This Mindset Is Essential for Successful Business Comebacks

As we seem to be stuck in a chronic game of “Ready. Set. Wait.” while our local and national leaders decide how to move forward in the new normal, we have two choices to make:

  1. Hunker down and hold tight to what we have so we can resume the life we once knew when the storm passes.
  2. Focus on improving what we have, look for opportunities, and prepare for growth so we can hit the ground running and operate even better down the road.

When nothing is certain, it seems certain that the first choice of hunkering down makes the most sense: Hold on to what you have so you don’t go under when the ship starts to sink. After all, playing it safe is better than risking it all.

If the above is how you are thinking, think again!

The first approach is that of a Fixed Mindset, and the second reflects a Growth Mindset.

Which of these mindsets you apply to your marketing and business operations as you face the challenging environment in which we operate now will determine if you succeed or fail. It’s really that simple.

Historically, the companies that succeed through tumultuous and uncertain times are those with leaders who have a common characteristic associated with a growth mindset: psychological resilience. 

Wikipedia describes psychological resilience as follows:

The ability to mentally or emotionally cope with a crisis or return to pre-crisis status quickly. … Psychological resilience exists when people develop psychological and behavioral capabilities that allow them to remain calm during crises/chaos and to move on from the incident without long-term negative consequences.

While many may argue whether resilience is a trait we are born with or a learned skill, I am going with renowned psychologist, Stanford professor, and author of “Mindset,” Carol Dweck, who claims resilience is a skill, not an innate human trait. Dweck maintains that resilience is part of a growth mindset which is grounded in the belief that hard work, dedication, one’s intelligence and ability to overcome challenges can result in great accomplishments.

The fixed mindset believes your abilities are fixed, so you stick with what you have, and you believe your potential is predetermined by circumstances beyond your control. As a result, you don’t sharpen your skills and ability to identify opportunities, improve efficiencies, and make futuristic decisions vs. short-term choices.

When you look at companies that rose above past recessions stronger and better than competitors, creating and executing growth plans was the primary difference.

An article in the March 2010 edition of the Harvard Business Review, Roaring Out of Recession, reviewed winners and losers from three previous recessions – 1980, 1990, and 2000 – and found that businesses lead by a growth mindset rose above competitors substantially. In fact, their studies show that only 9% of businesses monitored survived and actually grew coming out of a downturn, 80% failed to achieve their pre-recession levels within 3 years, and 17% failed altogether.

What about that 9%? These were the companies leading with a growth mindset that balanced offensive actions, such as improving efficiencies and seizing new opportunities, with defensive tactics of cutting back on costs to prepare for the worst.

What they did:

  • Kept and even added staff instead of letting people go
  • Remained committed to marketing programs
  • Invested in assets for long-term growth

As a result, these 9% came out stronger than before. Office Depot vs. Staples is a prime example offered in the HBR article:

Office Depot cut staff by 6% in order to cut losses for the near term. Staples hired more staff and looked for opportunities to improve operational efficiencies and invest for the long term. As a result, Staples’ sales were doubled at the end of the 2000 recession and were substantially higher than Office Depot’s sales, which were billions ahead of Staples before the recession.

Lessons learned from the HBR study, and the impact of a growth mindset vs a fixed mindset, include:

  • Maintain marketing programs and brand presence during uncertain or down times so that when purchasers start purchasing again, they think of and come to you first. Keeping your brand presence alive is key to letting customers and influencers know you will be around when the dust settles.
  • Reduce operational costs not staff. Doing so sends a signal to all employees that you are committed to the value they add which in turn increases their creativity, drive, and contributions at a time these attributes are needed most.
  • Invest in assets you can likely get for lower prices due to the recession to save money. This way you will be ready to respond to future opportunities quickly, and enjoy higher profit margins while others are scrambling to catch up.

Staying the course and believing in your business’ ability to reinvent, reinvigorate, and rise is perhaps the most important strategy you can execute while our communities juggle the pros and cons of getting back to the old normal or the new normal, whatever it may be. If you lose customers now and have to start rebuilding your base when the recession is over, you will have a very hard time catching up with those that managed to keep their base and grow incrementally.

How the Impact of COVID-19 Is Changing Marketing

Well, it’s not as if we can start 2020 all over again — we’re already halfway through this year thus far. Yet, we can say one thing, COVID-19 and its recessionary impacts may be hanging around awhile. How may this have changed marketing mid-year, and possibly changed it permanently?

