The ongoing Pandemic has changed the way people buy products and retailers sell products. COVID 19 has reshaped the whole consumer marketing this 2020. Consumer goods manufacturers and retailers should ditch the old ways and get a new perspective about the entire operation.
As soon as the Pandemic hit, most people chose the online platform for purchasing the needs rather than risking to go out for essentials. This situation made most of the shoppers take their business to the web. Essentials mostly include hygiene-maintaining items and groceries. With this, we can assure you that the buying experience will not be the same as before.
The sales scenario in the market is completely changed; it is a sudden radical change. Covid-19 has given rise to many trends disrupting the industry. There is an increased surge in online marketing. The grocery penetration of e-commerce platforms has increased from 13 percent to 31 percent as people avoid going out and ordering everything using web apps.
However, it is even seen that those who went to stores found a different experience like maintaining physical distance, hygiene, mask usage, and significantly changed to Online shopping. Well, with these changes, if CPG companies want to survive in these situations, then they must nurture the capabilities and adopt new strategies.
In an analysis done by BCG, 40% of the consumers doing online shopping are first-timers. After restrictions easing-out, 35% of the consumers are still concerned and choosing an online platform to order essentials. It is predicted that by the end of the year 2022, the grocery category in the e-commerce platforms will be three times higher than the pre-COVID situation and two times higher than the pandemic forecast.
COVID-19 impact
Different CPG industries are facing varying disruptions to the demand and supply chain. Like the packaged food companies have seen a 54.2% increase in their sales in the Lockdown. On the other hand, royalty-based toys have reduced their sales due to postponed movie productions and sales.
The level of impact on the supply and demand of a few CPG industries are mentioned below:
Home & personal care: Due to the Corona outbreak, consumers started stocking essentials. There is a high demand for sanitization products, especially the bigger package size. Due to a shortage of workforce and centralized sourcing, the production was interrupted while coming to supply.
Food & beverages: Increased surge for online food and beverage orders. Majorly for dairy, ready to eat products, that too in bigger pack sizes. The supply of these demands was difficult as it raised sales required double the workforce and extra time for floor sanitization. Due to Lockdown, logistics delivery was also restricted.
Beauty & cosmetics: There is an increased demand for safe beauty & cosmetics. Online consultation and e-commerce sales increased. However, there was a temporary disruption in the supply chain due to restricted transportations, increased manufacturing demand from a single area; sales to on-trade channels were also disrupted.
Apparel & footwear: Steep decrease in consumer demand, as well as delay in new fashion launches, plus most of the people prioritized buying essentials than apparel & footwear. Due to Lockdown in major countries, the supply chain price increased, resulting in higher order cancellation.
According to a report from Deloitte, “Majority of the consumers are spending more on Convenience to meet all the requirements or their needs. Due to COVID-19, people are more likely citing contactless shopping, fulfillment on demand and easy inventory availability.” There are other key findings of the report as such :
As of April 2020, the year on year growth of the eCommerce industry increased, and reached to 68%, surpassing the previous 40% of the total sales. With the ongoing pandemic, and countries following strict guidelines it is expected to increase to 72%.
Convenience will continue to be king of the Market, more than half of the people have shown their willingness to spend more on what they want.
People now are more interested in private brands. Until 2019, only 40% were willing to pay for the same or private brands. Now during COVID 19, people being at home and more cautious about health and products they use, private label sales increased.
There is increased spending on hygiene, groceries, other sustainable products, and organic stuff, in these pandemic months. These brands will continue to play a key role in the market.
Where is the CPG industry today?
Consumer-goods roles are huge during this COVID crisis, meeting the increased demands of consumers and protecting the vulnerable. This sudden change may or may not be permanent. However, there will be a significant fundamental shift in the pattern of buying.
In the initial days of covid, the priorities were clear for the CPG sector: the safety and health essentials, ensure a strong balance sheet and maintain the availability of essential products with a resilient supply chain. The CPG manufacturers who are ahead in their supply curve drove increased enterprise agility, adapted cross-functional collaboration channels, and adjusted in the current scenarios.
However, now the case might be changing with an increased level of uncertainty; as the restrictions are slowly removed, many nonessential retailers who were forced to shut are re-opening their businesses. While it is uncertain as the Pandemic is not entirely gone, it can potentially spread and impact the economy.
Another concern is the changed buying pattern, and increased buying concerns may be carried forward to the future. While the CPG companies are the least affected than any other industry such as retail- the hospitality and traveling industry is the most affected sector.
The edible industry, such as food and beverages where growth is monitored concerning population and income, is seeing increased demand. This results in a massive surge in pantry loading and delivery.
A historical change is seen! The food & beverage sector usually lagged in other categories such as apparel & footwear, beauty & cosmetics has seen a steep fall in their sales. In contrast, the demand for food & beverage has increased. Choosing the online platform for buying than going to shops has increased. The CPG manufacturers can work with the retailers and lower the cost-to-serve to maintain their operations.
It will take significant time for the consumers to shift from current frugality and embrace the older ways. But the heightened uncertainty will be there for some time. The retailers and on-premise places should try all possible ways to win back customers’ trust. In this Pandemic, people face a financial crunch, forcing them to shift to buy products at lower prices and save money.
The ongoing pandemic has been a boon for the Consumer Packaged Goods industry. The demand for CPG increased from 10 percent to 12 percent in countries such as Italy, France, the UK, and the US.
