As we enter 2023, a recession is a topic of discussion and a consideration for planning for the new year. As people who have worked successfully through the past four recessions, you could say we are recession experienced. Success, meaning business growth during these recessions, provides us with a point of view that is valuable today. Here is what we have learned.
First, a recession is marked by the fall in the GDP in two successive quarters. The GDP is the gross domestic product or total value of goods produced and services provided in a country during one year. Our being recession experienced is based on working through and growing our business during the last four recessions.
Our first recession was in 1990-91. It lasted eight months. It was early in our careers, so our success was defined by what we learned through the actions of others (AKA what worked and what did not). The second recession was in 2001 and it lasted eight months. The third recession was labelled the Great Recession which lasted one year and six months from 2007 to 2009. This is where we really “cut our teeth” and learned how to grow your business while others were simply hoping to survive. The fourth recession lasted two months in 2020 due to COVID-19. Once again, we used our experience to press forward and grow our business while others were recoiling. Our accumulated experience during these recessions twice produced high double-digit growth for our business.
The glass is half full
With our experience growing through past recessions, we are seeing the same reactions from many companies in the home and building markets. Businesses are restricting hiring or laying off people, cutting budgets, and crossing their fingers that an austerity program will let them get to the other side of the recession. We see most of these plans to be potential business altering mistakes. History suggests leaning into a recession while others step back leads to the road to remarkable success. Kohler in the 1970’s is a great example of leaning into a recession, taking the lead, and never looking back.
Focus on customer service. Housing demand remains good. It is cooling off to average levels of demand that remain more than enough to keep businesses growing. Your customers likely experienced supply chain issues in the last recession, so they are sensitive to the relationships they have with their suppliers.
Invest and promote your ordering and fulfillment systems. Have your sales team be more supportive in problem solving with their customers. Make certain you have strong sales support teams in place for your customers and your sales team. Maintain your commitment to marketing. Yes, continue to invest in marketing which occupies more than two-thirds of the purchase funnel and drives demand more today than ever. A recession is the time to promote and demonstrate the reasons for your customers to choose your business.
Most every business feels compelled to reduce costs as they plan for a recession. Our experience shows the most considerate place to make this happen is to suspend new product development. It is tough to introduce something new when customers are focused on using what they currently have available to them. There are a few exceptions that provide an immediate alternative to the status quo that will leverage existing resources and provide new resources at a cost equal to or less than what the business has available to them. Does something come to mind? We have something in mind for you.
Draper DNA completed a research project this past summer to determine what clients and prospects value most in their business partners. We learned that experience is the most valuable thing we can bring to our clients. This experience crosses many important areas including the home and building industry, manufacturing, resources budgeting and management, sales, customer service, business development, people understanding and engagement (AKA maturity), sales, and, of course, all disciplines of marketing. As with all good research and findings, we look forward to talking with you to learn of your experiences and how we may be able to work together.