Well, it’s not as if we can start 2020 all over again — we’re already halfway through this year thus far. Yet, we can say one thing: COVID-19 and its recessionary impacts may be hanging around awhile. How may this have changed marketing mid-year, and possibly changed it permanently?

Such prognostications have kept The Winterberry Group, a marketing research consultancy, plenty busy since March: reading the tea leaves of government data, industry interviews, marketing dashboards, econometric algorithms, and the like. Principal Bruce Biegel told a Direct Marketing Club of New York audience this past week that indeed June has been better than May, which was better than April — when the U.S. (and much of the global) economy was in free fall.

So what’s underway and what’s in store for us midyear? Have we turned a corner?

Our Comeback Will Not Be a U-Turn — ‘Swoosh!’

When unemployment shoots up to 17.1%, and 40 million American jobs either furlough or disappear, there’s going to be a lag effect. The “wallet” recession is upon us, as consumers hang onto their savings, or eat through them, so there’s not going to be the same level of demand that drives upward of two-thirds of the U.S. economy.

New York City is a COVID-19 epicenter — and the commercial real estate market may take five to 10 years to recover, reports The Economist (subscription required). Knowledge workers will return, eventually. But densely populated urban centers, where innovations accelerate the economy, may look and feel different for some time, and that in and of itself could hamper national and global growth. Can other innovation clusters stave off the virus to protect collaboration?

And then there’s our world of advertising. Biegel sees digital being a “winner,” as traditional media continues to take a drubbing. Linear TV spending dropped by a quarter this quarter, and direct mail by half. Experiential and sponsorship spending has been slashed by 75%, as concerts, live sports, conferences, and festivals all took a public health-ordered hiatus. Yet, even in digital categories, Q2 has yelled “ouch.”

Email is the only channel to have held its own, though pricing pressure has cut margins. Social, search, and digital display all have posted drops from 25% to 40% during the quarter — and though all our eyes were home watching Disney+, Netflix, and the like, even OTT/addressable TV ad spending was down by 5%. With the Newfronts coming this week, it will be interesting to see what types of digital media may post gains.

So if June’s “recovery” in media spend is any indication, Q3 (sans Olympics) and Q4 (yes, we’re still having an Election, last time I checked) should be solid though not buoyant. Biegel says it may be a “swoosh” recovery — think Nike’s logo — down fast, but up again slowly, steadily and resiliently. Which begs the questions: Can ad businesses, business models, and brands cope with a new reality?

The “new normal” is about coming out of the COVID-19 crisis — and half of executives surveyed by The Winterberry Group aren’t expecting miracles:

Medium-Term Budget Cuts

IAB-Winterberry Group State of Data (2020)

 Q3 Will Start a Recovery … of Sorts

Source: Advertiser Perceptions, Pivotal Research Group (2020), as reported by Winterberry Group

And, Biegel reported, that it may indeed take to 2024 — with COVID-19 firmly in a rear view mirror — for a recovery to be complete, according to IPG Mediabrands Magna. It is predicting a 4.4% ad spend contraction this year, a 4% recovery next year, and “subdued” results thereafter until mid-decade.

So How Have We Changed — and Will These New Behaviors Stick?

Some effects, though, may indeed have permanence in how Americans consume media — perhaps hastening trends already underway, or creating a whole rethink of how we act as consumers. Consider these impacts:

  • Streaming to TVs more than doubled during COVID-19 crisis. Have we rewired our video consumption habits away from scheduled programming for good?
  • Mobile data traffic surged 380% in March alone. Consumers have taken to their smartphones everywhere — so how has mobile viewing altered consumer’s screen habits across devices, and will it stick?
  • DTC brands and catalogs know all about remote selling — and so do millions of consumers who have now come to love shopping this way.
  • Video game use is up 60% — opening the door to more in-game advertising opportunities. This may change the mix of brands seeking to engage consumers there.
  • In January there were 280,000 posted job openings in data analytics. There are 21,000 today. More than half of marketers expect predictive modeling and segmentation to occupy their marketing strategy concerns for the balance of 2020.
  • Tangible value matters. Consumers will be demanding more pricing benefits from brand loyalty, and less VIP experiences. We may be getting tired of lockdowns but we are steadfast in a recession, savings conscious mindset.
  • Business travel – yes, your clients may be returning to the office, but do they really want to see YOU? What can B2B marketers and sellers achieve virtually?

