The Harvard Business Review suggests taking three lessons from the pandemic to recession-proof your small business or medium enterprise:
Accelerate digitization, including automation and shifts to online channels and remote or hybrid work
Reorganize and reskill for operational efficiency
Become more agile, increasing the pace of both product and business model innovation
What Can a Recession Mean for Your Business?
Before we look at the best business strategies for a recession, let's consider some of the potential impacts on your business. Nobody needs to tell you that a recession is a stressful time for business owners, but knowing the potential effects can help you prepare more effectively for the realities of a downturn. Here are some questions to ask when planning for the future:
What financial resources will be available? Consumers may be less likely to spend and banks may be less likely to lend. Marketing budgets and other business expenses may be reduced which will further impact your bottom line.
What human resources will be available? For SMB owners, you can distill the endlessly complex link between unemployment and recession down to one key consideration: good people can be harder to find when the economic chips are down. The challenge with staffing vacancies is to make sure customer and employee experience standards are maintained — otherwise, customers and staff may look for a better deal from your competitors.
How will customers respond? People spend less during recessions and tend to be more selective with the dollars they do spend. SMBs should consider how they retain existing customers, including by prioritizing customer experience.
Minimizing the Effects of Reduced Access to Finances
Focus on Agility
Research from McKinsey suggests agile organizations performed better during the pandemic. As you recession-proof your SMB, it's important to emphasize points of flexibility and reapproach areas of your model that might be too rigid.
Technology is a good starting point for a few reasons. As the pandemic made clear, all the technology-enhanced processes in the world don't matter if the system can't pivot to align with evolving company goals or broader needs.
Hunt for Alternative Revenue Streams
Technology is also what enables businesses to meet their customers (both existing and new) in new places when adversity strikes. Turning back to the pandemic, the high number of business-to-business (B2B) sellers that decided to embrace business-to-consumer (B2C) tactics in some capacity illustrate just one method by which this can be done.
Though they seem similar at the surface level, the ecommerce systems that power B2B and B2C transactions are quite different in terms of their features, experiences, and the business objectives they help achieve. For wholesalers and others in the B2B space, adopting a new model meant either taking on all-new, consumer-focused technology or adapting existing systems to support a more retail-like experience.
The quick shift to self-service tools and buyer-friendly digital experiences has continued to pay off for B2B sellers now that the world has returned to something resembling normal. The same tools that sated the sudden need for virtual shopping experiences are — unsurprisingly — also what allow B2B sellers to thrive in the present day.
How can technology help your business take logical steps into adjacent markets and selling models? Keep this question in mind as you continue to build your recession-proof business.
Reduce Costs Via Technology and Evolved Strategy
Businesses are always looking to reduce spending, but their efforts can become more creative or encompassing as a recession goes on. Implemented with the proper strategy, technology can be of substantial help in this regard.
Tips to save on costs without impacting quality include:
Enhancing customer retention. It's a lot cheaper to retain a customer than it is to create a new one. A smart nurturing strategy or similar efforts, backed by customer relationship management and marketing automation tools (among others), can be invaluable.
Keep marketing alive. Tied to the first point, a lot of experts will tell you marketing is even more important the deeper a recession goes. Marketing is obviously not immune to the financial effects of a downturn, but look for creative cost-savings instead of outright cuts.
Embrace the right kind of remoteness. Not all remote work tools are created the same. While embracing remoteness can save your business a lot of money, make sure to centralize and contextualize your tools as much as possible instead of tying disparate solutions together.
How Can Vonage Assist?
Vonage's unified communications as a service (UCaaS) platform allows SMBs to save money and scale quickly according to the needs of the business, thanks to the power of the cloud. According to ZK Research, its total five-year cost of ownership is typically 30-40% lower than an on-premises PBX. By consolidating your communication services into one provider, you remove the need to establish and maintain relationships with multiple parties and allow your IT team to focus on more strategic work rather than repetitive maintenance tasks.
Our APIs are built to assist speed to market, provide flexibility of use, and help reduce business costs.
Offerings like Video Express exemplify this. Built on top of our mature Vonage Video API, Express simplifies all aspects of working with an API solution while leveraging the scale, features, and performance of the underlying product. By reducing complexity and making it possible for non-experts to integrate a custom solution, it helps you bypass the costly, resource-intensive aspect of setting up video services.
Drilling down a bit more, our APIs are also great allies in the fight to build better customer relationships. For instance, we build our conversational commerce tools to interface with all the most popular social media channels and microsites. This makes it easier and — even better considering a recession — less costly to tackle multichannel sales and support without the need for specialized staff.