Demand has also affected a lot and saw a market downfall, as consumption shifted from on-premise to home. It is likely to stay and persist. Most people are continuing to work at home, so companies have also taken a fresh look to strategize the workforce accordingly. It is better to change the plans according to the need of the hour and embrace new strategies.
Engage Consumers with CPG marketing
Ongoing Pandemic has increased the use of Digital Platforms by most of the Companies and customers. This situation has made the brands to look over and revise their marketing strategies to gain new opportunities and fulfill the changing consumer demand.
Some of the companies thought to take a dive and enter the direct-to-consumer market. For instance, a company launched a platform dedicated wholly to B2C. In contrast, most of the companies are still using the subscription order procedure.
However, some CPG manufacturers want to maximize their platform reach in the market and engage retailers to grab a significant share with an increased e-commerce demand. In this case, the retailers are enabled to:
Placing orders online directly
Avoid or reduce the stockouts by implementing the real-time inventory management
Have the optimized SKU’s for digital channels
Assessing new disruptive routes to market by partnering with a logistic and delivery business
There are many challenges, and the CPG companies should overcome all these to succeed in online sales. Entering into e-commerce and utilizing technology that will engage consumers by keeping a note of their preferences and priorities isn’t that easy.
Priorities the CPG industry should implement to survive now and post-pandemic
As most of the consumer’s shift to e-commerce channels, the sales of food and beverage categories will increase to 70% approximately by the year 2022. This will be the gain of CPG companies, who can develop effective omnichannel capabilities to maintain their position in the market. Simultaneously maintaining an interactive and innovative presence in the social channels.
Below are the statistics showcasing increased CPG sales during the Lockdown. It is a representation of CPG sales by channels. The first one represents the increased sales of Grocery and the second graphic representation is for Multi-Outlet and Convenience. Amid this crisis, people are trying new brands, 50% of the consumers have tried new brands, however, 66% of them are likely to stick with these new brands.
As everything is turning from Pandemic to recovery, the CPG manufacturers must shift their focus to future plans. To make your mark in the market in such a situation, the below priorities should be focused on first.
Tailor all your capabilities to unique needs
As you will already have a standardized sales practice, it would be better to concentrate on approaching the consumers and targeting different channels and segments. This means customizing how to leverage data and other information to connect with retail consumers’ unique requirements. Analyze the collected data and check what the consumers want and also what they are interested in.
For instance, if a manufacturer wants to meet specific needs, they can reorganize its cross-functional sales team. For one retail consumer, there can be more data analytics experts in the team to facilitate the omnichannel strategy at work. However, there can be an addition of supply chain and operational experts for other retail customers, streamlining retail operations.
Making your sales model more flexible will help satisfy more customers and get a leading share in the market.
Partnership to improve omnichannel experience
Retailers have to serve hugely to customers in multiple channels; having a partner will help take care of the services, insights, and products. The job is not done just by moving in between stores, navigating mobiles, and e-commerce platforms. CPG companies should support the partner to do out-of-the-box things, grab people’s attention, and build even greater loyalty.
The consumer sales team should be clear about certain things before entering into it, such as, are they working the best with the online and in-store retail partners, is there another opportunity to increase it that they might have overlooked, are all the resource allocated in line with channel strategy, how to manage conflicts between retailers, e-commerce platforms and direct-to-consumer platforms. These are some important questions that must be analyzed before jumping in.
In an omnichannel experience, the more that data, the more accurate the result. A retailer knows what’s happening in his/ her region, while the manufacturers know how the products are performing in the market and different channels.
By having analyzed information, retailers can understand and optimize the omnichannel experience. If we take a step further, this analysis can innovate new ways to reach people.
Increase efficiency with Digital Tools
Now we are in such an era where contactless buying is preferred. With the outbreak of Coronavirus, people prefer less risky or contactless buying. Prioritizing the online process and minimizing human contact to avoid infections.
This situation arose a digital wave, where every business is trying to be on the online platform, mostly the product selling companies. Most aspects, such as taking the order, delivery, and customer service, are digitized.
This crisis forced the consumer goods industries to minimize human contact in the production and delivery department. In the same way, it forced the retailers to reduce human connection in distribution to stores.
However, digitization came as a savior in this crisis period. The three digitization process that came in handy are:
The route to market model digitization letting the customers know about your products,
automation of all in-store activities,
having advanced analytical experts by your side to get informed insights on shoppers’ patterns and product performance in the market.
The services such as telesales, messages, emails, e-commerce presence will, for sure, retain the market popularity of the product once the Pandemic passes.
Acting fast and adapting to an ever-changing market will always help the business. COVID-19 crisis has created a lot of challenges and changes in the market. It also discovered how important a retailer and manufacturer relation is.
In the Shutdown and panic buying situation, some recognized companies have stood still; well, on the other hand, few of the recognized brands are facing a steep fall in their sales. It all depends on how fast you grasp the changing market and shoppers’ interest and adapt to it.
The more resilient the company is, the less impact it has on its business. Simultaneously, it might take some time to wear-out the impact of COVID-19. This situation has reinforced the consumer-goods company’s values, providing the best chance to strengthen the retail partners’ marketplace.
Now it is time to be more analytical and plan to work uniquely and create increased value, presence, and engage people in their product.