It’s ironic, Biegel said, that privacy laws and the crumbling cookie are making customer recognition harder in the addressable media ecosystem, just as consumers expect and demand to be recognized. Identity resolution platforms will evolve to cope with these new marketplace realities — both of which are independent of COVID-19 – but the solutions will bring forth a blend of technologies, processes, and people yet to be fully formulated. These are still open and important marketplace issues.

So assuming we’re healthful health-wise, we have some challenges ahead in ad land. I’m glad to have some guideposts in this unprecedented time.

Brands Need to Keep Engaging – Don’t Just Stop Because of Crisis

We are in extraordinary times – and it’s only prudent to recognize this. While the Fed may be doing everything possible to keep our economy afloat, we likely will remain in limbo until a public health victory is apparent. It’s time to take stock of what we do on behalf of our brands and clients, to immediate effect.

Among thousands of businesses these past two-plus weeks, many of us have effectively handed our marketing decisions over to finance and accounting. Which means, if you’re not producing an immediate revenue gain, you’re probably being cost-reduced to the bone, if not entirely out of work. Such is the illiquidous, flash-frozen effect of COVID-19 on our economy. We’ve lost more U.S. jobs in three weeks than we did during the expanse of the Great Recession.

Cash is in crunch, and though The Fed may be doing everything possible to keep our economy afloat (will it work?) we likely will remain in limbo until a public health victory is apparent. That could be months. It may yet take longer to resume growth – and who knows how business and consumer behavior may have changed by then? We are in extraordinary times – and it’s only prudent to recognize this.

It’s time to take stock of what we do on behalf of our brands and clients, to immediate effect. There is much work to do.

Marketing Must Continue … With Prudence

  • Every pharmacy, drug store, food store, and big-box retailer – and the agencies that support them – should proactively communicate store safety measures, and elevate “conveniences” such as shop-online-and-pick-up-in-store to the preferred method of distribution. This is an opportunity to build consumer and brand trust.
  • For financial marketers, the need to connect with consumers right now regarding savings, budgeting tools, and capital preservation should be a high priority. Make it happen.
  • On television, I’ve seen the messages of optimism from the likes of Walmart, Toyota, and Ford. (Post your inspired ad in the comments section below to share, please.) We need these messages right now. Beyond our own mortality, we will emerge on the other side of this. Brands need to be megaphones for hope and empathy. And certainly not insensitivity.
  • Perhaps TV spending is too steep for many brands’ budgets. In my email inbox, my favorite restaurants offer meals-to-go, my coffee house enables virtual tips for unemployed baristas and healthcare workers, and nonprofit organizations are postponing their live fundraising events with an online ask for the here and now. Needs don’t stop, in fact, the chronic has become acute. For those of us who can afford to help, there’s a collective mood to give. There are reasons to keep relevant communication appropriately flowing to audiences.
  • My previous post addressed data quality. Let me repeat: all those mobile and data visitors to your sites right now must not go unrecognized. Ensure you have a data and tech plan to identify (perhaps in the form of free registration, analyze, and engage accordingly.
  • Respond to the Census. Yes, do it for democracy. But we in the marketing business also know how invaluable Census data is to the economy, and the strategies we map for our brands.

So, yes, we’re all facing a flash freeze. And marketing-as-normal needs to be re-calibrated. So let’s re-calibrate … show our CFOs the likely payback, and let’s get going.

 

 

The Grand Reopening of the U.S. Economy Will Happen, Plan for It

We are in uncharted territory, much as we were in previous economic downturns and recessions. Yet, do know, another expansion will follow … eventually. There will be a grand reopening of our economy, and as marketers, we need to plan for it.

I love defaulting to optimism – even in the darkest of times. It’s been part of my survival mechanism through all sorts of crises. That being said, we are in uncharted territory in this new normal, much as we were in previous economic downturns and recessions. “The Great Recession” of 2008-2009 was largely Wall Street born and Main Street slammed. But remember, the Great Expansion followed. A possible recession stemming from COVID-19, however, would be largely reversed, with millions of livelihoods suddenly denied, and both Main Street and Wall Street being slammed in tandem. Yet, do know, another expansion will follow … eventually. There will be a grand reopening of our economy, and as marketers, we need to plan for it.

