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    March 9, 2023

    How Would You Beat a Market Downturn?

    In a down market, it can be challenging for companies to maintain their customer base and keep revenue flowing. In our recent podcast, How Would You Beat the Market Downturn, we cover some insights on how to beat a down market. The first step is to understand the customer's job to be done and figure out which product or service can help them achieve it. This requires evaluating whether the job is still urgent in a down market or if it's a discretionary job that can be postponed until the market improves.

    All value creation comes down to helping customers get a job done faster and more accurately, potentially at a lower cost. The key is to focus on the job to be done, rather than the product itself. For example, there is no market for stents, but there is a market to restore artery blood flow. Companies need to shift their focus from their product or service to the customer's job and figure out how they can help their customers achieve their goals more efficiently and effectively.

    In a down market, it's even more critical to focus on the customer's job because their job doesn't change, even if the market does. Companies that focus on frivolous jobs that no one really cares about are unlikely to succeed, even in an upmarket. People are busy, and they have many things they need to accomplish, so companies need to focus on things that are meaningful to them and ultimately tap into big markets.

    Therefore, defining the customer's job is the first step for most companies, and it's essential to shift from a product-oriented mindset to a customer-oriented mindset. By focusing on the customer's job to be done, companies can create value for their customers, even in a down market, and ultimately come out on top.

    Companies that are product-oriented rather than customer-oriented often struggle to adapt to changing market conditions because they focus on their own products rather than the needs of their customers. For example, there is no market for CRM software, but there is a market for acquiring customers. By focusing on the customer's job rather than the product, companies can stay relevant and successful even in a down market.

    Take the example of Steinway and Sons, the piano company. In a recession, people are unlikely to buy expensive pianos, so Steinway had to find new ways to serve its customers. By focusing on the customer's job of creating a mood with music, Steinway could identify other ways to serve its customers. For example, they could focus on helping students struggling to learn instruments, or on creating affordable ways for families to learn and play music together. By investing in new platforms and services, Steinway could make itself more resilient and continue to create value for its customers even in a down market.

    B2B companies are seeing an especially significant contraction in the current downturn. This is where a clear customer segmentation can help. So how do you go about defining these segments? One approach is to start with your existing customer base and look for patterns in their behavior, needs, and pain points. You can also use surveys or other forms of customer research to gather insights on what drives their decision-making and where they face challenges. Once you have a clear understanding of your segments, you can tailor your product offerings, messaging, and marketing strategies to better address their specific needs. This not only helps you attract new customers within these segments, but it also strengthens your relationships with existing ones. It's important to note that segmentation is not a one-time thing. It's an ongoing process that requires constant monitoring and adjustment. As the market evolves and customer needs change, so must your segments.

    A down market can also create new opportunities for businesses that are nimble and can adapt to the changing needs of their target market. Gilt Groupe is a great example of a company that leveraged the market downturn to build a significant e-commerce business. It's important to understand that the needs required to get the job done may remain stable over time, but the unmet needs can change based on the environment. This means that businesses must stay nimble and assess the willingness to pay of their target market. In a down market, it's crucial to understand whether your target market is willing to pay to get the job done and whether you can do so profitably. While it may be tempting to go after the premium market where willingness to pay remains high, there may be large underserved segments with lower willingness to pay that present viable growth opportunities.

    Ultimately, your growth strategy should follow the market, and by understanding your target market's needs and willingness to pay, you can beat the market downturn and create new opportunities for growth.


    Posted by Admin

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