Beware of Hibernation - this is not the GFC!
7 Apr 2020
With all that’s going on to help Australian businesses stay afloat right now, we’re being bombarded by a dizzying array of new catchphrases and keywords. One of the latest to be released upon us is ‘business hibernation’. But what is it, and is it for everyone?
Given the uncertainty and pressures we’re living with at the moment, the idea of putting a business ‘to sleep’ for a while may seem logical (and for some, even necessary). But many forward-thinking businesses aren’t shutting down their entire business activity, just their regular day-to-day operations. It’s these businesses who recognise that the Covid-19 chaos will eventually come to an end (sooner rather than later, hopefully), and who want to be ready to go when life starts to get back to normal.
It’s important to recognise a few key provisos though.
This is not the GFC
It’s been shown that an increase in marketing spend during a recession, can lead to long-term advantages for a brand. But Covid-19 is different. It’s levelled the playing field and equalised competitors. It has changed the business landscape overnight, with some brands constrained by budgets and market circumstances. There are many comparisons being made between Covid-19 and the GFC, but way back then, digital was in its infancy. Nowadays, it’s regarded as communication’s holy grail with the power to propel brands into the stratosphere.
During the GFC, brands that continued to invest in traditional marketing generally remained strong and recovered quickly afterwards. Today, we have a host of new communication channels – most notably the various social media platforms – so how will this alter the outcomes post Covid-19 compared to post GFC?
The new connections
Long-term benefits come from delivering lasting impressions. These help to keep a brand relevant, and position it as meaningful and memorable, so that when the consumer comes back into the category, they’re top of mind. These impressions not only create a connection, but nurture it. The important thing to remember in times like this, is that those connections don’t need to be product driven. The line of engagement with clients and customers is not confined to products and sales. In fact, even in prosperous times, real connection is based on something a lot deeper than what you have to sell. Rather, it hinges on what you have to offer on a more personal, emotional level. It comes from how well you show that you support and understand your customers.
That means that, even when you’re unable to provide meaningful difference through your product or service, you can still provide meaningful engagement through your brand. With this in mind, knowing when your business or category will be back in the market becomes less important.
The new directions
Recent research shows that what consumers want now is information and education, while inspiration and entertainment are way down the list.
Also trending upwards is long-form video. People are spending more time on social channels, and have the time to scroll and to view.
There has been a huge uptick in enquiries about content production. But in a much more competitive online environment, we must also think innovatively and project an audience mindset into presentation. More than ever, video now must combine storytelling and graphics, allowing brands to educate and inform in an engaging and meaningful manner.
Ironically, as if foretelling today’s environment, it was Louis Pasteur – the father of microbiology and renowned for his discoveries of the principles of vaccination – who declared that, “Fortune favours the prepared”. It’s the agile, prepared and decisive companies that will rally and come out winning on the flip side.
The new attitudes
Almost overnight, a swathe of social attitudes have changed and the foundations of our lifestyle have shifted. Borders have closed, gatherings have been outlawed, entire industries grounded and either mothballed or been encouraged to find new ways to create revenue.
The international travel industry will be slow to recover, the cruise ship industry will take decades to bounce back, and large events will take time to re-establish themselves. This may be the time for smaller, more agile outfits to come to the fore. Learning and collaboration events will morph onto virtual platforms. People will be hesitant to move far from their patch, so local tourism will benefit. A yearning for the old days of simple socialising will likely see restaurants and hospitality boom, as we rush to re-engage with friends and old routines. Simple joys will become valuable commodities.
Even before life goes back to (relative) normality, we are seeing attitudes towards wastage change. Perceptions of what is essential have been swung around by the unexpected upsurge in hoarding, and for many, the sight of empty supermarket shelves a previously unthinkable phenomenon. Crafts and sedentary ‘off screen’ hobbies are seeing a resurgence, including crochet, puzzles and board games. Fitness Apps are trending as are sales in home activity equipment and clothing.
A massive driver in our connections to a community we can no longer physically engage with, has been the innumerable Facebook groups which have seen a huge spike in recent weeks. Human nature dictates that we want to belong, so, as many of us toil away in isolation, we will join groups – allowing us to belong to new communities – and we’ll be busy making new virtual friendship circles.
The fact that Australians genuinely want to be active at grassroots level will prevail. And while consumer confidence is at an all-time low, people are taking the time to reflect and pause, the previous high-level consumerism will take a back seat, and sharing, swapping and lending will emerge as the new normal.
The new engagement
As we continue on the trajectory of the unknown Australians will adapt and change, so for business it’s never been more critical to reshape and adapt. Good business owners are proactive but, faced with such immense daily volatility it’s a perplexing time. Digital transformation has been thrust upon the luddites and many businesses have found themselves adapting – quickly and often, to their surprise, very effectively.
With all of this continuing to happen around us, we’re seeing three business styles emerging.
Surviving: those businesses that are focusing on the short-term, and for whom, naturally there is fear and confusion. These are often found in the hospitality, tourism and events sectors.
Sustaining: businesses that are adjusting to new market conditions, continually revising existing plans but also tentative about additional investment.
Surging: characterised by managing demanding pressures, shifting into new channels, developing new products and changing their business models all the while recalibrating their priorities.
The new business
So, what should businesses be doing right now? Connecting!
Now, more than ever, businesses must lean in and really get to know how their people are feeling, what they’re doing, how they’re faring and what they want from you when normal life resumes.
Get close to your stakeholders, customers, suppliers, shareholders and your team. Know them, engage with them, understand and empathise, strategise and plan, adapt and innovate.
Now is not the time to sleep, but to find different ways of staying awake. Even if that simply means engaging with your market (or even discovering new markets), and reminding them that you are here, and you still have something to offer.
My advice: If at all possible, do not hibernate, for if you do, you may find that when you wake up, you’re no longer relevant.
My opinion only, as always, I welcome yours.