Covid-19 has been a challenging time for everyone; and the services sector is among the hardest hit. For example, in 2020, at the height of the pandemic, life insurance sales fell by as much as 13 per cent. Other service sectors, ranging from hospitality to retail sales, also suffered from the slew of movement restrictions. Nonetheless, some service professionals managed to do well even in this tough environment. They may know a few tricks we should pick up on:
It’s a common mistake to assume that every recession or downturn is the same. But while there may be broad similarities, there are always unique factors to each downturn.
Let’s take, for example, the finance industry: during the Global Financial Crisis (GFC) in ‘08 to ‘09, the challenge posed was one of trust: because of the failure of large financial institutions, financial professionals (from private wealth managers down to the counter staff at banks) were faced with increased skepticism. They had to refocus on building or maintaining trust, rather than continue putting out aspirational messages of wealth, comfortable retirements, etc.
The Covid-19 pandemic, however, poses a different set of challenges. In this crisis, many of the challenges are logistical: restrictions on dining out, conducting face-to-face meetings, and large seminars have put an end to many conventional sales methods.
As such, the solution is to refocus on digital outreach methods. Today’s financial advisors, for instance, don’t just need to get comfortable with online marketing – they also need to help clients get comfortable with Zoom sessions, using phone calls and emails more than face-to-face selling, etc.
The need for online communications is especially challenging for the elderly, who may not be as tech-savvy (thus turning some financial advisors into unintended tech support; but it’s the ones who accept the added job responsibility that are rewarded for it).
So rather than have a generic playbook for downturns, always make an effort to understand the causes, and the exact points of impact. Your response should be tailored accordingly.
A common error among service professionals is to confuse postponables with essentials.
For example, a dentist may think her service counts as an essential – something that doesn’t require added marketing in a downturn, as everyone still needs it. But in reality, many people can – and do – postpone expensive dental treatment if they’re in a state of fear, and want to save money (e.g., if they have just been retrenched or forced into a lower-paying job, due to Covid).
In reality, essentials are things that people both need and cannot put off buying (such as food and water). The real list of essential services is smaller than most of us imagine.
The following services could be considered essential, for example, but customers can delay buying them for quite a while:
● Insurance
● Property related services (unless a person is immediately homeless)
● Optometry
● Tuition services
● Some healthcare services (people may put off going to the doctor unless they absolutely need it, and some may even delay purchasing medication)
If your service is postponable, it can mean you need to invest more in marketing, not less, during a downturn. Only those with truly essential services can get away with little to no added marketing effort.
Conversely, low-cost providers of essentials tend to see increased demand in some downturns; such as Sheng Siong during Covid-19. So a grocery delivery service, for instance, might get away without having to spend a single cent more on ads.
You may be tempted to use the ongoing crisis as a way to sell. For example, pushing the need for insurance because Covid-19 brings a new risk of being unable to work or death.
There’s seldom a positive pay-off to these methods. Even if you’re not criticised as insensitive, most people won’t pay attention to your marketing message – they’re stressed enough without needing more negative signals.
Instead, focus on putting out messages that support and encourage. This can be as simple as careful word choice in your copy, or putting out actionable steps (e.g., marketing messages that show how to safeguard or improve the buyer’s situation).
Even if these messages don’t directly sell your service, they are more likely to be remembered by prospective customers; and you’ll be the first they contact, when they do need the service.
An example of this would be recommending a cheaper tier of service, rather than giving buyers a 20 per cent discount.
This is important to avoid devaluing your service. When you lower prices now, it is very difficult to raise them again later. There’s a risk that, when you try to normalise prices after a downturn, your customers will go elsewhere. It’s not just the amount that matters, customers may be upset at not being rewarded for loyalty (“I supported you when times were bad, but now you’re charging me more!”)
So if you’re in the logistics business, for example, you could recommend a more basic delivery service, rather than give a “special rate”.
As an aside, direct discounts are incongruent with certain forms of branding. It would be odd, for instance, to see PriceWaterhouseCoopers advertise 20 per cent off accounting fees. Bear this in mind, if you position yourself as a premium service provider.
During a downturn, existing customers may need to “dial down” expenses. This could mean switching to a cheaper tier of service, or engaging you less often.
Most customers expect to be treated less well when this happens. So if you continue to maintain their rewards and benefits, it can create a lasting positive impact. Some service providers even increase rewards to customers for loyalty, even if they’re spending less at the moment.
There are two key benefits to doing this:
The first is that customer retention is almost always cheaper than customer acquisition. This is especially true during a downturn, when new customers are hard to come by.
The second reason is that, if your existing customers are impressed, you may get word-of-mouth referrals. Buyers tend to be more picky and cautious during a downturn; so direct referrals from their friends are more important than a glimpsed ad or video.
Don’t let pride get in the way, and insist on not “copying” what others are doing. If they’re doing well during a downturn, then their methods are worth noting. You can chase wildly original ideas later, once you have something solid to build on.
At Exodus Capital, we provide a nurturing environment for financial professionals. Through close mentorship, we help Financial Advisors navigate changing situations, such as the inevitable downturns and crises that make up part of the journey. If you’re struggling in the current situation, reach out to us for help and support.
