How Coronavirus Has Forced Businesses to Rethink
The Coronavirus (Covid-19) epidemic has really knocked down people and countries a six. The disease is highly contagious and has forced governments across the world to take unprecedented measures. It is evident the disease has affected the global economy with most people fearing it might lead to a financial crisis. The mysterious virus originated from Wuhan, China, where the first case was reported on the last day of 2019. Since then, the disease has caused numerous deaths with the latest number surging well over 18,000 globally, with more than 500,000 cases having been reported. For example, death cases have gone past 8,000 in Italy, with Spain coming in second with over 4,000 deaths reported. Although it started in China, it is evident that Europe has become the new epicenter of the virus. Italy, Spain as well as the United States, have borne the brunt of it all.
The contagious state of the disease has forced governments in the United States, Europe, as well as other countries around the world to impose a total lockdown in a bid to contain the spread of the virus. While the move is necessary from a medical point of view, due to the fact that most cases are through person-to-person, it is given that it is going to affect businesses immensely. In the business realm, there is a saying that the companies that fail to adapt will vanish. The new situation has forced firms to devise new measures to keep their operations going and remain afloat, awaiting those better days.
Lockdown
The impact of the epidemic, which has forced total or partial lockdowns, can already be felt, with many businesses being forced to respond differently. For the small and mid-sized companies, the future is bleak, as many don’t have cushions to protect them at this time. This has seen some businesses respond to the situation by closing down. For those with branches, they are at least trying to concentrate their operation in a few branches. Also, the future is bleak for most workers, with most encouraging companies forcing them to take leaves (paid, partially paid, or unpaid) or devise ways to work from home with no end in sight. For now, businesses are just getting by, especially those that are not part and parcel of the critical infrastructure.
For businesses to remain operational, more than just working from home is needed. This is because there so much that workers can conveniently work on while at home. As such, companies must come up with ways to ensure that the products reach the customers as expected. So, how can a company manage to keep the operation going, given all the stumbling blocks? This question is definitely in the minds of most managers across the world. So, how has the epidemic changed the way businesses do their marketing activities in a time when more and more people are concentrating their efforts to stay safe and hoping for a better tomorrow.
This is Not 2008
Many people fear that the current situation will lead to a financial crisis. Given the uncertainty and measures taken by various governments, it would be reckless to rule this possibility out. So, what exactly should companies do? One thing for sure is that organizations should increase their marketing budgets, unlike in 2008, where most reduced the allocations.
So far, companies have not adopted such measures during this period. On the contrary, most companies have adopted new strategies that have seen managements shift the funds allocated to participation in exhibitions to double the investment in online marketing. Such a move is commendable for companies focused on the “day after coronavirus.”
It is no brainer that the epidemic will leave a “trail of economic destruction” across the world. However, does this insinuate that all businesses will be affected the same way? The answer to this question is a resounding NO. While most companies will definitely be affected, some will be making a beeline for offering the best services now. Companies such as Netflix, Showmax, Amazon Prime, and other online subscription videos on-demand service are smiling all the way to the bank, given the increase in subscriptions due to a surge in “homebody economy.” This has resulted in people increasing their online shopping activities and media consumption due to quarantine orders given by most governments. Similarly, the demand for video-conferencing has seen companies such as Zoom report a surge in demand due to employees working from home.
According to data expert analyst Michael Olson, he predicts that the Netflix year-on-year subscription will double in both the United States and Canada as people are encouraged to remain indoors. Previously, the subscription was estimated to stand at 1.6%; however, the current predictions place the expected subscription rates at 3.8%. Similarly, the company is expected to make a significant reap on the international scene as the expected subscription rate is 30.9% from the previous prediction of 39.9%.
Although it may all appear like these companies are on a roll, most managements are afraid that it might seem like they are benefiting from the crisis.
Instead, savvy brands are making inconspicuous moves in a move to adjust to the adjustments in customer conduct. According to Darwin, anticipating that the organizations that would endure the interruption “are not the biggest nor the keenest, but the most versatile to change.”
