Changing the Recession Conversation

A Four-Part Series From Moontide

HERE WE ARE IN THE MIDDLE OF A RECESSION?

Recession or no recession, it’s time to be an agent of change.

Are we already in recession? Or is it coming in 2023? Does it matter? With the highest inflation in four decades, it’s clear Americans are already feeling the burn.

LIVING WITH HIGH INFLATION AND MORTGAGE RATES

As if two and a half years of Covid were not enough, your customers are also exhausted by the daily news onslaught—from global war to culture wars, from democracy-on-the-brink to ballooning home prices, and on and on.

Meanwhile, you’re trying to figure out how to keep moving forward, keep your people employed, and keep the brand healthy.

How should your brand respond to these uncertain times? Do you simply pass on your cost increases to your customers? That’s a good way to lose their allegiance. At a time like this, customers need to know that you’re stepping up for them—that you have a common goal, and it’s not limited to mere survival.

If you consider this an opportunity to build stronger relationships that benefit both you and your customers—the kind of relationships that build enduring loyalty—what should you do differently?

Change the conversation, change the outcome.

To meaningfully change your approach, you’ll need to provocatively reframe the conversation. The ordinary conversation is the tacitly agreed-upon approach in your category/industry to a crisis such as recession. It’s probably the wrong conversation. If you adhere to it, you’re playing by someone else’s rules. When you change the conversation, you make the rules.

In this mini-series we define four ways to change that conversation. Embracing these issues openly and honestly can help you figure out how to change your approach. You can determine how to get through this together with your customers—and fortify your brand in the process.

Only the radically relevant will make it to the other side. Don’t wait for the recession to deepen before you embrace the change that will propel you through it.

Part 1: Ignite Customer Loyalty

Welcome to Moontide’s Changing the Recession Conversation series, pinpointing four critical conversations designed to help your brand not only survive the recession, but emerge on the other side stronger than ever.

The wrong conversation: Let’s figure out how to protect our current market share.

The right conversation: Let’s ignite deep and lasting customer loyalty. (Think: acts of radical appreciation and generosity.)

At Moontide, we’ve learned that the key to sustainable brand success is the dynamic interrelationship of three key factors: Affinity, Loyalty, and Advocacy.

Let’s break it down.

Loyalty

Unshakable loyalty is the cornerstone of business stability, especially at a time when you need your customers to stand by you. It’s measured in customers so loyal to your brand that they will who go to another store if your brand is out of stock. It’s the customer willing to pay a premium for a brand that “gets me.” Or the customer who will wait six months for your new phone launch rather than buy a competitive brand that may technically be a superior product.

Bankable loyalty is intertwined with brand affinity. Without it, you merely enjoy repeat purchase—a fragile KPI, especially when money is tight and people are shopping around. Bankable loyalty can make a profound bottom-line difference. You need truly sticky customers—folks willing to push through this crisis with you because they see value in the relationship.

But loyalty cuts both ways. You need to show up too.

In the current situation, consider doubling down on loyalty. Focus on unexpected ways to promote and reward it. Consider what acts of radical appreciation and generosity might lock in unprecedented brand loyalty.

Advocacy

Bankable advocacy, also born of genuine affinity, is passionate and proactive. More than just a good NPS score, it’s customers talking up your brand unasked. It’s not merely “would recommend … if asked.” It’s an outgrowth of their buy-in to your best self. It’s NPS+.

Take T-Mobile, a brand that catapulted from regional me-too to one of the Big 3 mobile carriers on the strength of its uncompromising “un-carrier” positioning. As the iconoclastic challenger brand in a complacent, restrictive industry, it has garnered powerful brand affinity and loyalty. Its Net Promoter Score is a whopping +82 versus a telco industry median score of +31. That’s bankable advocacy.

Active, authentic advocacy is a powerful weapon when you’re fighting for a piece of a shrinking pie. If, to date, you have merely measured your brand’s NPS, consider how you can double down and really energize advocacy for your brand—now and on the other side of this economic downturn.

How can you both promote and reward advocacy, more assertively and generously than ever before? Again, think about acts of radical appreciation and generosity.

