How your online business can survive a global recession | October 16, 2008

Traditional business is simple. You create a product or service you think customers will want, and then spend money to drive people towards that product or service. If you’re lucky, some of those people will want to user your product or service and you’ll make money. This can be through direct charges or, in the case of content creation, selling this attention on to other companies.

During times of economic slowdowns, marketing budgets are usually the first things to be cut. However in doing so you reduce the number of people who’s attention you capture, reducing your potential market, and the whole things turns into a downward spiral. This is why most marketing pundits recommend that you increase your marketing budget during time of crisis, in order to shore up potential customer numbers.

Despite this obvious logic, there is a lack of liquidity in the market and budgets are going to be cut whether we like it or not. So product owners need to think of better, more effective ways of spending their money and maximising their return on investment.

The ironic thing about the preceding couple of paragraphs is that I’ve not actually mentioned the quality or suitability of the product or service, only the fact that marketing spend can drive attention. Yet we all know that it’s harder and more costly to acquire new customers than it is to satisfy existing ones. So rather than driving more traffic and hoping that some of those people will stick, we need to improve the core offering itself.

What does that mean? Well, first off, most websites are incredibly inefficient and converting customers, and can you blame them? Up until now it’s all been about volume rather than efficiency. As such sites are littered with usability problems that literally block your clients from spending money with you. In fact only this afternoon I abandoned a website for its competition because the site was so painful to use. You wouldn’t lay barriers in front of your customers in the real world, yet this is what we’re currently doing every day online. So the first step to slowdown success is to spend time removing these barriers and reducing your drop-out rates. This can be done quickly and for a fraction of what it would have cost to recruit those customers in the first place.

Next, we need to use our understanding of consumer psychology to promote our products more effectively. So rather than just laying out all our wares on the ground and hoping that somebody will wander past and buy something, we need to think about the purchasing process and make it more enticing for our users. This is the stuff that any marketing graduate will have learnt in their first year at school, yet for some reason it rarely seems to make it onto the web. This is largely because marketing departments don’t really get the web and either ignore it completely or shout at the top of their voices. However the web is full of discerning consumers who want to escape from overt marketing, so this stuff needs to be done subtly and with aplomb.

Lastly, we fundamentally need to rethink what we’re selling. Rather than coming up with a great new product and services and then hoping we find a market to sell it to, we need to learn about the needs of our customers and provide tools they actually want. So you need to go right back to basics and start talking to your customers to see what they need. Doing some smart research can show you’re where you’re currently falling down as well as opening up whole other opportunities you never even knew existed, simply by asking questions like “what do you wish this product did that you currently can’t do”. So surveys, customer interviews, and ethnographic studies can be a powerful tool in your business armoury.

One canny pundit once quipped, “people aren’t queuing up to buy your crappy product”, yet we keep trying to sell mediocre goods by upping the marketing spend. Instead, why not do what numerous other companies do and spend your money making your products better. By focussing your attention on building value in your products and providing an outstanding consumer experience you’ll create products that literally market themselves. Or to put it another way, it costs a lot less to market a good product than it does to market a crappy one.

So in order to weather this current economic downturn and come out ahead, we need to start thinking more strategically and less tactically, more about long term vision than short term success. Otherwise we’ll end up with a slash and burn mentality to driving online success. Instead, we need to build better products, we need remove the barriers to adoption, and we need to promote them more effectively. Doing any one of these things will significantly improve your conversion rates, but doing all three will see you weather the current storm and come out ahead. What are you waiting for?

Posted at October 16, 2008 7:43 AM


Marco said on October 16, 2008 3:09 PM

Good advice but… how does it relate to an economic downturn? I’d say the advice you gave is always the better way of doing things, not just when the economy is going downhill.

Martin Ringlein said on October 16, 2008 3:53 PM

Great post! I think one of the fundamental truths to surviving bad economic times (or just times in general) is to ensure you are always flexible and nimble enough to adapt to change — change in the economy, change in clients, change in needs, just change in general.

Being able to adapt quickly and being properly prepared will keep you head above water.

Marie said on October 16, 2008 11:21 PM

Nice and timely post. I’d add that web shop owners need to test different layouts and see what converts the best. It is not that easy to figure out what would be the best look and feel, messaging and shopping cart setup.

Paul Lloyd said on October 17, 2008 6:08 AM

I know that your post is focused more towards websites, but I imagine it is no coincidence that you should write this in the week Apple announced a new laptop range (that in the face of common (and misguided) conception) was of higher quality, yet didn’t see a massive reduction in price.

Whilst they have maintained an older model, that has seen a price cut (and directly a result of the current economic climate I would wager), this example in the offline world I think strengthens your point. As Steve Jobs likes to say, they intend to innovate through economic downtowns, increasing their R&D spend, rather than just slashing prices and increasing marketing.

With regards to web design and usability, I have seen at first hand how just removing friction points, and increasing the performance of a product increases conversion rates, and it’s rather exciting to see how little changes make such a positive impact!

Dallas Website Designer said on November 3, 2008 1:45 PM

More of a checklist than a strategy to survive hard times. Buckle down and pray your core clients don’t all go broke at the same time…

lewis litanzios said on November 4, 2008 3:52 AM

i went out last friday around bristol, mainly because work is shallow atm and i had the spare time, and spoke to shop keepers, firms, and local businesses about what i do (face-to-face).

the amount of interest i received was phenomenal, even just with a colourful CV, and it cost me all of nothing. it’s pretty easy to sit back on laurels and blame the downturn.

it’s all about upping the anti at this point more than ever. an analogy would be ebay trading. nobody’s buying anything, so low bids mean low prices. a great time to invest in products, but you’d already know that if you’d planned ‘long-term’ anyway, as andy points out, a year or six months ago.

driving attention with no spend or overheads by selling yourself has got to be up there in the check-list of beating the recession - especially if you’re a freelancer.

Kath Burke, copywriter said on November 18, 2008 3:53 PM

I like the point about not putting barriers in the way of your customers - this is important even for a service business where you’re not actually selling goods online. I’m advising some companies at the moment about revitalising their web content. And they are concerned that they’re not getting enquiries through the web. One obvious suggestion I’ve made is to stop hiding their phone number - display it prominently on every page of their site. And also include the email address - one client’s Contact us page only has an email form, so you don’t know what email address to type in. This is dead basic stuff but so easy to overlook.

Stu Collett said on November 19, 2008 11:41 AM

A great article Andy.

You make total sense. I don’t know why some companies refuse to invest in the development of their own products.

It seems bonkers to make it a marketing issue, when the real problem is the product itself.


Stu Collett.

Steve Rydz said on November 23, 2008 7:04 PM

That’s a good article there Andy. It’s nice to see that integrity is still out there.