Minimizing the Impact of Staffing Shortages
Attract, Engage, Upskill, Retain, and Save
Change is a core aspect of most of the advice contained here, and in business, change never occurs in a vacuum. Building a recession-proof business means figuring out how to manage that change in a way that suits the organization and its people. As with customers, employees are almost always cheaper to keep around than bring on new ones. Instead of struggling with the known and unknowable costs of bringing new employees on, it's smart to strategize around the idea of retention.
Because of this, businesses should learn to love the internal maneuver as their model evolves. Upskilling people — a job perk in and of itself for invested professionals — gives them the opportunity to stay around even as the business shifts. Moreover, it lets your organization save on hiring and onboarding costs.
Hybrid working arrangements remain popular as people seek to reduce commute times and spend more time with their family and loved ones. Offering these arrangements not only helps you attract quality staff, but also brings the added benefit of widening the talent pool at your disposal.
Thankfully, modern communications platforms can make sure staff have access to the same voice, video and messaging capabilities, and feel like part of the team, whether they're working in the office or remotely. Engaging and collaborating with staff is important at any time but particularly so during times of uncertainty.
Use Technology Intelligently
The ability of artificial intelligence (AI) to reduce workloads and increase efficiency means companies can reduce long waits and overworked employees. Here are some of the ways AI can help support operations with reduced staff:
Handling simple tasks. AI can schedule meetings, answer simple questions, and greet customers using natural language. This ensures human agents only address queries that AI can't handle.
Providing contextual information. AI can analyze the sentiment and content of calls and use the data to automatically populate the agent's screen.
AI can also help improve the employee experience by facilitating more flexible working arrangements, providing better training, improving the day-to-day experience with better routing, and helping to resolve customers' queries more efficiently.
How Can Vonage Help?
Vonage's unified communications platform lets SMB teams work anywhere with the same tools as in the office. This will help you attract and retain the staff you want. Further, our video-conferencing solution is an intuitive one-stop shop for your entire team, with simple functionality that allows real-time collaboration for up to 20 participants.
Our UCaaS mobility tools provide SMBs with a main number for customers to call and text, meaning your employees no longer need to give out their personal contact details to clients. Further, by ensuring all staff have visibility into who is responding to each client, your team will be able to work more efficiently and no longer have the frustration of preparing a response only to find someone else has also done it.
Vonage's Conversational Commerce and contact center chatbot integration solutions use world-leading AI to provide better customer and employee experiences. Multichannel chatbot automation allows you to use AI bots that can respond to customers using natural language processing and work intelligently with store associates and customer service agents.
Minimizing the Impact of Increasingly Cost-Conscious Customers
It's immediately easy to understand customers and empathize with their rationale when they tighten their purse strings in the face of a recession. But convincing them to continue spending — be it through revitalized product offerings, better service, or another strategy — is essentially the core objective of any recession-proof business.
There are a lot of ways businesses can meet their customers at the correct touchpoints (by evolving their product offerings, for instance) using technology. But businesses must weigh that against the idea that retaining customers is a lot cheaper than creating new ones.
To that end, one of the best things a business can do to make itself recession-proof is to pay exacting attention to its customer experience. Being able to turn to a world-class experience that doesn't create major friction points (like making customers repeat themselves) is a talking point that's hard to overcome when questions of value come up.
Being able to fluently engage with customers in all their favorite digital channels is another key step in providing the kind of experience that keeps customers around. When the competition is steep and highly price-directed, flourishes like a responsive cross-channel social media presence can be the differentiator for retaining existing relationships and even creating new ones.
How Can Vonage Products Assist With the Customer Experience?
There are lots of ways, both overt and indirect. Take our expanding presence in the world of conversational commerce, a tech-fueled branch of customer engagement designed specifically to help businesses connect with customers on the channels they want at just the right times. These tools make it easy to affordably give customers great experiences at effectively any stop of your sales cycle, and they help shorten those cycles — an important aspect of recession-proofing a business.
Our UCaaS platform can ensure no customer call is ever missed, no matter whether your staff are in the office, at home or on the road. Whether a customer is calling, texting or messaging a social media account, the relevant person or team can all be notified and respond in moments. And even if your staff are out of the office, they can use their personal devices with a called ID that reflects your main number, maintaining a professional business experience
We're also skilled at helping our customers remove friction points that cause their customers to churn out. Our UCaaS platform integrates with customer resource management and productivity applications so customers don't have to repeat themselves, while our contact center software comes with advanced reporting and analytics features that make it easy to build continual improvement into the process before pain points become attrition.
Lastly, our products offer an easy way for your business to tackle multichannel, multiformat communications in a way that makes sense for your business. This is an important distinction in an era where tech-savvy customers are quick to reject inauthenticity.
Let Vonage Be Your Guide
The uncertainty and turmoil that come before a recession can be just as stressful as the recession itself. We can help reduce that stress and walk you through all the options for how to future-proof your business by embracing flexibility, technology, and superior employee and customer experiences.