Affinity

Affinity is the bedrock, without which the other two dimensions lack traction. Do customers love your brand or just like it? What can you do to earn and fortify brand love, the faster the better?

Affinity is not just some feel-good metric. Apple is an example of the bottom-line power of affinity. Its deep-rooted brand affinity supports premium pricing. Affinity underpins an enduring sense of community. It drives fierce loyalty in the face of highly seductive competitive product offerings. And there’s arguably no more passionate and persuasive brand advocate than an Apple loyalist. Small wonder that Apple became the first $1 trillion, then $2 trillion, and currently $3 trillion brand.

Ask yourself: How would a brand that people have a strong affinity for show up in a crisis?

What kind of recession partner would it be?

In hard times, Affinity-Loyalty-Advocacy is a measure of your brand’s resilience. Consumers want to stand by the brands that “get” them, that show up for them. Consider how you can activate all three—asap.

Part 2: Turn the Price-Value Equation to Your Advantage

The wrong conversation: Let’s discuss ways to protect our margin. (It’s all about us.)

The right conversation: Let’s talk about how to change the price-value equation to our mutual advantage. (Win-win for us and our customers.)

Faced with inflationary pressures, many brands look at price-value as a binary strategic

choice:

• Ask customers to pay more for the same item (option B below).

Or…

• Give customers less for the same price (option C).

This is shown in our price-value model, which plots alternative approaches to the delivery of

customer value:

Alternate value positionings

“Good value” sits on the curve (blue dot). What I pay and What I get are in equilibrium—I

get what I pay for.

A: Get more for the same price is a disruptive value equation that sits above the curve. It’s a classic challenger brand stance, employed by brands such as T-Mobile (“the un-carrier”) and Nissan (original tagline: “It’s time to expect more from a car”).

B: Pay more is win-lose. It sits below the curve. Simply passing on your cost increases causes your customers pain, prompting some to shop around. It lacks imagination: My prices have gone up, so your price is going up too. Not win-win.

That said, if you at least try to be transparent about the rationale for your price hikes, you might improve the odds that they will stick. That’s according to research by Hall & Partners. Better than nothing, but fundamentally a defensive, apologetic strategy.

C: Get less is arguably worse. This also falls on the wrong side of the value curve. The customer’s experience is impoverished through what J. Walker Smith, Chief Knowledge Officer at Kantar, calls the removal of value—a down-speccing or downsizing of the product.

This is also known as “shrinkflation,” which CNET defines as “the practice of reducing the size or quantity of a product while keeping the same price.” It’s already a broad trend, and a number of well-known CPG companies in categories like breakfast cereal, soap, juices, and paper towels have been doing this on the quiet for some time, predating the current recession. Price stays the same while cost per unit goes up. The recession affords some level of rationale for the practice, but it’s never a win-win proposition. The brand may win, but the customer clearly does not.

Neither B nor C feels like the brand is showing up when it’s needed most. Neither proactively

addresses the challenge of customer stickiness.

So how might we add value, a win-win, instead of simply removing it?

Answer: Change the frame. Pivot from price to loyalty. Reframe the value conservation.

The current crisis offers an opportunity to be an agent of change through authentic acts of radical appreciation and generosity.

Consumers don’t expect something for nothing. Win-win is about getting through this together.

Take for instance the Pennsylvania grocery store/gas station chain currently offering customers 10 cents off every gallon of gas for every $50 spent on groceries (Source: NPR).

That retailer is being smart on multiple fronts:

He’s rewarding and deepening brand loyalty, now and potentially long-term. He’s maximizing share of wallet for his grocery offering and his on-site gas station. He’s strengthening brand affinity by showing up as his best self. He’s increasing propensity for customers to advocate for his brand.

All of which impacts his ability to weather the storm and emerge stronger than ever.

Here’s a classic example from a few years ago. During the 2009 recession, when unemployment hit 10%, the Hyundai Assurance program made a remarkable offer to customers at risk of defaulting on payments due to financial hardship:

“Hyundai is the first automaker in the U.S. to offer a vehicle return program that allows you to walk away from your loan or lease without having to worry about negative equity. It lets you return your vehicle in case of certain life-altering circumstances (such as loss of income).”