As e-commerce involves majorly on the consumer, the relationship between the two should be well-built. It is one of the critical building blocks that you will have to add in your online business 2020. You have to understand how crucial a customer’s feedback can turn out to be. They help you shape up your business flaws, which works like constructive criticism. A simple thing like highlighting your loyal customers monthly on the company’s social media can be a big win.
Areas to Involve the Consumer
One of the areas that are still a challenge for online businesses is safety. As the opportunities to go global arises, assuring consumer’s safety while paying with their credit card is an issue that needs solving. Only then can you take its full advantage. Know the tools that you can use to protect your website. Luckily, you can find a WordPress website design company to have anti-spam tools added to your site.
Now the internet is way easier to access. People can find and hack your information online. Help your customers to transact through the electronic marketplace comfortably.
Build Partnership
It is an important area, although overlooked. Usually, it costs nothing to offer excellent service to your customers but earns you big. When you delight them, they refer others to your company. Whenever you have an oncoming sale, let them know ahead of time. They feel valued.
Give them coupon vouchers that they can redeem in your store. For your existing customers, you can offer them loyalty cards that will earn them points that can later accumulate into substantial cash, which they can use and save money.
Based on the aggregate of referrals they have brought to your store, you can offer them some discount to encourage them to do so. The whole essence of saving your client’s acquisition is what will retain them. Transparency also plays a significant role in involving clients in your business in 2020.
Make Use of Common Platforms
When you are operating in e-commerce, it is paramount to find out where your clients spend more time for you to reach out. It is so apparent that you will find most of them on social media such as Facebook, Instagram, and LinkedIn. Use them to interact with your clients. If there are questions that need answers, don’t take long to answer them. Clarify when required, and create a meaningful personal connection.
By taking full advantage of the platforms, you can create a community and start a conversation by seeking customer’s insights. Weigh in some exciting trends that will engage as many people as possible. To keep the fire burning, have an open dialogue.
Customers’ Reviews
What kind of analysis are your customers giving? If you offer commendable service to your clients, then you don’t need to worry about the reports that you will find on your site. New customers will take a view of what previous ones had to say regarding their purchases and overall experience in your brand.
Remember, testimonies can give more weight to your brand, and the majority of people will only buy from you after watching videos of customer testimonials. To emphasize this, you can offer small incentives to your clients to participate in it.
Offer Exclusive Deals
Everyone loves deals. Especially when you mention that it is exclusive. Show a sneak peek of some unique content that you will release at a later date in your blog, to have your clients hooked. You can keep updating it on your site, or even send an email reminder, so your customers don’t miss out.
If you get a WordPress website design company to work on your site, these are things that can get sorted. Provide your email subscribers and those who have a premium membership a 5 to 10% coupon so that they can use it to purchase your products and probably spend more.
Be an Inspiration
We understand you are in business, but a little inspiration goes well with it. Develop a marketing initiative that draws people closer to your brand because it shows that you care for them. Some companies will advertise, “for every purchase, a dollar goes to help the needy.” While those in fashion will say something similar, “buying a pair of shoes from them will warrant one to a poor child.”
Your brand shows that you care and play a significant role in helping the marginalized.
Sharing your vision to the world also can inspire many customers out there. Assuming it carries a relevant message that depicts your care.
Do a Follow-up
Most people do a fantastic job of bringing in a customer, and finally converting leads. Little do they realize that one of the other essential business deals of closing the loop is doing a client follow up. Call and check if your customers’ merchandise was according to their needs.
How was the service experience? Not only will this grow your clientele base, but it will bring back the customer for more. Orange Mud CEO Josh Sprague, suggests; “Remember to organize tasks of customer’s follow-up with an intent of executing.”
Since not everyone will appreciate a follow-up call, learn your customer’s behavior. When you do so, it will be way easier to understand their preferred means of communication. Most importantly, the right time to give them a call. If a customer says a call is a bother, it’s good to respect their request unless there is an urgent situation.
Take Them for a Tour
Since you cannot invite everyone to your company, select only the loyal ones. Take them on a tour guide as you explain more about your products. You should be more knowledgeable about your company, and everything that you have there. It is an efficient way of reaching out and involving clients about a brand that they love.
For the sake of those who did not make it, you can record the tour on video and place it on YouTube and all your active social media avenues. These are places that you are likely to attract a lot of views. Remember, there are companies like Animoto that have enabled you to turn your amateur video into a more professional type.
In conclusion, when you develop a strong business relationship with your customers, you are headed to the top. Customers love to be treated special and appreciated. They value responsiveness. Ensure to have a mobile integration to nail this effectively. There are varieties of tools that you can get from the WordPress website design company that can be added to your site to involve customer interaction.
Majority of the economists in the United States are saying that the next Recession is coming. Unfortunately, all the signs are pointing towards the looming Recession 2020. We can expect that this time, the Financial Outbreak will be massive and also quoted as the “biggest so far.” If we check with the economists, the main reasons behind the Outbreak are “US-China Trade war” and “Inversion Yield Curve.” So, we can clearly, anticipate how the crisis would be, because marketing during the bankruptcy seems non-sensical.
What is a Recession?
Generally, Recession is Financial Crisis when the GDP growth rate is negative for two consecutive quarters or more.
When there is a contraction in Business Cycle, generally there is a decline in economic activity. Slump usually occurs when there is a drop in spending. Typically, Slump is due to a lot of aspects such as the Financial Crisis, an external trade shock, or outburst of the economic bubble.
