While there’s been much debate over whether the U.S. economy is currently in a recession, the fact remains that once it makes headlines, it strikes terror into the hearts of business owners and customers alike. But as a sales leader, you know recessions are simply part of the business cycle. You understand that selling in a recession requires preparation, increased creativity and, often, a change in sales growth strategies. Before you experience a downward trend of customers becoming more reluctant to buy, make sure you have a playbook ready on how to soften the economic blows.
Wondering how you can prepare your business to stay afloat during a downturn? These 5 tips will help cushion your business for when a recession hits as early as 2023.
Understanding Recessions and Their Impact on Businesses
Before getting to the sales growth strategies, let’s first clarify the state of the U.S. today. Because a recession is defined as “a fall in gross domestic product (GDP) in two successive quarters”, many experts have declared that the U.S. entered a recession back in the summer of 2022. They argue that while the economy grew by 2.9% in the third quarter of 2022, other factors such as industrial production, rising unemployment, and falling retail sales all point to a recession.
And it’s not just the U.S. either. According to David Malpass, President of World Bank Group, “Global growth is slowing sharply, with further slowing likely as more countries fall into recession. My deep concern is that these trends will persist, with long-lasting consequences that are devastating for people in emerging markets and developing economies.”
While it’s true that recessions don’t affect everyone in the same way, the impact on your bottom line is felt regardless of your company size. Businesses both large and small have suffered slumping sales, credit impairment, bankruptcy, and employee layoffs. What helps you minimize its impact all depends on the efficacy of your sales growth strategies—more on that in a minute.
Recessions and Their Impact to Your Sales
As briefly discussed, an economic recession occurs when economic activity slows down, unemployment rises, and customer spending decreases.
During this period, you may experience:
- Sales slow to a trickle
- Demand on a downward spiral
- Trickle-down effects (e.g. low consumer demand causes ROI for ads and marketing to become predictably low, forcing media companies to cut budgets and layoffs, thus resulting in revenue slumps.)
As sales revenue continues to decline, you may feel pressured to cut costs of your own—but this is exactly what you should try to avoid. Maintaining or even continually exceeding revenue is a necessity to continue growing. Accomplishing such a feat is largely dependent on your ability to put these 5 sales growth strategies into practice.
The 5 Ways to Generate Sales During a Recession:
1. Keep Your High Value Leads Engaged
Though prospecting and pitching to new customers is important for driving sales, you can’t neglect your current customer base. According to Bain and Company, increasing customer retention rates by 5% can bring in 25% to 95% more in profits. This means you should make customer retention a top priority and upsell your current customers.
There are a couple of ways to entice your existing customers. Here are a few:
- Send personalized newsletters to remind them of your product’s value
- Use retargeting ads to keep your offer top of mind
- Improve customer communication channels (chatbot, online forums, content marketing, telephone, etc.) to keep customers onboard
- Resolve their issues ASAP to maintain exceptional customer service
- Keep your website fresh to show visitors that you always have something new to offer—enticing them to revisit
It isn’t just about finding new customers during a recession, but also looking for growth opportunities within existing customers.
2. Always Offer Your Most Popular Products
In times of recession, most households are forced to cut spending on unnecessary items to cover necessities. Therefore, you should assess which of your products are most suitable for selling during hard times.
Focus on which products offer the best value for your business and your customers. A couple ways to implement this would include: utilizing testimonials and reviews of the product, and creating social media ads showcasing what the product is, why it’ll better the lives of your customers, and why it’s a no-brainer purchase.
3. Invest in Inbound Marketing
As previously mentioned, the gut reaction when a recession hits is to start pulling the plug on your marketing plan. However, that’s not where you want to start cutting costs. Marketing and advertising are one of the few lifelines you have to reach customers and can prove to be invaluable tools that keep your business afloat during a recession.
The most effective way to use these tools is in the form of inbound marketing. Inbound marketing is about bringing customers to your website through valuable, engaging content (such as blog articles, landing pages, or videos) tailored to their interests and pain points. Inbound is the winning choice here, because you’re primarily investing time, not money—giving you more flexibility to experiment and higher long term ROI while sticking to any tight budgets you may have. Though it isn’t meant to completely replace outbound marketing, 53% of marketers believe that inbound marketing gives them higher ROI; only 16% said the same of outbound.
4. Reward Customer Loyalty
As stated in the first sales growth strategy, your efforts are not wasted if you focus on driving sales from existing customers instead of prospecting for new ones. As such, it’s important you establish an incentive for them to remain loyal. Consider how to build a moat around your customers with the guiding mantra of “how can I make my customer WANT to do business with me?”
The most effective way to reward loyal customers is by asking them what they desire and meeting their wishes. Send surveys via email to show your loyal customers that you not only value them, but also respond to their feedback. Creating a loyalty program that aligns with your business strategy and is designed to give your customers the ability to save money will keep them coming back. Then when recession wanes, you can switch back to an experience-centric approach.
While the COVID-19 recession is the shortest on record, loyalty programs performed immensely well. According to Global Customer Loyalty Report 2022, 62% of respondents said that loyalty programs helped keep customers engaged during the pandemic.
Humans crave connection and want to feel seen. If your business makes them feel important every time they visit your store, chances are they will return.
5. Prepare Ahead of Time to Avoid Disaster
As a general rule of thumb, you’ll want to have these core actions be a part of your recession preparations. It’s important to note that this is not an exhaustive list, but rather a foundation for planning around financial insecurity.
- Take inventory of your financial priorities
- Establish a backup to your emergency fund
- Keep up communication with your team and customers
- Focus on your cash flow
When the economy is on a downward spiral, your business doesn’t have to follow suit—keep focused, flexible and financially aware. Increasing your sales and having your business continue to thrive boils down to the sales growth strategies you’ve planned ahead of time.
Need help putting a recession plan together? Get in contact with our expert sales consultants to start recession-proofing your business.