COVID-19 recession is something that we never anticipated to be at this large a scale.
With several million people becoming unemployed in a short span of time, business coming to a standstill due to lock down, all economic activities have tremendously slowed down.
The disruptive nature of COVID-19 will shake the consumer confidence. Consumer’s will respond to uncertainty very cautiously by cutting down on their spending’s. As consumer spending contributes to most part of GDP, which is the heart of the economy, we will see a huge drop in sales and markets will shrink.
Given the way COVID-19 is spreading, the recession will most likely last longer. There is a good possibility that consumer attitudes and behaviors, shaped during this recession, will linger substantially beyond its end.
As a product manager facing recession, I will do the following.
1. Revisit the elements of my business model
Customer relationship, resource management, key partners, revenue, cost, etc., all functions will need to be looked closely and tweaked accordingly. A leaner business model can lead to greater productivity and smooth functioning. Eliminate wasteful tasks and concentrate on revenue-generating functions as it would help in smooth running of the business.
2. Revisit the product portfolio
When faced with declining demand, focus on reducing excessive complexity in product lines that feature too many marginally performing SKUs (for e.g. hardware products). Some legacy products would have evolved over a period of time, including features that have meaningless differences among product lines. Overly broad product lines require lots of development, testing and marketing support and eat up resources and working capital.
3. Tweak the marketing strategy and messaging
Adopt more inbound techniques of marketing like social media, blogs, CRM rather than costly marketing practices. This will help target relevant customers at lesser cost. Curtail in-person interactions, trade shows and events, shifting to avenues that may be less traditional but are spiking in importance due to changing consumer behavior. For e.g. Content marketing and messaging to be timely, relevant and appropriate in the context of the pandemic. Broader health and safety messages — even if the product does not play within the space — can signal a commitment to consumers. Data driven decisions will help in meaningful insights and tweaking the decisions.
De-emphasize non-mission-critical marketing spending and activities. This will help free up the budget for mission-critical activities and for short-term improvements to cash and working capital.
The markets may be performing poorly, at the same time searchers are looking for experienced help. In an industry that normally has some of the most expensive keywords and a high cost per click, we’re seeing that cost per clicks are falling and relieving some pressure from a normally competitive industry. Many are also noticing increased Click through rates and Conversion rates as well. So, it is very important to revisit the marketing strategy and budget.
4. Flexible pricing
A recession is associated with a decline in prices. This makes intuitive sense, but it can also be explained via the supply and demand curves. When people lose their jobs and cannot afford to pay as much, it is very important to lower prices to keep sales up as much as possible.
In tough times offering products at discounted rate helps. However, the client’s perceptions of pre-discount “normal” prices must be monitored. Too low expectations about prices can affect the profitability in the recovery period and also later, because people will resist the steep increases, when prices return back to “normal.”
5. Expansion into New Markets
The possibility of more profits, more reach, and more impact is enough to get anyone excited to make decisions related to expansion into new markets. Figuring out the possibility of expansion into the new market opportunities in alignment with the organizations business objective and strategy is important. Clients of B2B companies are reevaluating where they should be spending. It is very important to recognize these changes and invest. Plan for a pipeline of innovations. It will be a long difficult slump, yet business respond quickly to the recovery, whenever it happens. This means, having a pipeline of innovations ready to roll out on short notice. Most consumers will be ready to try a variety of new products once the economy improves. Businesses will lose out to the competitors if they wait for the market to recover and then plan their innovations. An important thing to keep in mind, though, is that a recession is only temporary. Companies that have enough foresight to invest in post-recession recovery will see exponential returns as the economy begins to grow again.