During this type of Financial Crisis, like Downturn, marketing agencies are the first ones to get affected. According to Forbes.com:
The furthermost reaction from most of the companies, during this Recession period is to cut, cut, cut everything, and the first one in the queue is always Advertising.
How do you know a recession is coming?
The two significant factors that tell about how we can know Crisis is coming, is mentioned below. Read the whole thing to understand better how economist reach to a conclusion regarding Slowdown.
Yield Curve
If you follow all the studies and forums about the Economic Outburst, then you will know that yield curve forecasts about the Trough. Since 1970 it has been seen that the slope in the yield curve becomes negative before every slump. It is called an “inversion” in the yield curve in this the short maturity rates, exceed the high maturity rates that lead to Great Contraction. The below graph showcase the ten to the two-year yield curve
Source: Chicagofed.org
Yield Curve is usually, based on ten years treasury note just fell below the rate on the 3-month bond. It is the first time we’re are moving forward with limited data. All the Central Banks over the world are worried about this Great Financial Crisis. You can see the graph below, which showcase the estimated bankruptcy probability.
Source: Chicagofed.org
FED is trying to neglect the Outburn 2020 to maintain full employment. It is of the critical targets that everyone is looking for. The Alerting situations raised by monthly Yield Curve is making FED worry. As most of the banks invest majorly on treasury bonds, it is an alarming situation for Banks.
US Trade War with China
It is a known thing to the whole world, that how big competitors are US and China and behave as the Global Predominants rather than Partners. The raging trade war and currency war are the reflections of what these two countries are doing. However, the long term conflict indicates that the ceasefire will continue, as a result of this economy of both the countries will impact severely with no long term peace.
However, the Fed was sending signals that aim to pull back on the increase rate made in 2018, that include the concerns in the economic outlook that include Trade war with China.
Mr. Trump has recently blasted the Fed for not reducing interest rates. It is under the belief that the interest deduction will lead to more lending activities and will make the US dollar more competitive with foreign currencies.
According to Nouriel Roubini, a Prof. at NYU Stern School of Business predicts that:
The Global expansion will continue till next year, while the conditions will ripe for the next Global Recession 2020. The Global stimulus packages are coming to an end, inflation is coming, trade disputes will drag the economies by pulling down the interest rates.
For, both the US and China, it is essential that they should make peace and don’t escalate the war to the next level. To a point where there will be an unnatural end to all the supply chains.
When is a recession coming?
Most of the economists and surveys are predicting that by the mid of 2020 Outburst will start it is even predicted that it will have 38% impact on all the sectors, in later 2021 the outburst may have 34% impact. There is already a 2% decline in the manufacturing industry.
Will there be a recession in 2020?
As it is said, “better than you expect and worse than you even hoped.” However, according to the National Association of Business Economics (NABE) latest survey, which is based on 53 professional economic forecasters.
The consensus, clearly showcase that the economy has grown to 2.8% pace in the year 2018 while coming to 2019 the growth with come down to 2.6% pace growth, that will decrease even more in the next year 2020 and become 2.1% pace growth.
However, if we take US Presidential Elections into account, some of the marketers say that it will come before the Presidential Inauguration. During, this time the job growth will continue to be in brisk, with a decrease in average monthly increase, which is 184,000 in 2019 and it will be 139,000 in 2020.
On the other hand, the residential investment in 2020 will see a downfall to 1.3% from 2019 level. All these situations rightfully indicate that yes there will be a recession in 2020.
Only 2% of the 226 respondents will see the US recession this year, compared to 10% survey that showcased in February. There is the panel split to discuss whether the next Recession will hit 2020 or 2021.
Recession in US 2020
The first impact of the US Recession is Job loss. Not just in the US everywhere. During Credit Squeeze, there will provide no cashflow, and firms will be facing an economic crisis; Job loss becomes the primary issue. On February 2010 it was recorded that the US economy is shakier than that of Canada’s. Most of the service industries have reported the dropping in their market price value.
Between 2007 and 2009 there was a massive loss of the job, a total of 2.6 million people lost their jobs, the highest in 6 decades. The number is equal to the amount of the post found in the states such as Wisconsin.
A majority of the economist are saying that the next recession 2020 US will also be a part. However, according to the NABE recent survey, Donald Trump scratched out all the looming Credit Crunch in US news and stated that:
US is well prepared for all the situations. I don’t think we are having recession. we are doing tremendously well. Our Consumers are rich.”
Mr. Trump has recently given a massive tax cut, and he believes that people have saved and already have money.
According to Larry Kudlow, the chief economic advisor of President Trump:
Consumers are working at a very high wage. They are even, spending at a high rate. People are also saving money. So I think the second half, the economy is going to be good in 2019. I sure don’t see a recession.
Recession in India 2020 or मंदी
The Global economic decline in 2007 or मंदी started in December, the impact on India was enormous; the GDP growth slowed down to 9% in 2007-2008. After Wall Street collapsed in September 2008, the Indian GDP decreased to 5.8% and remained the same for the quarter.
In 2008, Indian high foreign exchanges reserve, prevented a lot of chaos, even after the foreign investors withdrew $12 billion from the stock market and foreign credit suddenly vanished.
