How to out-think the competition in a recession

Thought experiment.

A recession looms, and the business you work for decides to tighten its belt. All discretionary or uncommitted marketing spend is put on hold until the business feels it has seen off the worst.

All of your competitors, bar one, facing the same recession, do the same thing.

The odd one out takes a different tack and maintains their marketing activity.

What happens next?

Let’s assume the looming recession actually happens, and the overall market shrinks as macro demand in the economy contracts.

The companies that have reined in their spend will see their business contract broadly in line with the wider market contraction.

As a result, costs will be cut. NPD will be put on hold. Service levels will suffer as call wait times lengthen. Product quality will start to suffer as the firm pivots to cheaper suppliers.

Bit by bit, right across the market, the customers still in need of the products or services that they originally signed up to will get increasingly disaffected with what they are now getting.

But they won’t really be able to migrate to another provider, because all providers are cutting back.

All providers, bar one, that is.

You can guess the rest.

In the thought experiment, disaffected buyers migrate to the one provider continuing to invest in service, product and promotion. The most disaffected might even be prepared to pay an inflated price for the product / service that no one else seems willing to provide.

The company that manages to keep its head whilst all the others are quoting Kipling will actually prosper, whilst their rivals flounder.

Now of course this is only a thought experiment. Real life isn’t this simple or linear.

But there clearly is a recession on the way. Indeed it’s almost certainly already here.

So what now?

If the circumstances in this thought experiment hold true even tangentially, then the chances are that many of your competitors are already drawing in their horns.

Which means their product or service quality is already suffering, and their existing customers are already noticing.

They aren’t going to be marketing themselves out of this position – they’ve already decided that marketing is expendable.

This makes them vulnerable – not just to the sea changes in the economy – but to challenge from any competitor that can identify and then exploit that vulnerability.

So maybe the shrewd strategic response isn’t to take a big red pen to the entire marketing spend, but to invest some of it in finding out which competitors are vulnerable to having their customers poached by you. And then focus your sales and marketing effort on winning disaffected business from the competitors who cut too soon.

If you’re in B2B marketing, I can help with the first part: I’m an independent B2B market researcher. I can arrange to contact a representative cohort of your biggest competitors’ clients and ask them how they are feeling right now; whether their current service experience is getting better or worse; and how likely they might be to switch suppliers if a better one came along.

I can then produce a ranked report of which of your rivals are the most vulnerable to attack, and identify the chief Achilles heel of each – price, service, product quality, responsiveness etc.

You can then arm your sales team with propositions tailored to exploit each competitor’s specific weakness.

In a recession, you don’t need to try and grow the market to stay alive – if you hold your nerve, you can poach your struggling competitors’ business.

All you need to do is identify which ones are hurting the most.

My contact details are in my profile.

Simon Hayhurst

www.hayhurstconsultancy.co.uk

November 2023

Photo credit Ussama Azam (@ussamaazam) | Unsplash Photo Community