Let’s accept the fact that the ongoing COVID-19 pandemic has thrown the best-laid plans of most businesses straight out of the window.
While some companies may come out unscathed from this force majeure event, many – especially MSMEs, will face an existential crisis in face of the inevitable recession the pandemic is likely to bring.
Most conversations we had with business owners since the COVID-19 lockdown was imposed in India revolved around how they should market their B2B solutions in the face of the upcoming recession.
It’s a catch-22 situation that businesses often struggle with when things get tough, and more often than not, Marketing and Brand Communications is one of the first casualties. Wrongly so!
Fortunately, there are plenty of learnings from previous recessions that demonstrate how different approaches to navigating the slowdown landscape have yielded tangible results for companies.
In a fascinating study, researchers from Harvard Business School and Kellogg School of Management analysed the strategy selection and business performance of almost 5,000 public companies during three global recessions – 1980, 1990 and 2000. The performance of these companies was broken down into three time periods: the three years before the recession, the recession years themselves and the three years after the recession.
17% of the companies in the study didn’t survive a recession. Of the ones that did, 80% did not regain their performance to pre-recession levels. Amongst the companies that survived, only 9% flourished under the grim conditions.
The study revealed that companies that focused only on cost-cutting measures (defensive strategy) had the lowest probability of pulling ahead of their competition when times got better. Similarly, companies that aggressively invested more than their rivals (offensive strategy) didn’t necessarily do well.
The research summarised that the 9% companies that thrived were the ones that deftly balanced between cutting costs to survive the present and smartly investing to thrive in the future.
Labelled as “Progressives”, these 9% companies seamlessly balanced their defensive strategies through selective cost-cutting while simultaneously adopting offensive strategies like investing more in R&D, asset acquisitions and Marketing.
Does this mean that you too should invest more in Marketing in this time of crisis? Not necessarily. Today’s times call for Smart Marketing instead of More Marketing.
In B2B Marketing, return on investment (ROI) is best measured on revenue. The most effective, and at the same time the most misunderstood strategy of revenue-focused B2B Marketing is Account-based Marketing (ABM).
ABM is perhaps the most misunderstood B2B Marketing strategy because many B2B organisations assume that they are doing ABM since they have a Key Account plan, or target specific prospective clients. Till date, we have interacted with many such companies that insist that they’re already doing it because they have implemented elements of an ABM strategy — but that’s not ABM.
It’s only when an organisation takes the plunge and allows true ABM to be practiced does it realise that real ABM is nowhere to what they have been doing. ABM is not about what Marketing does for Sales, but what both these teams do jointly. That’s our suggestion to business leaders who are keen on a revenue-based Marketing strategy in a recession – look at the B2B companies which have historically thrived after a crisis, and you’ll see that ABM was at the heart of their B2B Marketing efforts and investments.
ABM is powerful and effective because it is customer-centric in the truest sense with the entire ABM strategy revolving around how to help the customer grow their business. This approach transforms the way your accounts (prospective as well as existing customers) perceive you because they feel encouraged to learn that you are working with them to grow their business and not just selling to them. By becoming an ideological partner in their business, rather than simply remaining as a supplier, you attract conversations you never expected to have, that in turn, create new business opportunities for you.
Only when your every conversation is about how your customers can grow their businesses with your expertise, will you be able to work together to jointly identify a way out of a recession that paves way for businesses to be part of the 9% that thrive.