During the Great Recession, according to the survey of Labour Bureau Ministry of Labour Employment: 500,000 people lost their jobs between 2007 to 2009 from eight primary industry, Information, and Technology, BPO, automobiles, gems, and jewelry, transportation, construction, and mining industry.
Source: Govt. of India
Nevertheless, there was a significant decline in the output of Automobiles, commercial vehicles, steel, textile, petrochemicals, constructions, real estates, finance, retail activity, and other sectors. Exports from India fell by 12% in October in Dollar terms.
For India, the Global Economic Crisis is coming, and the increasing trade war will lead to lessening external demand. All this could be heavy on our payment balancing, can damage the foreign financial outflow, and trigger exchange volatility.
According to Prof. Biswajit Dhar of JNU:
Indian exports that shrank down recently, is expected to remain affected as the trade barrier is hardened and their is the ongoing Trade war, all the countries around the world will try to protect their domestic exports.
Keeping trades aside, the oil exports will also be hampered. Given that US oil export from India has increased to 3 fold between November 2018 to May 2019.
The measure took for Indian Recession 2020
In a recent press conference with Indian Finance Minister Nirmala Sitharaman on 23rd Friday 2019, she slew all the safety measures that the Indian Government is taking. Regarding the steps FM Nirmala Sitharaman told
पूरी दुनिया के मुकाबले भारतीय अर्थव्यवस्था बेहतर है। निर्मला ने कहा कि आज अमेरिका और चीन जैसे देशों के मुकाबले भारतीय अर्थव्यवस्था कहीं ज्यादा बेहतर है।
Adding to this, FM Nirmala Sitharaman explained about all the necessary steps; the Indian Government is seeking to overcome the situation.
To boost the Auto sector: the govt has lifted the ban on govt bodies from replacing the old vehicles. The govt is asking to “Go and replace your old vehicles.”
Rs 100 lakh crore is pumped for infrastructure. A task force has been assigned to expedite this investment, who will fund the money and monitoring every activity. Delayed payments will be on priority. Liquidity flow will be smoothened.
The timely refund of GST for the MSME, all the pending refunds have already started and will be completed in 30 days. The future GST refund will be sorted in the next 60 days.
Source: Govt. of India
The papers related Loan closure amount will be given in 15 days of the closure. Banks will improve the One Time loan Settlement (OTS), that will help MSME by implementing the checkbox system.
RBI has directed all the banks to release the benefits of the Repo rates to the customers. The primary target of Government is to diminish the interest rates and auto rates.
For the Banking sector, FM announced that:
“Government is releasing 70,000 crores, with additional lending of Rs 5 lakh by providing upfront capital to PSB” This will help strengthen MSME, retail borrowers, and traders.
Government removes Angel Tax on Startups.
Encouraging investment in Capital Market, it is even decided to withdraw the enhanced surcharge levied by the Finance No. 2 Act 2019. The pre-budget position is restored.
Violation of CSR will no more be treated as a criminal offense and instead will remain as a liability. After 1st October 2019, income tax orders, tax, the summons will be issued through the centralized desktops.
This clearly, showcases that India has already taken all the significant steps to overcome Downturn or मंदी.
Recession in Europe 2020
Europe has more than 75% chances to fall in the upcoming Credit Crunch according to the lead economists. The Stock Markets in Europe extended their losing streak. The oil prices have fallen 3%, and the mounting Stagnation continues to hit the investors confidence.
In the last six months, the top 100 firms in Britain have dropped more than 1%. On the other hand, the stock market in continental Europe has dipped in response to the investors who are thinking to raise funds.
FTSE 100 ended this Thursday, and it dipped by 1.1%, at 7,067 lowest level since February. On the other hand, German Dax fell by 0.7%, and French 40 backed down by 0.3% dragging the European market to six months low. Later, in the coming days, it is evident that Europe will be facing a Huge Stagnation.
No-deal Brexit UK
There is an increased risk of no-deal Brexit in the UK, as it is clearly visible that the no-deal Brexit will push the UK into bankruptcy. According to Boris Johnson of NIESR (National Institute of Economic and Social Research)
There is one in four chances that the country is already in recession, growth has also been stalled for in the recent months, business investments have flatered and pounds has fallen sharply.
The economist believes that the UK economy has diminished in the last three months, making the first negative quarter in the first seven years. As a consequence of factory closure planned for potential disruption around 29 March the Original Brexit deadline.
The European Central Bank has cut down the interest rates further as a negative territory next month. Most of the major Central Banks that includes the Eurozone’s are free of politics have not engaged in outright manipulation.
All, these situations indicated, Europe will face a Great Economic Downturn, majorly affecting Germany, UK, Italy, Portugal.
How long do recessions last?
There is no specific period for the Credit Squeeze, if we check the records than the Last Great Contraction was on December 2007 to June 2009, one year six months, 5.1% decline in the GDP.
Recession 2020 is due from 4.5 years if we take in to account the United States business cycles, the average length of the growth economy is 38.7 months or 3.2 years. On an ordinary Credit Crunch lasts for 17.5 months or 1.5 years while the full business cycle on an average is 4.7 years.
The Longest Financial Crisis or the Contraction occurred in 1929, known to be the Great Economic Contraction in the United States that lasted for 43 months or 3.6 years. While the second slowdown is known as the “Great Recession” that we all experienced in 2007 lasted for 18 months or 1.5 years.
How lousy will recession 2020 be?
