I must be a glutton for punishment. Why else would I continue to stare at a sea of red in my stocks app every day? According to McKinsey, “economic forecasters continue to trim growth estimates,” due to “surging energy and food prices, the effects of the war in Ukraine on supply and trade, and rising policy interest rates intended to cool inflation.” Analysts are split on whether it will ultimately result in a downturn, but consumer confidence will no doubt be impacted by the word “recession” in headlines every day.
For business leaders contemplating pivots, HBR puts it well: “We should expect a re-evaluation of strategic priorities, with reduced liquidity and increased capital costs leading to more scrutiny.”
In other words double-down on the initiatives that quickly drive growth, while reducing focus on those that are slow and low-value.
For brand leaders, it’s a great time to look in the mirror and ask if the living, breathing brand is ready for a recession. We know brand strength is a key driver of business resilience, with leading valuation models consistently indicating strong brands dip less during a downturn and rebound faster. But brand building is a long game.
What can we do right now to ensure the brand is prepared for a slump? These five questions will help you assess.
- Is the enterprise unified around a single shared Purpose?
A key first step is to strengthen the connective tissue that binds and activates the organization. Shared Purpose is the heartbeat of an enterprise, with proven ability to attract and retain talent, keep customers loyal, and capture higher margins. Research from Deloitte highlights 78% of consumers are more likely to remember companies that exhibit a strong Purpose, while 72% are more loyal to Purpose-driven companies. A 2020 EY study suggests “companies that operate with a clear and driving sense of Purpose, beyond the goal of just making money, outperformed the S&P 500 by a factor of 14 between 1998 and 2013.” Yet it’s one thing to have “Purpose on paper” – quite another to have “Purpose at heart.” Brand leaders must ask if the Purpose is known, internalized and used. If not, it may be time for a refresh… or at least re-training.
- Is rapid innovation strengthening, or diluting, the brand?
HBR noted the firms least impacted by the 2008-2009 financial crisis had one thing in common: resilience. They were highly agile in their ability to capture efficiencies and create more flexibility in their planning and operations. This gave them space to pursue innovation that made their customers more loyal. All innovation should work this way: accreting value to both the business and the brand. Unfortunately, too often innovation happens in silos, trading long-term brand dilution for short-term business gain. It’s crucial for brand leaders to balance business agility with on-brand consistency – an art that requires information sharing and collaboration across marketing and non-marketing teams. It’s a good time to ask if your teams truly have the muscle memory for the disciplined collaboration a down market requires.
- Does everyone in the organization have an actionable view of the customer?
One of the biggest barriers to brand consistency is the lack of a shared view of customer experience. In my opinion, one of the central problems is the readability and usability of the information. Personas and journey maps can often be quite technical documents, which can only be interpreted and actioned by a select few. At A+P, we’ve put a lot of energy into breaking that script. As a marketing agency with our roots in PR, we view information as stories. A customer journey map can absolutely be presented as a narrative, not an eye chart. Once the usability barrier is cleared and CX deliverables become meaningful information to everyone, the next step is to bring workgroups together to co-create a unified engagement plan.
- Are teams complementary, or competitive?
Working relationships often come down to the KPIs that incentivize and motivate teams. We frequently see competing KPIs as a root cause behind lack of unity. A+P Partner and Managing Director of Performance & Intelligence Brent Diggins believes upfront collaboration on OKRs and KPIs can be a powerful camaraderie-building tool. “Bringing teams together to co-create the vision in a way that’s truly inclusive, with individuals’ and teams’ goals as key parts of the big enterprise goal, is something that brings people’s hearts into the game and sets the stage for long-term partnership,” he says. Brand leaders can use the inflection point in the market to create an inflection point internally, reevaluating the metrics that can either divide us or bring us together.
- Is the brand and product portfolio creating leverage, or drag?
Portfolio architecture transitions are usually a slow burn. But changing market conditions are often catalytic, accelerating overdue changes. A looming recession can be a trigger to finally field those brand perception studies and determine if architecture changes could unlock meaningful cross-sell opportunities, while also streamlining operations. Simplification can help customers see a clearer picture of the “total offering” with an easier path to bundling complementary solutions. Meanwhile, brand managers juggling complex endorsement and co-branding systems can collapse confusing guidelines and enable everyone to move faster.
The jury is still out. We may or may not enter into a recession in 2022. I certainly hope my stocks start turning green again. Meanwhile, it’s a great time to step back, assess readiness and build consensus around an action plan for the brand. Brand strength is a key foundation of business resilience, and market swings present a perfect opportunity to shore it up.
Are you as prepared as you can be?
Paul Sears is Managing Director, Brand & Engagement Strategy. With nearly 20 years in advertising, brand and marketing strategy, Paul spends most of his time helping clients sharpen their strategic focus – at the brand level or for individual products and campaigns.