Are we in a recession? It doesn’t matter — your clients think we are and they’re acting accordingly.
The Silicon Valley Bank collapse sent shivers down their spines and triggered Lehmann Brothers memories. Does it matter that SVB is NOT Lehmann Brothers or that this bank run might have been the first one of its kind to happen mostly online?
Again, no.
A bank collapse is now associated with a clear crisis signal. It breeds fear and fearful investors and account holders withdraw their cash with uncanny speed. In turn, the recession becomes a self-fulfilling prophecy.
In a (perceived or real) recession, people spend less. I’ve written about how B2B buyers’ behavior will change this year here and about how to navigate uncertainty here.
When uncertainty shifts towards a (perceived) imminent recession, what do your buyers want?
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Saving money trumps making money
This thread by Patrick Campbell shows a clear shift towards saving instead of growing. What’s interesting, though, is that we had the same proclivity three years ago. When COVID hit, people expected a crisis, so they started saving:
But we spent so much time indoors that we saved money even if we didn’t set out to do it. When the restrictions were lifted in most countries, people got back to wanting to make money and they were willing to spend what they had saved during the lockdowns:
A year later, we’re back on the savings train.
This sounds a bit counterintuitive, doesn’t it? If you made more money you wouldn’t need to save as much.
True, but we also need to factor in trust: people trust the economy less, pessimism creeps in, and they think fewer people will buy from them. Or that their jobs are less secure these days.
So instead of betting on new money hitting their accounts, they prefer to hold on to certainty. The incessant struggle to find certainty is just like grasping at straws: it offers a brief illusion that you’re safe.
But fighting against human nature is a fool’s errand. And so is assuming everyone thinks the same way. Some consumers still spend their money as usual and some companies still thrive.
Who’s left standing during a recession: David or Goliath?
A lot of companies of all sizes had growth spurts during the last crisis.
At the same time, the 2008-2010 downturn hit small businesses harder than larger ones.
You may assume that larger companies were hit less because they had enough money to cushion the blow. That’s only partially true.
Large companies are notoriously overspending when they’re riding favorable winds. They’re also notoriously hard to adapt to changing climates.
So why did they fare better than their smaller counterparts?
Because they have a larger trust capital, which makes consumers favor them over “unproven” solutions. When money is scarce, you put it where it’s most likely to yield good results.
Luckily for us, SME owners, consumers start to place more trust in small businesses. While the trend is not completely reversed yet, it’s encouraging. Especially since we can steal away some tactics from large corporations.
What your buyers want to hear during a recession
Quick recap: most people are scared and they’ll spend less. This is good for no one: it’s not good for them, it’s not good for business owners, and it’s not good for the economy.
How can you make them overcome their fear and spend money (almost) as usual and preferably on what you’re selling? My favorite messaging and business tactics are:
Build trust: it’s the one thing that works just as well during a recession as it does when the economy is booming
This is the main thing to steal from large companies: invest in building trust above anything else. You may not have a PR department and unlimited budget but you can:
- Un-gate most of your content to showcase your expertise
- Consistently offer advice — if you can do it in a public comment on a social media platform, even better.
- Gather and publish social proof. Tons of it! Very few things are good even when they are excessive — social proof is one of them.
Give them a more affordable alternative to your high-end ticket (downselling)
If you have a high-ticket offer that hasn’t fared so well recently, it’s time to create a more affordable alternative to it. You can always create a starter package for your monthly offers and offer a cheaper PDF alternative to your video course or a shorter workshop.
Here’s how I approached this: my strategy consulting service is quite expensive. The main deliverable is a fully documented marketing roadmap my clients can implement. It’s created for them from scratch, so it takes a lot time and a lot of expertise — it can’t be significantly discounted.
I noticed two things:
1. People are wary about spending upwards of a couple thousand dollars on a strategy right now.
2. Not everyone needs a full strategy. Most of my clients already have a rough sketch of their roadmap.
So I created something much more affordable: a quick, 60 mins strategy session to help them fill in the blanks and gain clarity. It’s roughly 10 times more affordable than the full strategy-building service and it fits a lot more buyers. Win-win!
Show how your product can help your clients save money
I’m not talking about discounts. You can help your clients save money through:
- An outsourced service that costs less than hiring people in-house
- Financial advice
- Helping them choose a better plan (especially in the SaaS world)
- Offering a single solution that replaces several others (another great fit for SaaS companies)
- Saving their time: can you take something off their plate so they can focus on optimizing their cash flow instead? (ideal for freelancers)
Do the math for them and show them exactly how much they can save
People prefer to save money right now and your messaging is built around making money? Flip the script.
Use the list above to build a money-saving alternative. But don’t stop at that: start crunching numbers to show them exactly how much money they are saving.
The average salary for a Marketing Manager in the US is $55/hour. If your service saves them 10 hours per week, that’s $550 a week or $2200 a month.
Use discounts sparingly
Discounts are appealing to everyone: they make buyers buy more (especially when they feel like they’re on shaky ground financially) and they help you get more cash faster.
But we’re here to future-proof your business, not make a quick buck.
So my advice is to use them rarely, only if you absolutely need to, and only if it aligns with your brand’s image. Consider the following:
- Are your buyers impacted by the recession? If so, you can consider offering a discount.
- Are you selling high-end products? If so, don’t discount them.
- Are your products nearing their end-of-life? If so, add discounts to squeeze the last drop of ROI from them before you retire them.
- Are your products necessities or nice-to-haves? Be honest about this. I know it’s hard to, but it makes no sense to fool yourself, does it?
There’s no one-size-fits-all approach to creating recession-proof messaging. I’m sure you knew that. If you’re not sure which of the above applies to your business, go back to the data. Look at your best-selling offers thus far and figure out whether their sales started to decline or not.
Talk to your clients — I cannot emphasize this enough. Ask them how you can support them. Be honest about your own struggles (if any). This will help you build trust and rapport, not just new products. While products and offers have a longer or shorter lifespan, trust, and rapport can be forever.
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Adriana’s picks
1. A recently-launched newsletter I’ve been enjoying A LOT and I think you will too — it’s both fun and thought-provoking. Happy Accidents features a quick story each Tuesday morning about a wildly successful company or product that was seemingly started completely by accident! Subscribe here!
2. Don’t put your kids’ faces on social media. Especially if you’re an influencer: it’s morally iffy and it will take them a lifetime to deal with the damages.
3. This vision of the future from the 1930s is eerily accurate.
That’s it from me today! See you next week, around the same time, in the same place, your inbox.
Here to make you think,
Adriana
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