The three things to keep in mind which all are true: Most certainly the USA will not undergo Trough right now. Yes, the US may avoid one of the disastrous foreseeable future. But, the chances of the US to fall in this Trough is increasing every week.
Long term interest rates have plunged since the end of July- there is a shift which historically predicts that the lower interest rates are cut down from the Federal Reserve. It showcases an increased risk factor in the economy into outright contraction.
However, a lot of Financial marketers have been saying that there will be no Credit Crunch for the US in 2020. On the contrary, there are plenty of proves which directly indicate about the near Financial crisis.
Here comes the most important one, due to President Trump’s, On-Off execution with China leading to Trade war with this other countries have fed uncertainty with business decision making. On the other hand, the corporate investment is lessening, even though tax cut by Mr. Trump will boost the investment.
According to an economist Tara Sinclair, of George Washington University
Recession 2020 is a self-inflicted wound type, but how deep the cut will depend on many other categories of the economy thereafter on the policy response.
Now the economy in China and the other neighboring Asian Countries are getting weaker, which is giving rise to the Trade war with the United States. While the Europeans who are already in large ongoing debts will surely fall in Credit Crunch. Incase, Britain crashes out of the European Union with no current exit deals until October 31st, Europe will face even more profound challenges.
According to the survey of the Institute of Supply Management (ISM), in the United States, the growth rate has slowed down for a consecutive month, and July has the weakest reading. All these factors indicate us how bad the Recession 2020 would be.
What happens during a recession?
Effects of Recession are a lot; all of them related to the Financial Crisis, in this period, there is always as tremendous negative economic growth. You can see all the Financial similar thing to be falling apart. We listed out some of the significant changes that take place during this period, check it out:
Unemployment
During the Financial Crisis, the firms produce very less, and therefore, they require very fewer employees. Nevertheless, some of the firms even go out of business during this period, causing the workers to lose their jobs.
If we take 2007-2009 trough into account, a lot of people lost their jobs who belonged to banking or finance sector. Simultaneously when the demand for the Cars fell, the workers were laid off.
Saving Ratio Increases
During the Financial Crisis, people become careful and tend to save money as the market falls. If people have a fear of losing their jobs, then usually people don’t want to spend or lose the money they have and instead start saving more money.
If we consider the previous surveys, it is clear that during the Great Economic Contraction, there was a Paradox of Thrift- as people tend to save more and reduce consumption. This makes the Downturn even worse as it reduces the consumption rate. Individually, everyone is doing the right thing by keeping, but as everyone targets on saving, then on a total consumer spending decreases.
Fallen Interest Rates
In Stagnation, interest usually falls. This is all because inflation is lower and the Central Bank tries to stimulate the economy. Lower Interest rates, help the economy from striking the Stagnation.
Lower Interest rates usually decrease the cost of borrowing and encourage investing and consumer spending.
Fallen House Price
Usually, the House Price falls before Stagnation strikes, and this is one of the critical cause of Recession. During this time, unemployment increases, people don’t want to invest in housing as they can’t afford mortgages, so home repressions become common. This leads to an increase in housing availability and decreased demand for it. This is one of the primary reason for the 2009 Recession.
How can different Agency survive in a Recession?
The best and the safest way is to diversify your clients. In this way, your work will not be just entirely dependent on one client from one region. If you have client contraction problem, it is better to plan to grab more clients.
Surviving in Credit Squeeze is what each and every firm wants. To make it easy for all the readers, we have listed out some of the top hacks that you can use.
Build Cash Reserves for your Agency
If you are new to the market, usually, companies under the span for five years should have cash reserves at least for a year. This can a combination of business checking cash plus personal saving. Until your business gets a constant monthly cash flow, it is always better to have a Cash reserved for future use.
This is important for the people in all sector because once a Slump has started,
Clients can slow down your payments, and even can cut-off the cash flow.
In worse condition, one of your more prominent clients may be forced to sell his business.
Either way, cash reserves are significant, if are having a Digital Marketing, or an Advertising Agency, it is recommended to keep reserves for at least a year. Marketing fields are increasing day by day. It is always better to be on the safe side by keeping some reserves.
Even though Digital Marketing and Advertising Agencies are least affected, it is good to have reserves, as you will have time to grab some clients for the future growth of Digital Marketing, and SEO.
Controlling the Client Credits and Invoice Clarity
When we come down to transaction a lot of firms work based on net-30 days terms. This means you provide a service and wait for 30 days to receive the payment. However, if it is the Economic crisis, then 30 day period might look a bit difficult for all type of firms.
Reasons:
Clients might ask to defer the payment with 60-days or 90-day payment
Sometimes, clients may even go out of business, leaving you with hard work and cashflow.
The alternate way, here is to check your client’s commercial credit, and eventually prepare your self especially during the economic crisis. You can provide your Client with a Credit Proposal according to your withstanding.
Try to implement, a reliable system for invoice collection, that reduces the overdue payment issues.
Outsource Your Services
During the Trough time, it is best to outsource your services, than hiring new people. It will lower the labor cost that will strengthen the bottom line, they will provide some cash flow, and the agencies can allocate their resources to research and development.
Outsourcing is a viable plan during the Trough period.
Conclusion
If we look at all the points above, we can conclude that all the suitable, reasons are indicating that the Downturn can be a bad one, mostly for the Countries and businesses will be affected by it.
For all the job holders, it is better to have faith in their savings for a year. So even if there is a situation of jobless, then their saving will be the biggest saviors.
