In business, just as in life, there is no real opportunity without risk.
Appetite for risk varies in us all and this plays out in our decision-making every day. When an unprecedented situation like the global Coronavirus pandemic arose, it affected every person on the planet, many of us had our livelihoods drastically impacted.
This led to countless decisions being made by billions of people across the world. These decisions included many business leaders weighing up whether their businesses could continue as they were or with subtle changes, or whether a significant transformation was needed to protect the business. All this while trying to consider staff needs and retaining or even attracting new customers.
Budgets assigned to business-as-usual activities would have been questioned and weighed up, considering if the objectives were still achievable in a very ‘different-from-business-as-usual’ world. While some businesses saw an initial increase, many businesses were seeing a huge decline in revenue, with their customers not leaving their homes and adjusting their spending to only what they considered vital items. But there was still great opportunity to be found in taking risks at such an uncertain time.
Let’s take a look at an example of where opportunity and risk would have been considered and the decisions taken varied greatly. Take the comparison between Procter & Gamble and Coca-Cola – in 2020 their decisions based on risk and opportunity were in stark contrast, with P&G maintaining close to their full marketing budgets. Coca-Cola, in a view shared by many at the time, thought that marketing was not going to make much of a difference and was an obvious place to make budget savings at an uncertain time.
Guess whose revenues grew? P&G of course. This article from Mark Ritson discusses the comparison in detail and looks at why you shouldn’t automatically cut ad spend in a crisis. One line which really stood out, was this one on leadership at a time of risk:
“Covid caused every brand to question itself. The brave, the clever and the ones with long memories doubled down. Those with lesser budgets, shorter memories or a lower grade of leadership cut back and paid the price” – Mark Ritson
In business, the board members are primarily responsible for determining and overseeing risk appetite. As management report to them, it is the board who decide when the level of risk is at a point that allows the business to progress with its plans and objectives, or whether changes must be made when faced with a momentous shift impacting business-as-usual.
At Yard, we have had to make these decisions ourselves, but have also had many conversations with our clients as to how we can support them in identifying opportunities for their business in the immediate future and the longer term, allowing them to be more agile in how they invest their marketing budgets.
Through these conversations, we have seen a significant difference in appetites for embracing risk, and whether decision makers were able to frame a risk-taking option as a real opportunity for their business in retaining or acquiring customers to protect and grow their revenue.
Responding to change
As an example of a sector significantly changed by the global pandemic, financial and insurance products worldwide not only saw their qualification criteria change, but the demand for certain products dropped drastically in 2020 and have not yet returned to levels anywhere near those of 2019.
Using Cubed, our own solution-based platform, we have been able to help clients including Sainsbury’s Bank and Visit Scotland in identifying opportunities where there is demand for their products and services which can be purchased online and ensure they focus on the most profitable areas right now.
Where another of our clients’ stores closed for months at a time, we have been able to provide guidance on widening online channels of communication with their buyers. The client changed their customer contact points by having their usual store-based teams staff those online channels, allowing their customer base to speak to experts directly.
Cubed reporting allowed the business to see how this innovative change has paid off, as they can see online sales directly attributed to their experts. Online sales that include a chat with a product specialist have been at a rate that meant this service offering has actually continued even as their stores reopened months ago, as customers embraced it due to convenience, real-time access to an expert and great customer service.
Finding new opportunities
“A satisfied customer is the best business strategy of all” – Michael LeBoeuf
Every business has its challenges, and when found in unprecedented territory, these are amplified to levels that can break or make its future. Being able to work as a team and focus on the right opportunities takes real focus, as some risks can seem too great. Tapping into what your customers need is key, as even in tough times, if you can satisfy your customers’ needs or even widen offerings to a broader customer base in cases where opportunity outweighs risk, your business continues to be viable.
A clear example is the UK fishing industry, where hundreds of fishing boat crews across the UK found that with many restaurant customers closed due to lockdown, they had to diversify business in order to maintain an income. Many were able to use social media to identify demand was still high, with the customer themselves their new end of chain, and began to market their catch-of-the-day direct to homeowners. Customers would visit their local harbour to buy fresh seafood, and other fishing crews began offering a home delivery service.
A much bigger fish, Heinz, launched Heinz to Home website delivery service in the early days in the UK lockdown, recognising an opportunity to allow loyal customers to access their favourite Heinz comfort food from the comfort of their homes. It has been a huge success, with popular offers and subscription bundles, and there are now plans to expand this to baby food products in the near future.
Speak with your customers. Identify what they need. Listen to what they are telling you directly and indirectly. Direct conversations, changes in search terms, social media engagement, changes in seasonal demand for items, there are a variety of ways to identify the right opportunities to focus on to protect and even grow the future of your business. To find out how Yard can help with this, please get in touch.