A new economic landscape is taking shape as national governments double down on quarantine measures. According to data from the World Health Organization, there are now over 1.7 million confirmed cases in at least 213 countries (as of mid-April, 2020).
Consequently, businesses, both small and large, have seen foot traffic and sales drop dramatically. From manufacturing and automobiles to retail and real estate, economic activity is grinding to a halt. Economists and observers have warned leaders to brace for a potential US$2.7 trillion loss from the global economy.
Are businesses prepared to navigate the currently unstable economic climate? Is there an endgame where those that are struggling come out of the crisis intact or better yet, stronger than before? With the technology and tools available now, do businesses stand a chance of weathering the economic fallout?
To help answer these questions, it’s useful to look to the past for similar experiences and examine the strategies in response to the crises at the time.
Learning from the past
The 1918 Spanish Flu (influenza) pandemic infected about 500 million people worldwide and took the lives of at least 50 million. The high mortality rate forced people and businesses to severely limit movements and cut back operations. Studies on the economic effects of the 1918 pandemic showed a major decline in employment, manufacturing output, bank assets, and consumption of goods.
Despite all that and it being the aftermath of World War I, businesses soldiered on. It was an act of necessity. Businesses had a choice, either to fold or adapt to the extraordinary circumstances. Indeed, many had to close shop, but there were others that persisted. Reports from the Financial Times during that time, showed a glimpse of this resiliency.
Bovril, which sold meat extract paste, advertised that its products were essential to fight the influenza pandemic. Theatres at the time were still operating, albeit with certain upgrades to their facilities. Ozone ventilating systems and germ killer sprays were used to disinfect viewing areas.
Since then, other more recent recessions have ravaged the global economy. From the 1920s to the 2000s. All of them have come and gone. While many of these recessions were not caused by a mass viral outbreak, their economic effects are similar to what we’re experiencing now.
For instance, triggered by the subprime mortgage crisis in the US, the 2007-2008 recession buried many homeowners in debt and crippled the ability of banks to provide funding to businesses. Spending was severely low and there was little capital going around to fuel growth.
Harvard Business Review published a study which sought to find out what helped businesses survive past recessions. The researchers observed that there were four types of companies during a recession:
- Prevention-focused — companies that heavily rely on defensive strategies like cost-cutting and avoiding losses
- Promotion-focused companies — companies that heavily rely on offensive strategies and aggressively continue marketing and advertising
- Pragmatic companies — companies that combine both defense and offense
- Progressive companies — companies that achieve the optimal balance between defense and offense
Finding the best strategy during a slowdown
About 17 percent of the businesses the researchers looked at did not survive, 80 percent did survive but sales and profits didn’t recover right away, while 9 percent came out of the recession in better shape than before. Many of the companies examined swung too hard to an overly defensive or offensive strategy in an effort to adapt to economic slowdown.
When businesses overly emphasize cost-cutting measures, innovation initiatives take a backseat. This isn’t bad in the short-term while a crisis is underway. However, it’s highly likely that this will come back to haunt businesses in the future and negatively impact competitiveness against rivals. In addition, the sole focus on survival can allow a sense of pessimism to pervade the organization. This negativity can severely impact morale among the few employees that may be left, potentially leading to low quality output which then feeds into subpar customer experience.
Excessive reliance on promotion and long-term investments on innovation while in a crisis can create problems as well. An overly optimistic approach puts businesses at risk of being in a state of denial or ignorance about the realities on the ground. It can be tough to reign in this false optimism when everybody in the company buys into it — even when there are signals that are pointing towards a disastrous financial performance.
Then there were the ones that struck the right balance by being cautious while making calculated risks. It’s no surprise that the researchers found these were the companies that thrived post-recession.
These progressive companies were exceptional when it came to making the right moves at any given moment. They recognized the need for both defense and offense to complement each other. Cost-cutting measures, investments in R&D and promotion were prioritized accordingly to achieve ideal outcomes.
Fast forward to 2020 and times are tough yet again. Knowing what we know now and with the technologies at our disposal, businesses might be better positioned than the ones before.
Forging ahead and unlocking opportunities through the digital realm
Businesses today need to once again execute the optimal balance between defensive and offensive strategies. To pull that off, one needs to have a good understanding of a key difference between today’s recession and past ones: customers are now digitally empowered.
As people all over the world are now spending more time at home, online shopping and product searches will go up. In 2018, most shoppers were already doing their searches online through various digital channels. If anything, the social distancing and home quarantine measures will only keep boosting this trend.
Similar to what businesses were doing to adapt and remain resilient in past recessions, you can do the same by leveraging the power of digital technology.
Search Engine Optimization or SEO is at the core of this effort. SEO can help you get the most out of the online content and engagement that your business is doing. While you may already have started on defensive strategies like implementing remote work to cut office space costs and minimize travel, SEO is a long-term investment that you can add to your arsenal of offensive strategies.
As more people resort to online platforms to purchase their needs, appearing on the first page of search engine results is key to staying on top of the competition. However, for SEO services to get your business towards that ultimate outcome, there are four key stepping stones, namely:
1. Assure customers in a time of uncertainty
Generally speaking, people are more fearful and uncertain about where current events will lead to. Hence, it’s crucial for your business to set a reassuring tone when engaging with existing and potential customers.
Needless to say, it will do you no good to take advantage of these negative feelings. Customers are likely to abandon your brand if they feel that promotional offers and other content are not helpful and only serve to make a quick buck.
Ask yourself, how can my business or brand alleviate the negative atmosphere customers find themselves in? What kind of content would serve them well during these times? Depending on the industry you’re in and the types of products and services you offer, you can create helpful and educational content customers can use to make home quarantine more bearable.
2. Establish a solid and reliable online presence
With the many changes wrought by COVID-19, you could find yourself adjusting your business hours or certain high-demand products might be running out faster than usual. Regardless of what these may be, consumers will greatly appreciate up-to-date information to better guide their purchasing considerations and decisions.
If you’re a small business in a local community, local SEO will be particularly essential for you in ensuring your Google My Business Page info is updated.
It will also help if you can monitor search demand and COVID-19 related topics that have relevance to your business. By knowing what people are searching online these days, you can improve your ability to publish helpful information and relevant content. The more you do that, the more likely you can build consumer trust and confidence.
3. Scrap outdated marketing campaigns
In connection to the previous points about being reassuring and reliable, your business should assess your campaigns that are already scheduled before COVID-19 struck.
Were any of them to publish today, would they sound a bit void of empathy or just downright inconsiderate? If so, abandon or overhaul the overall messaging.
4. Guard against hackers and crisis opportunists
While you may be doing your best to show understanding and compassion to consumers, others may not do the same. There have been reports of hackers using malware to circulate false promotional offers around COVID-19.
Your business could potentially be a casualty of this strategy as many of these cybercriminals utilize the brands of established and trustworthy organizations (e.g. World Health Organization) to extract private consumer information.
In summary
Going back to the pressing questions posted earlier above, can businesses navigate this economic fallout successfully? Do businesses have the essential tools and strategies?
First, history has shown us that businesses can withstand seemingly insurmountable crises, whether brought about by a pandemic or otherwise. An adaptive and resilient mindset is key.
Second, while overcoming these obstacles, businesses must execute a combination of defensive and offensive maneuvers, based on the objective facts at any given moment and depending on where the trends could lead to.
Then third, digital technologies in the form of SEO and other tools can take advantage of today’s interconnected and data-driven world.
In a newly forming economic landscape, no one can really predict what the outcomes will be, however history suggests that those who adapt quickest, have a better chance to come out intact.