Even if the Government of the different countries says that they are good to go and can face the next Slump and there will cause no damage, however, we suggest that it is better to save some Cash Reserve that is suitable for at least a year.
If you have any further query regarding Slowdown, do feel free to write us, through email or comment below. We will surely help you!
Customer relations is the key to the growth of any organizations, and there are plenty of CRM applications out there now to help business administrators to do this effectively. Salesforce DX based CRMSs are considered to be the most reliable and feature-rich Customer Relationship Management systems available now.
Further, in this article, we will discuss how proper customer relationship management using technology platforms can help businesses to improve the performance better, and help grow the company bigger and better than ever.
Using CRM to find apt customers
The expert opinion about CRM now is that; it is unable to covert more than 50% of the marketing leads to sales without the use of a proper CRM system. Salesforce DX offers a focused customer-centric approach in the development of CRM. With many powerful tools to filter out the leads in terms of finding prospects and better conversions.
Every business may be spending a lot of time as well as resources to attract new customers and generate new leads, but what are the ways to do it effectively? Are the marketing leads going to the sales team correctly and if its pass on, which opportunities are most perspective?
Time is a critical consideration when your business is small and fast growing. One should make the most of available marketing tools and integrate it with every channel like email, social media, and marketing automation by connecting these to the CRM platform.
With a stable system like Salesforce DX based CRM, both the marketing and sales lead becomes easy to assess. From a comprehensive view to identifying the prospects to focus more on targeted communications to convert the prospects into customers. In the B2B business environment, it will help reach the key decision makers much quicker and effectively to get favorable decisions.
Building more sustainable business relationships
Building strong relationships is always a primary task when you are into CRM. There are some of the deep concern that you should be careful of while having these bonds.
Deeper customer relations
All sales leaders will unconditionally agree to the fact that more in-depth customer relationship management is the key to sustainable success. Platforms like Salesforce DX based CRM, thereby stay as the “State of Sales.”
For business leaders, it is essential to develop a deeper understanding of the customer’s business by analyzing their history with your business. With such a more in-depth insight, you can build a strong and lasting relationship with the consumers based on trust and contribute to mutual success. A functional CRM can act as the backbone of this activity.
Exploring customer challenges
With Salesforce DX type of CRM, you can pinpoint what matters to customers the most. With the data in hand, you can define their real goals, preferences, and challenges by analyzing each exchange with them and through follow-up actions.
A functional CRM will make a record of these and can set reminders also with which you can take it up further from exactly where you left off.
Relevantly engage with the customers
After understanding the real business challenges and goals in light of customer needs. You can take a more personalized approach to recommend the most appropriate products or put forth customized promotions to them. All the tools offered by providers like Flosum, it is also possible to present the content which is relevant to the priority business interests of each customer at the right time.
With a featured CRM, you may also know you’re your customer’s purchase and how they use your products and services to provide them with the most relevant information and content.
Scale one-to-one relationships
Starting as a small business, your customers will love the personal experience you offer and stay close to your brand. But it becomes challenging to know the needs of each customer once you grow big.
This is a where a mighty CRM built on Salesforce DX can work on your behalf by handling the volume. In terms of hosting best email templates, set task reminders, and even initiate phone calls for you to keep in close touch with the customers by providing them a very personalized experience.
Reduce the overall cost of sales
As per sales experts, the probability of selling something to a new prospect is about 5% to 20%. Whereas the likelihood of reselling to the existing customers is about 60% to 70%.
Through marketing metrics
No doubt that getting new customers is the key to consistent growth, but it is not very so cheap or easy to come by. However, the good news is that you can effectively offset the additional cost for new customer acquisition through reselling to the existing customers.
Always try to gain greater visibility and engagement into cross-selling, upselling, and make use of the renewal opportunities. Even try to establish a culture of trust, and you will start to see an increase in repeatable sales.
By improving the efficiency of sales
With a high-performing CRM, you can prioritize the leads and reap more opportunities which are likely to convert the most based on effective customer interactions and support.
Uncovering the potential of referral business
Once if you look around, one can find out many untapped opportunities in the existing relationships itself to explore. The possibility of referral business is enormous in many business categories, which needs meticulous planning. Instead of spending money on the dead-end leads or merely relying on cold calling, these avenues can be made use to generate smarter business results.
Reducing the time to close
A functional CRM can help your sales team to execute the steps of closing a deal more effectively with a 360-degree view of the customers. This will not only reduce the time taken for conversions but also can help make a more customized approach for better conversion rates.
Many of the high-performing sales administrators attest to the power of powerful CRM technologies as a significant contributor to their success. Adopting appropriate CRM technology will free up the teams from task-intensive steps. By automating the process and also give them more room to connect to the customers.
Manual operations like hunting down the contact information of the prospects and entering data into the database under specific categories etc. can be automated to save time and effort. Full automation across the platforms of sales, service, and marketing, etc. Will free up the employees and allow them to spend more time to strategize and strengthen the customer relationship with the real prospects and keep it ticking.
A pay-per-click (PPC) advertising campaign can be a good investment for your business. The PPC or cost-per-click model is used to drive traffic to your website. You have to only pay when your ad gets “clicked on” by a user.
But you’ll only know if the PPC campaign is a good investment if you analyze the results to ensure you’re getting the most for your advertising dollar. Whether you manage to advertise for your own business or clients, you need to determine if you’re getting an appropriate Return on Investment (ROI).