Genius. An authentic no questions asked act of radical generosity that spiked brand affinity.

Simpler, more obvious everyday examples might include:

Buy two, get a third at X% off.

In exchange for taking a hit on price, this locks in share of wallet.

Sign up for a subscription (cancel any time) and enjoy discounts that offset inflation.

Locks in and rewards loyalty—win-win. Be as radically generous as possible.

For every friend you recommend who purchases the brand, you get a bonus of $X or product discount of $Y.

Locks in and rewards advocacy. Be as radically generous as possible.

A no-strings extended payment plan to help lessen the short-term pain.

Secures brand loyalty.

All the above are simple, obvious, quite ordinary. No doubt you can be more creative. The point is ideas like these can be game-changing. Authentic reciprocity, for mutual benefit, signals to your customers that you are eager and willing to get through this recession together. It changes the value conversation in your favor.

Be an agent of change. Earning affinity and rewarding loyalty are good business practices.

Radically amplified in times of real need, these changes can fortify your brand today and set you up to emerge stronger than ever.

Part 3: Reframe Your Definition of Success

The wrong conversation: Let’s discuss how we can survive this crisis.

The right conversation: Let’s reframe our definition of success and let it stimulate a creative response to the crisis that will remain relevant beyond the recession.

In the current environment, it’s more vital than ever to pause and reconsider what real success looks like—besides mere survival.

Don’t be too quick to settle for pat approaches, like:

• Maximize market share

• Grow by X%

• Increase sales

Statements like these do little to stimulate new thinking and a renewed sense of agency.

The more provocatively you can define success, the more likely you are to stimulate new thinking and shared clarity of purpose:

“Well, if that is how we define success, we should be double down on this, and do less

of that, that, and that.”

Don’t throw the baby out with the bathwater, though, by simply jettisoning your ongoing strategy in favor of a purely tactical response to the recession. Frame your here-and-now strategy in the context of where you want to land on the other side.

Here are a couple of examples of pointed Definitions of Success (DOS) that can help reframe your brand’s approach to the recession and set the stage for a post-recession world.

• DOS 1: Earning radical brand loyalty

A Definition of Success like this can refocus a brand’s efforts around stickiness at a time when many customers feel obliged to shop around. It makes sense even when you’re not neck-deep in a recession. Who wouldn’t want the competitive edge of radical loyalty?

This DOS can help reframe and refine KPIs. Consider the difference between a common KPI like CPA (Cost Per Acquisition) and CPSA (Cost Per Sticky Acquisition). One-and-done purchases tend to drive superficial acquisition (CPA). But one purchase does not guarantee a second, third, and so on. CPSA keeps your eye on the ultimate goal of stickiness and changes the success conversation in meaningful ways.

With that in mind, you might rethink how you recruit new customers. Maybe there’s a prove-the-product-works hump to get over that can’t be delivered by a single purchase. For instance, results with a hair-loss product might take several months to kick in. But what if a typical initial purchase is one bottle that lasts, say, just one month? That doesn’t get the purchaser over the hump. It all but guarantees one-and-done. Consider instead how to take that prospect on a seamless over-the-hump journey toward subscription.

A radical loyalty DOS might also call for investment in a more customer-centric CRM strategy, including acts of radical generosity and appreciation. Now is not the time to take your loyal customers for granted. In fact, this is the time to reward them and show your appreciation more sincerely and generously than ever.

A radical loyalty focus signals that you sincerely appreciate your customers. It invites them to get through this recession with you, as partners in adversity. And on the other side, you may decide to make radical loyalty the ongoing foundation of your brand strategy.

• DOS 2: Becoming the most beloved brand in your category

This should be more than just feel-good blah blah. It’s really more a KPI than a strategy, because you’ll need to define the brand behavior that gets you there.

Beloved brands give love back. It’s a two-way street. They bend over backward for their customers. Two-way love springs from deep, lasting brand relevance and a sense of shared values.

Critically, there can be a huge bottom-line difference between a “brand-I-like” and a “brand-I-love.” Apple is a $3 trillion brand-I-love. It’s brand affinity you can take to the bank. It proves the notion that deep brand affinity and loyalty are much harder to dislodge than mere preference based on easily copied features and benefits. Affinity speaks to the core difference between building a brand and product marketing. The latter is sales-driven, the former relationship-driven. And strong relationships are what will help you weather this storm.