Listening to the U.S. President talk about getting parts of our country back to some semblance of normal by Easter may seem wild-eyed and some might say irresponsible. In reality, China is reportedly already back on line – after six-to-eight weeks of paralysis. Does this mean a possible “V-shaped” recession (very short), a “U-shaped” one (mild), or an “L-shaped” one (long term)? We don’t know.

It’s always dangerous to make prognostications, but we can learn from patterns elsewhere in the virology. With the United States now the most afflicted nation in sickness, we yet have a massive fight ahead to control viral spread. And doubt and fear have taken hold as two debacles have come about, one public health and one economic.

Unfortunately, there is no “on/off” switch for the viral crisis. Even when its spread is curtailed, which will happen, we’ve been shaken and edginess is going to remain. That’s only human.

Patterns of consumption will not resume as if nothing happened. Unemployment shocks will not reverse as easily as they came. So there will be a “new” normal.

However, a reopening is coming. You might say that’s my optimism, but folks – we are going to be okay in a time. It may not be of our choosing, as Dr. Fauci faithfully reports, but one that will be here nonetheless. As marketers, let’s get ready for it.

Look to Your Data to Prepare for What’s Next

Recessions are actually good times to look to the enterprise and get customer data “cleaned up.” The early 90s recession gave us CRM, and database marketing flourished. The end of the Internet 1.0 boom in 2000 brought data discipline to digital data. And the Great Recession brought data to the C-suite.

So let’s use this time to do a data checkup. Here are four opportunities:

  1. Data audits are often cumbersome tasks to do – but data governance is a “must” if we want to get to gain a full customer view, and derive intelligent strategies for further brand engagement. Quality needs to be the pursuit. Replacing cookie identification also is a priority. Understand all data sources to “upgrade” for confidence, accuracy, privacy, and permissions.
  2. March 15 might be a good date to do an A/B split with your customer data inputs – pre-virus and during-virus. What new patterns emerged in media, app usage, mobile use and website visits? Are you able to identify your customers among this traffic? If not, that’s a data and tech gap that needs to be closed.
  3. Customer-centricity or data silos? It’s always a good time to tear down that silo and integrate the data, yet sometimes healthy economic growth can mask this problem. Use the recessions to free up some time to actually get the work done.
  4. Test new data and identity solution vendors to increase match rates across your omnichannel spectrum – to better create a unified view of audiences, both prospects and customers. I’ve already seen one of my clients come up with a novel offer to analyze a subset of unidentified data to drive a substantive lift in matches.

As we work remotely, it’s important to understand that this current state of crisis is not a permanent state. Only once the virus is conquered, on its weaknesses not ours, can we really have any timetable to resume the economy. That being the health science, it just makes great business sense now to “stage” your data for that eventual Grand Reopening.

Hiding Tax Increases: USPS Taps Mailers’ Budgets, Again

When the cost of oil and gas plummets, that’s when states—looking for revenue—make a move to raise taxes on gasoline, in hope voters will hardly notice. Of course, when the price of gasoline inevitably increases months or years later, that tax on gasoline becomes painfully obvious and more pronounced: Small cars get driven, while the big guzzlers stay in the garage or showroom. Conservation rules the day.

When the cost of oil and gas plummets, that’s when states—looking for revenue—make a move to raise taxes on gasoline, in hope voters will hardly notice. Of course, when the price of gasoline inevitably increases months or years later, that tax on gasoline becomes painfully obvious and more pronounced: Small cars get driven, while the big guzzlers stay in the garage or showroom. Conservation rules the day.

Like a tax-hungry legislature, the United States Postal Service is looking to raise postage again—a surprise rate hike request, given the exigency first taken from mailers’ pockets last year that is still in effect today. The U.S. economy may be back—but marketers aren’t stupid on postage, they well know the pain. Nothing takes business elsewhere and more rapidly than unplanned, surprise cost increases.

My mindset on the entire exigency has always been suspicious. Purportedly to recover lost funds from the impact of the Great Recession (2008-09), the USPS exigent increase, on top of the inflation-indexed release of 2014, has represented a collective 6 percent tax of a different kind. What business gets to pass along its Recession “losses” to its customers? Direct mailers, unlike drivers at the pump, have very much noticed.

