OpinionWhy you should take the opposite marketing approach in a crisis
Why you should take the opposite marketing approach in a crisis
"If a crisis catches you by surprise, you'll probably need budget cuts to survive. But the first thing is to recognize the human tendency to make reckless decisions in times of fear," writes Ronen Menipaz, CEO of the startup group M51
The emerging crisis in the world of startups and capital raising has hit many entrepreneurs and ventures at the worst time. Within six months, the startup sector has gone from full speed to stall. Suddenly, and to the surprise of many, the U.S. Federal Reserve has hit the brakes. Many ventures have already announced sharp cuts in expenses. But is such a move right for everyone? Not necessarily.
“If you’re going through hell, keep going.” ― Winston Churchill
VC funds often say that tough times produce the best ventures, those that can ride out a crisis and emerge from it stronger than before. The thinking is that those who do well in a crisis have a better chance of succeeding during the upturn.
If a crisis catches you by surprise, you'll probably need budget cuts to survive. But the first thing is to recognize the human tendency to make reckless decisions in times of fear. Even a seasoned CEO may be affected somehow by the negative atmosphere and bad headlines. This doesn't mean the situation should be ignored, but rather that more time should be spent understanding the full picture.
This way you can avoid making reckless decisions and maintain consistency, gathering your marketing data to understand what's most effective and has a high ROI. Think back to all the companies that fired their employees at the start of the pandemic, and just a few months later were scrambling to find new ones.
Strategy for the strong: now’s the time to stand out and learn to weather crises
When everyone's running for the hills, that’s the time to stand up and stand out. If you show strength - if your competitors, prospective customers, and suppliers see you with your head held high - then they'll believe it and you'll believe it.
On a practical level, think of it this way: in this hyper-digital age, how effective are you when everyone's messaging is the same? It's much harder to stand out in good times, which is why all the biggest opportunities arise during downturns. The best investors in the market know this, that’s how they make their money. And you, too. Your dollar in sponsored advertising is worth several times more when the networks are quieter, when others are downsizing, and their effectiveness is falling.
Nonconformity, going against the grain, has proven itself beyond a doubt during COVID. When everyone else was slashing budgets, the companies that invested in their brand, in their advertising, in their marketing - saw the best return on investment. In the short term, between March and April 2020, the volume of advertising on social media fell dramatically, just when the whole world was confined to their homes and glued to their screens during lockdown. Till this day, advertisers recall the sky-high exposure and engagement levels, the excellent sales, and the low costs per lead.
In the medium term, everyone knows that those who showed strength during COVID are financially resilient, as are their employees, customers, and suppliers. When you display resilience, the level of trust in you grows, as does your brand.
In the long term, a nonconformist approach grants a company or organization knowledge and data on those marketing tactics that work during times of crisis. Since most organizations, out of fear and apprehension, don't take this approach, they also don't gain knowledge and abilities, and future employees don’t develop survival skills and outside-the-box thinking.
Bookaway founder Noam Toister was recently a guest on my (and Noa Eshed's) podcast Real Life Superpowers, and told us about how the pandemic seriously hit his startup's revenues. Yet he decided, together with his partners and investors, to resort to a strategy completely contrary to the mainstream. The company raised additional funds from investors and began buying competitors to prepare for the day after the crisis. He built up supply to benefit from a future surge in demand. Today in 2022, with the return of the tourism industry, he is reaping the fruits of that decision and his company has gained tremendous momentum.
When the product’s right, demand won't change during a crisis, and will sometimes even grow
If your tech venture solves a real problem, then nothing has changed. If not, then you have a deeper problem on your hands because your existence isn't justified in the first place. A crisis can be an opportunity to get your house in order, fix it and communicate things to investors and employees. You'll have greater legitimacy to do so and also to take advantage of the crisis to create the next cutting-edge product in preparation for the upturn.
If you know your product meets the needs of the market (has good product-market fit) -- remember that there are many tech products for which demand rises during periods of recession. Tech products in the field of development streamlining or digital advertising optimization can save money, and this is the opportunity for organizations to adopt them. If you know your product's focus is on efficiency and cost savings, this is an excellent time to boost your marketing efforts.
Don't forget your most important asset: your team
One of the biggest challenges companies have in times of crisis is devoting managerial attention to one of the resources that's in shortest supply: great employees. The last few years have proven that great talent is a rare commodity. Contrary to the claim that only the best developers are lacking, also product and marketing personnel can be in short supply and in many cases, the difference between the good and the great is what will lead your company to its highest achievements.
Even if the crisis is drawn out, talented long-term employees are an organization's biggest asset. So, it's precisely during those times when it looks like employees have the fewest alternatives that it's important you make sure to retain them as part of a long-term relationship. Invest more in your employees and in their personal development and remember that you're building a company for the long term.
Talking about nonconformity, that should also be expressed in your appeal to employees. One of the key challenges for startups is competition for employees. Make sure to put resources into that, too, for the sake of existing and future employees. This is a recession, so there's no need to overdo it with extravagant parties and perks.
This can be expressed in other things that have a big impact, like a team-building night with a special theme, a trip, or other nice gestures. Above all your team wants to be appreciated, and to know they are walking on stable grounds and not about to lose their job. Make sure they are confident on both aspects. And if push comes to shove and you’rein a state of unavoidable cutbacks, be sure to show resilience to the remaining team, and externally byboost your visibility on social media.
Ronen Menipaz is a serial entrepreneur and CEO of the startup group M51.