Branding in a Recession: How to get through it and come out on top

Are we in an economic downturn?

I think that’s the biggest question to start with…remembering that in a ‘typical’ downturn some businesses struggle to attract new business while others seem to thrive in what the media broadly labels as ‘challenging times’…

But we’ve been here before…

Ref: Graph showing average of the ANZ-Roy Morgan and Westpac-Melbourne Institute consumer sentiment measure of respondents’ perceptions of their personal finances relative to the previous year; ANZ-Roy Morgan index rescaled to have the same average of the Westpac-Melbourne Institute index since 1996. Sources: ANZ-Roy Morgan; RBA; Westpac and Melbourne Institute.

Consumer sentiment is a good indicator of what’s coming in respect to economy and property markets. Today, sentiment is historically low — lower than the peak of the pandemic and the 2008 GFC. Ultimately, this means consumers are spending less and stashing their cash. This is one of the driving factors in inflation and you guessed it — an economic downturn.

What this means for brands…

Brands have more pressure than ever to ‘recession-proof’ themselves at all costs. To change business models, practices and how they go about growth while some feel stuck, helpless and struggle to get by. But not every business can be so immune to the effects of a recession. They’re tough times and for some, they’re just not setup to weather them.

We saw this a number of times throughout COVID — admittedly when a government forces you to shut your doors, it can feel like your hands have been tied behind your back. But this time, when we’re not facing a superbug. We’re hoping things will be a little different.

The good news is, it’s not our first ticket to the rodeo. We’ve got countless stories, case studies, tools and systems used in the past to help us get through it in one piece — and for some of us, continue to build. And we believe, the secret is in timing and preparation.

RECESSIONS KILL BRANDS

Businesses who bring little value to the kitchen table just wont cut it. To make it through the other side you’ll have to rethink how you approach new businesses but most importantly, take a strong look at your retention strategies and ensuring your current customers keep coming back for as long as they can. If you take a ‘fly by the seat of your pants’ approach to a downturn, you’re setting yourself up for a rather shaky and challenging time. Remember, it’s hard to fight for survival when you’re already standing on the battlefield with no weapons. Preparation is key — and now is the time to do it.

Brands who get in early, restructure early and batten down earlier will have more resources to fight the good fight as a recession comes into play. Armed with a strong brand as you move into a recession and with cash in the bank puts you at an advantage to capitalise on available market share as competition falls from the cliff.

HOW YOU CAN THRIVE

Here’s 6 ideas to get you thinking about how to weather the storm (and come out stronger on the other side).

1. Take a look around

During a recession, customers behaviours and habits change. Most often, without notice. There’s no warning and it can feel like your business has been bit hit by a truck. Spending is reigned in, new experiences are thrown out the window and trialing new ideas or ventures…just…doesn’t…happen. Understanding how this affects you, your industry and your livelihood is key to survival.

2. Dial up the value you bring to the table

Look closely at where you bring value and dial it up where you can. If you can balance perceived value with internal efficiencies you’re onto a winner. Working through a recession is about reducing cost and stabilising revenue (or if you can — growing it). This comes from both sides of the coin as consumers look for better deals and savings with your competitors. Instead of fighting at the bottom of the barrel. Take a hard look at where you can bring additional value without extra costs and differentiate yourself that way.

3. Invest internally

Look inward before you look outward. Take a close look at your customer base and identify your truly valuable customers and invest in them. In a thriving economy, the quickest and cheapest way to increase revenue is to increase your current customers spend. It’s a volume and frequency game — increase the price, or increase the number of times they spend. Because in a downturn, these customers are not only harder to find, they’re sometimes not even there. Focus in on your great-fit customers and bend over backwards to build their loyalty. This goes for your employee’s too — the best ones are generally the first to go, make them feel safe, secure and don’t give them a reason to jump ship.

4. Open yourself up to new opportunities

We love a contrarian mindset and believe a downturn is the absolute best time to launch a new business or venture. New businesses and brands are nimble. They can move quickly, slowly or at whichever pace they need to make it work where others are stalled and held back by people, processes and liabilities. Competition is less intense. You can acquire and build on market share quicker and with less invested capital than almost any other time. Advertising is cheaper and mutually beneficial partnerships are easier to make a reality. Existing businesses who can introduce new lines, new products and/or a new offering to new segments quickly can build and nurture these lines through the recession to come out on the other side with an incredibly profitable and stable extension of their existing brand. If you’d like to learn more about how to do that — you can chat with us here: studio@mkrst.co

5. Use the extra space to innovate

When business is good and you’re run off your feet it leaves little time to innovate. If you’ve been sitting on an idea just waiting for the chance to run with it — now’s the time to take action. This could be experimentation with product packaging, delivery methods, sales tactics and tools, creative exploration or even an entirely new product. Look for opportunities to quickly test and iterate on your ideas to test and gauge how consumers respond. Try to prioritise ideas that can break even quickly, and provide the learnings you need to make informed, viable decisions as we exit the recession. Whether your goal is to grow market share immediately or stabilise, build and grow later, taking a long-term view toward innovation is essential.

6. Eat the competition

Businesses struggling to make it through can be snapped up quickly and for quite cheap. Look for businesses with lower cash reserves, bad debt or financial mismanagement. These types of businesses can be highly lucrative purchases providing there’s still value to be gained in the transaction. By buying another business, their IP can give you access to competitive secrets, new technology/patents or market segments you’ve previously never ventured into. Acquisitions can be one of the most sustainable and efficient ways to grow during a downturn. If you can’t beat them, buy them (and their customers). Win-Win.

How branding can help…

Most high-impact business decisions involve some level of work on your brand — from a brand uplift and refresh, to full-scale re-brands. If you’re looking to grow, differentiate, extend or redefine — you have to take a long hard look at how you represent yourself to your audience, and whether or not that aligns with who you are, your strategic goals and objectives and what the future for your company looks like.
Regardless of whether you’ve been in business for 5 years, 5 decades or 5 minutes. A Brand development project can help you:

Double down on differentiation

When times are tough (like a recession), consumers are more price-aware and sensitive to their back pockets. A brand refresh can help you stand strong in a wake of vultures. It can help you get noticed. It can help you dial in on your strengths and re-articulate the value you bring to your customer. A brand refresh can influence your customers to feel a certain way about you, reinforcing your position in their lives.

Increase Brand Recognition

A brand refresh most commonly includes an uplift of your brand signifier’s. This includes your visual identity, your logo, your approach to colour and how you use it, your typography, messaging and the language you use to communicate. It can help you become more distinctive and memorable in your market. This is important in growing market share at any time and even more essential in a declining market.

Revitalise brand perceptions

Pivot — the buzzword of 2020. But it’s more true now than ever. Your ability to move, adapt and re-evaluate where you sit in the market can help you gain access to untapped revenue sources and customers. If your brand’s not perceived correctly, customers are harder to win and struggle to find relevance and value in what you bring to the table. This can cause trust and credibility issues. A brand refresh can help you re-frame your position in market and bring assurance that the perception your customers hold of you is aligned to how you want to be seen.

We have created a no-nonsense workbook to help you assess where your brand is currently at, identify gaps and hopefully help you plan for what’s next. This guide should help you figure out exactly where you want to be and give you everything you need to lay out a roadmap on how to get there. You can grab yourself a copy of our Brand Audit Workbook here or you can always chat to us via studio@mkrst.co