Perhaps the economy is doing well—heck, even direct mail volume is holding up. However, better economic times—which can cover some fiscal sins—can’t hide what needs real fixing inside the Postal Service. We all know that USPS deficits and defaults, which postal management appeared to try hard to avoid, with cost-cutting, network rationalization and other initiatives, are really attributable to Congressional mandates, and not the Recession or digital migration.

Well the U.S. economy is moving in the right direction, and has been for six years, and may grow another 3 percent or more this year (2014 fourth quarter aside). Business outlooks are generally good, and Apple among others just set a quarterly earnings record in profit. Jobs have come back, though the labor participation rate lags, and pay packets have barely budged. The stock market, volatile yes, is booming again. Few may feel very secure, but the underlying data shows the recession of 2008-2009 is far behind us.

Even the USPS knows that the U.S. economy is growing. Direct mail volume held its own in 2014—the digital death knell has been greatly exaggerated. Perhaps cooking up the exigency, and another, surprise inflation-indexed increase this year, is the Postal Service’s way of taking another revenue injection when the going is good. Certainly that’s more reliable income than waiting for Congress to act on what is most meaningful: backing off ridiculously punitive, pre-funding requirements for retiree health benefits, letting the USPS offer employees its own healthcare plans, and halting silly moratoriums on USPS infrastructure needing to resize to fit the times.

I always thought Congress, with the USPS in fiscal crisis and default, and a difficult severe recession, would have prompted members to act. The White House, too. Nothing in the way of new reforms ever emerged. Maybe Congress, too, is waiting for “good times” again to stage its next postal act. Let’s hope this next one doesn’t cost mailers even more. The present situation is unsavory enough.

What Do We Really Know About Consumers?

Turns out American’s didn’t splurge on trivial junk during this recession, and that means many experts don’t know today’s consumer as well as they thought they did.

Turns out Americans didn’t splurge on trivial junk during this recession, and that means many experts don’t know today’s consumer as well as they thought they did. At least that’s the takeaway from this article by Mina Kimes of CNN Money.

The prevailing assumptions about recessionary spending were based on studies of consumer spending during past recessions that showed Americans spending more on cheap indulgences during hard times. But as Kimes points out, that hasn’t held true during this recession. iPhone sales spiked while lipstick, liquor and candy dropped.

Some of those trends saw ups and downs (a previous report by Kimes indicated general cosmetics doing well last year), but overall, 2009’s cash-strapped consumers seemed to make purchase decisions more thoughtfully than in recessions past. Instead of cutting expensive items and indulging on the cheap, they made more complex calculations. They often saved money to buy expensive items, for example, sometimes by cutting out the very indulgences consumers might have wallowed in during “simpler” times. It appears that many took control of their finances instead of living hand-to-mouth, with some surprising retail results.

I wonder how much of that reflects a psychological shift in consumers, and how much reflects shifts in the retail market. Many goods are available at relatively low prices these days thanks to several decades of the biggest retailers competing on price (i.e. Wal-Mart). I’m not sure indulgent lipstick’s that much less expensive than a pair of bargain shoes. On the other hand, consumer electronics is not simply an entertainment purchase. People spend their careers using their personal laptops and smartphones as tools; so spending more can mean more money or better opportunities. Consumers are well versed in the investment calculation of these items: If you have to buy a phone and phone service anyway, why not choose the one you can carry with you and load with apps that make you more productive, or at least more entertained?

Consumers have changed, but the retail landscape may have changed even more. What can you assume about a nation of potential customers who constantly consider that?

That’s probably not surprising to those of you who read Target Marketing or All About ROI, which often talk about the importance of testing and verifying assumptions about your audience. At heart, direct marketing is a numbers game, and those successful at it know what my football line coach used to sum up: to “assume” makes an “ass” out of “u” and “me.”

But even extensive testing doesn’t really take assumptions out of the equation. Who spends resources testing something they don’t expect to work? When you try something new, where did the idea come from? Usually an assumption. So even with testing, there’s a bias to test toward what we believe to be true. Adaptability is learning to recognize and react quickly when things we thought we knew turn out to be wrong.

So have consumers changed during this recession? Has that been the case for your customers? Are they acting against type, buying or not buying in ways that defied your expectations?