Tough markets reward brave companies – Lessons from the last Great Recession
If you’ve been paying attention to the news, you’re probably not feeling particularly optimistic about just about anything right now. We’ve got a global pandemic, which is likely to spark a recession, that’s being accelerated by an oil price-war between OPEC and Russia. The effects of all of those things coming together are likely to be both humanitarian (people displaced, lives lost), and economic (business slowed down, jobs lost).
One of the natural reactions to all of this darkness is to retreat into a crouched position in order to protect ourselves and the resources that we do have. When it comes to personal health and safety, I say crouch away. Create an emergency safety kit, work from home, avoid all contact with humans and make sure that your money is in safe, liquid assets.
For businesses, however, now is not the time to go into a cave. There’s a famous Warren Buffet quote that I think about a lot: “Be fearful when others are greedy, and greedy when others are fearful”. Of course, the legendary investor was talking about the stock market at the time, but I believe that it applies just as importantly to all other aspects of business.
If we look back to the last great recession and use it as an example of how the market reacts to bad news (whether this ends up being a recession or not) some of the greatest wins and fails all came out of that time period, and the phenomenon that drove nearly every one of the success stories was the investments that they made in their customer experience. Since the last recession happened to coincide almost exactly with the explosion of digital & social into mainstream usage, those experience-investments were almost universally connected to the online world.
Examples to consider:
In 2009 Domino’s did a massive customer research study that told them one glaring fact: People didn’t like their pizza. That’s a big deal when pizza is pretty much all that you sell. So they launched a massive campaign to collaboratively rework the recipe. They tried, tested, and ultimately perfected the new pizza, all in the public eye, becoming one of the first brands to truly embrace social and digital to create transparency and connection for their customers. After the initial launch, they were one of the first to offer online ordering, delivery trackers, a livestream where you could watch your pizza being made, and even the ability to order with a tweet.
When times are tough, the last thing that any executive wants to hear is that the core business that everything else is built upon needs to be changed, but Domino’s did that in a dramatic way, and their stock price has seen a 7008% increase from a recession-low of $5.25 to a boom-high of $373.16.
Few countries were hit harder by the last global recession than Iceland. Their banks collapsed, the government was in debt, and the economy showed little promise of turning around. What they did have was a beautiful country and friendly people, so they went all-in on telling that story to the world. The Tourism Iceland marketing strategy went far beyond a series of ads, they made significant, meaningful investments like recruiting people across the country to answer live questions, hosting influencers before that was really a thing, and celebrating their quirky culture through high quality content that they published pretty much everywhere.
Since then, Iceland has become a cautionary tale of over-tourism, and they’ve limited access to certain destinations, but the economic boost that they got from their dark-times investment helped to lift an entire country’s economy.
Wedding Wire, Zillow, Square, Venmo, Uber & Lyft
The silver lining of an economic downturn is that it inevitably culls the slowest-moving businesses that are no longer paying attention to the customer experience. The wedding, banking, and transportation industries were all well-established fortresses that did business the way that it’s always been done. The Great Recession, however, cracked open that armour and caused people to reconsider the status quo. As a result, businesses sprang up that did consider the customer experience, and how they could provide answers to the problems that people had previously just learned to live with.
Fortunately we’re not there yet, and we may not be in for the type of economy that we saw in 2009, but regardless of where the stock market goes, we can take a few notes from the winners and the losers:
Consider the entire customer experience
Traditional businesses were certain about the roles of their departments. Advertising created awareness, sales created revenue, customer support kept people around, and none of the three communicated much with each other. The advent of digital and social created the opportunity for businesses that considered the entire customer journey and developed strategies that would deliver consistently remarkable experiences.
Seek out pain points
The way things have always been done is not the way that they will be done in the future. Right now in your industry, there are people who are frustrated with the service or products that they’re receiving, but they’ve just come to accept them as inevitable. Technology, platforms, and data give us the opportunity to identify those pain points and set our businesses apart by solving them for people.
Invest in assets, while others crouch
Investments in people, content, technology, and content all produced some of the world’s greatest returns for the companies that emerged from the Great Recession. What they each did was to charge aggressively at the opportunity, allocating resources for the next 5-10 years. The competition, if they were spending at all, were buying ads and promos aimed at quick wins.
Market cycles are inevitable. How we react to them is what determines who is the next wave’s Uber, and who is this generation’s Chrysler. We’re fortunate that we can look back to the past, using those lessons to help guide the decisions that we make as we look to navigate a 2020 that is likely to, once again, separate the businesses that are delivering value versus the ones that focus only on their bottom lines.