Let’s be honest: we’re in a recession. But we’re sure you already knew that since it’s all anyone talks about these days.
According to a recent consumer survey conducted by Reddit for marketing news outlet The Drum, Reddit has seen a 29% uptick in mentions of ‘inflation’ across US news subreddits and a 203% increase in mentions of ‘recession’ in career-planning groups.
With all this recession gloom and doom, 615innovations wanted to understand what this means for consumers and how it impacts our small businesses. Here’s what we found:
Let’s start with the basics
A recession is defined by when the United States’ GDP has two consecutive declining quarters. And while economists are the ones with all the data points, it doesn’t really matter what they say. What matters is how consumers feel. Another recent consumer survey from the University of Michigan showed that consumers are the most pessimistic about the economy since polling began in 1952. As if inflation hasn’t changed consumers’ buying behavior enough, the recession has had even more of an impact. Consequently, small businesses will face new challenges when it comes to retaining customers and securing revenue.
Consumers Buying Changes Create Winners & Losers
Interestingly enough, a recession actually creates quite the playing field of both brand winners and losers.
Luxury companies such as Ferrari, Dior, Loui Vuitton and Versace are reporting strong sales or hiking their profit forecasts because their wealthy target audience is immune to inflation and rising costs. Same goes for the travel and hospitality industry. People want to escape everyday woes, and therefore, the travel industry rarely sees a decline in sales.
Losers, on the other hand, are the everyday brands like Walmart and even Truly Hard Seltzers. Consumers shopping at Walmart are easily impacted by the rising costs of essential goods and gas prices and are looking for ways to cut back by buying lower cost alternatives. Sorry, hard seltzers, you’re taking a back seat to premium light beers for now, according to the CEO of Boston’s Sam Adams Brewing.
Where Does That Leave Small Businesses?
As a majority of the population re-evaluates their spending habits and priorities, small businesses find themselves in a unique position to double down on marketing, reinvest in sales, and innovate!
Just like many did during Covid-19, now is the time to…
- To reassess your company’s financial forecasts
- Identify your best performing revenue streams
- Take a look at your spending to see what you actually need and where you, too, can cut back. (Here’s lookin’ at you, subscription memberships.)
- Assess team performance and individuals roles & responsibilities. Are you using everyone to their full potential or can you move some tasks around?
In addition, refine some of your marketing strategies. What channels are most effective? Which ones are hitting your target audience dead on? And which are the ones that are lagging?
Also make sure you are measuring your sales and marketing efforts to know where you’re most efficient.
Of utmost importance, though, make sure you know your customers deeply.
- Evaluate every touch point of their customer journey. Are you making it as easy as possible for them to buy your product? One little bottleneck and you risk drop-off.
- Do you know what your customers value? What’s most important to them? Are you 200% certain that your product/service is essential to them? If you don’t know what’s important, you better reach out via a survey or set up a coffee or check-in Zoom ASAP!
Now as for which customers to go after and how to attract and retain them, stay tuned for our next blog!