Over the past six-months economists have increasingly sounded the alarm about the recession just around the corner. Does market research have a role in helping companies prepare for this possibility? We think the answer is: Yes.
Business publications and financial pundits offer varied advice on the best strategies for surviving and thriving in the next economic downturn. A recent article in the Harvard Business Review advocated taking a long-term view, avoid cost cutting and focusing on growth opportunities. On the other side of the spectrum, some strategic advisors recommend building up a large financial reserve and avoiding taking on any additional debt. And some recommend a two-pronged approach.
Regardless of your world view on how best to prepare for recession, a few things seem inevitable. In a general economic slowdown:
- Customers and prospects face greater budget constraints
- New investment decisions receive more scrutiny and take longer
- There are fewer sales opportunities
Collectively these trends make it hard to find and win new business.
Primary research insights can help companies focus on the market segments with the most opportunity, identify the outcomes prospects are willing to invest in, and optimize their upper funnel activities.
Identify Segments of Opportunity
When fewer sales opportunities exist, marketing and sales resources need to focus on the segments most likely to buy, especially if sales and marketing budgets are cut.
Segmentation research can identify the segments:
- Willing to invest in solving the pain-points your offering addresses
- Where your value proposition resonates
- That recognize and value your competitive differentiation
With these insights’ companies can better target sales and marketing resources to areas of the market most likely to provide a return on investment.
Empower Internal Champions
When budgets shrink, indirect competitors grow. Companies become willing to live with the status quo longer. Their current solution may no longer meet their needs, but when it comes to justifying investments it’s easier to defend the need for an existing product, than to advocate for a new solution.
Competition for budget also increases in economic downturns. When faced with a shrinking budget, functional leaders rarely make across the board cuts. Instead they prioritize their investments. Some areas may be unaffected by a shrinking budget, or even have their budget increased. Other areas may be slashed altogether.
Understanding the strength and nature of these indirect competitors helps identify the full scope of barriers you face. This not only helps position your offering; it can also help put your internal champion in a better position to sell the solution to the other stakeholders in the decision.
Align the Upper Funnel to Triggers
The number and nature of the triggers that prompt a prospect to investigate new solutions narrows during economic downturns. When the economy is strong, companies and functional leaders find it easier to think and act strategically. They tend to be more open to new ways of doing things. They explore solutions and vendors that they may have to grow into.
Economic downturns place rational and irrational pressures on functional leaders. In turn, their outlook becomes more tactical. This influences how they react to messaging, sales presentations and processes. Rightly or wrongly they focus on the near-term, and tactical, pain-point or jobs-to-be done. And on price.
This makes them less receptive to high-level messaging. They also have less patience for sales processes that bring prospects through an extensive discovery process that drifts away from what the prospect identified as their core need.
Identifying the tactical needs that trigger interest enables you to incorporate them into messaging and sales processes. This helps reassure the prospect that their tactical needs will be met, which may open the door to a wider conversation.
In economic downturns it can be tempting to reduce the budget for market and customer insights at a time when they may provide the most value. When there are less fish in the stream, success requires knowing where the fish are more likely to be, and the bait that will attract them.