to their customer’s needs will be the brands that will sustain and thrive in any economic downturn.