With an NPS of +82, T-Mobile is also a brand-I-love. It was the first of the Big 4 to pioneer no- contract wireless, previously the domain of late-entry discount providers. T-Mobile was secure in the knowledge that brand affinity would minimize brand promiscuity.

This DOS—becoming the most beloved brand—will continue to be relevant on the other side of the recession. Giving love back will pay immense dividends over time.

Part 4: Focus on What Really Matters

Welcome to Moontide’s Changing the Recession Conversation series, pinpointing four critical conversations designed to help your brand not only survive the looming recession, but emerge on the other side stronger than ever.

The wrong conversation: Let’s figure out how to cut costs.

The right conversation: Let’s focus on doing what really matters—better.

Does your marketing pie have too many slices? Do you try to do 50 things, and end up doing none of them well?

Instead of operating mile-wide/inch-deep, consider getting through this recession by concentrating your resources for maximum impact.

Now is the perfect time to ask a question like the following:

During this recession, should we double down on a handful of changemaker actions that really make a difference, and do them exceptionally well?

You may find yourself wondering why you didn’t ask this question years ago.

A tough economy brings what really matters into sharp relief, both for your customers and your bottom line. Define what matters and deliver it on steroids.

Here are a few thought starters:

• What might we achieve if we reallocated funds to, say, triple our CRM budget to drive loyalty?

• What if we doubled our refer-a-friend bounty to turbocharge the power of brand

advocacy?

• What would a radically generous “thank you for your loyalty” gift look like? What would

we ask for in return?

• What if a new customer received their first three bottles for the price of two—getting them over the “it works” hump, or the habit hump—while also locking them into our brand for an extended period of time?

Tough times require tough questions and bold action. Clear-eyed focus and strategic prioritization can provide a real competitive edge.

Ask yourself: From our long marketing to-do list, which line items really matter? Team members can undoubtedly make the case for every single action point in the marketing plan, but not all KPIs and line items are created equal.

Ask: How can we spend the same—or less—and achieve more?

Don’t be too quick to just hack spending across the board. Double down on what drives growth and real customer value. The two should go hand in hand.

Ask: Do we have too many KPIs?

They probably all matter, but which one or two matter significantly more than the others? Which most closely align with your newly reframed Definition of Success? (See Changing the Conversation Part 3: Reframe Your Definition of Success.) It might be helpful to tier your KPIs, so everyone clearly recognizes the one or two that are the real cornerstones of brand success, and knows where to lean in, hard.

This brutally honest process should aim to get all team members on the same page, serving a shared goal, rather than huddled into silos, each chasing their own narrow Definition of Success, oblivious to the larger shared goal.

Importantly, also ask: Is there a situation-specific KPI missing from the mix that we should add, at least for now?

Consider: How much will our current situation-specific KPIs matter when we come out on the other side? Are they necessary but temporary tactical adjustments? The more tightly you can sync those emergency KPIs to parallel long-term brand growth KPIs, the better.

Finally, make sure to filter all of the above through your Affinity-Loyalty-Advocacy model. (See Changing the Conversation Part 1: Igniting Customer Loyalty.) Sales should not be your only measure of success.

A Quick Recap

We hope you found something of value in this series. To recap the main ideas:

• In a nutshell: be an agent of change.

• Focus on Affinity, Loyalty, and Advocacy to drive current and future stickiness.

• Show your customers your authentic best self. Get through this together.

• Don’t wait for the future to happen to you. Proactively create the present and future

you want.

• Reframe your price-value thinking to incorporate aggressive loyalty reinforcement.

• Reexamine your Definition of Success. The more provocative and concrete it is, the more effectively it will drive positive change and whole-team buy-in—today and on the other side of the current crisis.

• Do less, better. Focus on key levers that really drive brand affinity and growth.

All of these are best practices, recession or no recession. But they really matter right now because only the radically relevant will make it through to the other side. Don’t wait for the recession to deepen before you embrace the change that will propel you forward.

Follow Us