How do you know what to monitor, analyze and adjust?
We’re here to help you with our tips for how to measure the efficiency of your PPC investments. Using the 6 Key Performance Indicators (KPIs) we outline here, you’ll be able to assess the performance of your campaign.
Getting Started
Like any aspect of your business, it’s important to establish goals for your campaign before you start. Having goals means you can analyze your results against those goals, and make any adjustments if necessary.
Signing customers up for regular emails or newsletters, to enable you to develop a customer database.
Driving traffic to your website.
Converting that traffic into sales.
Increasing recognition of your brand.
Once you’ve established your advertising goals, you can set up your campaign, and monitor and examine results.
To do that, here are the 6 KPIs on which you should focus.
1. Clicks
You’ll never reach any campaign goal without having users click on an ad, whether the objective is a brand enhancement or conversion to sales. Therefore, the number of clicks is an important measure.
Let your campaign run for a while, and continue to monitor clicks. They can be an early indicator of success, but as the campaign progresses, you may want to make adjustments. That can include pausing ads that aren’t performing well and increasing the bid on ads that are performing well.
Clicks are enjoyable to watch, but they aren’t the only indicator of success.
2. Click Through Rate (CTR)
Another key metric is CTR, which is calculated by dividing the total number of clicks your campaign received in a given time frame by the overall impressions.
In other words, if your ad was viewed 500 times (known as some impressions), and was clicked on 100 times, your CTR is 20%.
Tracking your CTR throughout the life of the campaign is good. You can generate reports by week, month, or whatever time frame works for you or your client.
There are different ways to determine what’s an acceptable CTR. That could be by comparing to industry standards, for instance.
Wordstream analyzes the data for Google Ads and can provide you with the information you need on a good target CTR, with data updated for 2018.
For instance, the average CTR for the search for the Travel and Hospitality Industry is 4.68%, and for E-commerce is 2.69%.
At least, this can provide a benchmark for your business. But monitoring CTR will also help you analyze individual campaigns for increases or decreases in CTR.
3. Cost Per Click (CPC)
It’s good to keep track of your CPC, or the amount you pay for each click on an ad. This helps you monitor your budget, but also the effectiveness of the campaign based on the cost.
To calculate CPC, you divide the total cost of your campaign by the number of times an ad was clicked.
Check your math and figure out the campaign’s total cost by multiplying the CPC by the number of clicks your ads received.
The CPC data will measure exactly how much you’ve paid for a campaign. This is helpful because while you may have set a budget and a bid price when you set up your PPC campaign, it doesn’t mean that’s what you actually pay. Actual costs can be different than bids.
The cost of an ad can be determined by other competitors in a PPC auction, so CPC helps you track your actual spend.
If your CPC goes up, your advertising spend increases as well, so obviously your ROI is going down. In an ideal situation, over the course of a campaign, your CPC should decrease, and your ROI will therefore increase.
4. Conversion Rate
It’s great to know how many users see your ad, click on your ad, and what that costs, but all that doesn’t mean much if they don’t complete the desired action once arriving at your website.
That’s what makes conversion rate so important.
Whether your “conversion” is an actual sale, providing an email address for a newsletter, or completing some other type of form, the conversion rate will tell you if you’re successful with that goal.
To calculate this metric, divide the number of people who “convert,” or complete your desired action, by the number of people who clicked on the ad.
If your conversion rate isn’t where you want it to be, you may have to look at your website to make adjustments.
For instance, analyze your user experience to ensure your landing page:
performs on a variety of devices;
it has a good load speed;
is mobile friendly;
and, the desired action is clear to users (form submission is clear and simple, for instance).
If your conversion rate goes up, you’ll be spending less on advertising to get a sale or other desired action. Therefore, your ROI will go up. So you always aim for an increase in your conversion rate.
5. Bounce Rate
This could also be called the opposite of your conversion rate.
Your bounce rate is the number of visitors who click through to your site and but leave without completing your desired action.
A high bounce rate will send you back to your landing page to look for further enhancements. Review again to make sure it’s user-friendly and has a clear call to action to point people to your desired conversion.
You will always aim for a decrease in bounce rate.
6. Return on Advertising Spend (ROAS)
It can be argued that this is the most important KPI, particularly in terms of determining your ROI.
After all, what is more important than looking at the revenue earned vs. the money spent? To determine an effective ROAS, a break-even measure is a dollar earned for each dollar spent.
To calculate ROAS, divide the revenue of the campaign by the cost. If you made $500 and spent $100, your ROAS is $5. In other words, for every dollar you spent, you earned $5.
You should note that sometimes a bounce rate can be artificially inflated. For example, a user lands on your page, and then calls your business, then leaves. This would still count as a bounce, but in fact, the user actually converted
This number provides the bottom line on how the marketing budget has supported the business.
Final Thoughts
A PPC campaign requires planning, monitoring, and adjusting.
Like any aspect of your business, you want to be sure you establish goals and measure performance against those goals.
Launching a PPC campaign won’t be effective if you simply launch and leave it. You must monitor to make adjustments if necessary.
Knowing how to measure the efficiency of your PPC investments is vital to ensuring a positive ROI for your business, or your client’s business. Measuring and monitoring these 6 KPIs will ensure you get the most out of your PPC spend.