According to Rob Sanderson of Loop Capital Markets, predicts that Google and Facebook’s promotion income will be seriously affected by the decrease in advertisement spend by tours and travel companies (as revealed via Search Engine Land).
As per his examination;
Google could see a 15% drop in year-on-year advertisement income during Q1 from lower spending in the tours, and travel segment as clients hold off from booking occasions until the episode has passed. This drop could increment to 20% before the finish of Q2, relying upon the term and size of the flare-up in key markets far and wide.
Google and Facebook are probably going to endure an extra shot from different enterprises who have been influenced by changes in shopper conduct since the Coronavirus spread comprehensively. Investigators Laura Martin and Dan Medina from the Needham Research Institute guarantee there is as of now proof that advertisement spend has diminished in divisions, for example, amusement, retail and FMCG as films and cafés close, buyers maintain a strategic distance from shopping centers and individuals modify their ways of managing money.
Consolidating this with diminished spending in the movement business, it could speak to between 30–45% of Facebook’s worldwide promotion income.
Moreover, continued with vulnerability could make advertisers in different territories reevaluate their promotion go through and may merge with the hardest hit enterprises to deliver a much more somber picture for the incomes of Facebook and Google over the coming quarters.
Traditional Marketing vs. Online Marketing
Numerous nations have brought about requesting an across the country lockdown. The decision to confine individuals’ interactions by making them remain inside their houses and limit every single superfluous excursion is probably going to prompt an outstanding reduction in out of home advertisement spend, with brands picking to concentrate on the web, advanced promotions.
Television is one of the major advertising platforms that has taken a hit, with several organizations cutting their TV advertisement budgets as a precautionary measure. This is to such an extent that ITV, which goes about as a sort of benchmark for the British TV advertisement showcase in general, appraises that they will see a 10% lessening in income due to coronavirus.
This is likewise on top of the fact that significant sporting activities such as the English Premier League and tournaments have just been dropped, and sponsorship deals have been cut, resulting in a decline in TV advertisement activities.
Despite this saddening predictions, other quotas are foreseeing and predicting something else. In most cases, TV tends to record spikes in viewership during times of terrible climate or different periods where individuals are bound to remain at home. In this manner, some TV officials are anticipating immense increments in advertisement spend as purchasers are compelled to stay at home.
So, how are companies going to maneuver around advertising? People are anticipating that there will be an immense increment in computerized advertisement spend through the next few months as people around the county continue to be holed at their homes, which is expected to them spend more time on the web, particularly deciding to shop online as opposed to going out. These expectations are supported by a research that was conducted by Dentsu Aegis Network, who found that of 155 clients and customer pioneers reviewed, 14% said they were moving their spending plan online compared to offline stores, as they aim to observe government directives.
Furthermore, as individuals travel less and work from home more, experts also hope to witness mobile and social opportunities go a notch higher. Research by Global Web Index found that currently, people see a tremendous increment in individuals checking their social media regardless of their age and socioeconomic status. For example, people labeled as Generation Z account for 27%, 30% among Millennials, 29% among Gen X, and 15% among Boomers. This may be the case as individuals are liberated from the careful gaze of their supervisor and can check their telephones all the more consistently. However, this might be the case as many people (4 out of 10) are continuously relying on these sites to check the news.
How Coronavirus is Affecting SaaS Companies
Just like any other industry, the coronavirus epidemic has not spared SaaS players. According to a report, SaaS companies are expected to take a hit with most expected to register a loss of between 10 to 25 percent. Most SaaS companies have a large number of international players, with most of them being from the United States and Europe. The lockdown being experienced in most of the countries has disrupted services, including SaaS firms. In recent years, the SaaS firms have been on the rise as more organizations adopt new technologies, especially cloud computing. However, questions on how the companies will survive the current epidemic keep lingering in the minds of many managers.
While several companies subscribed to the services are yet to cancel, customers are delaying ventures, and at times, payments have been deferred. In SaaS, installments are annualized. Taking into account that many industries in the economy are enduring a rough patch, firms like Posist are “exploring monthly or quarterly payment options for the time being. The organization is rethinking its overseas expansion plans also”.
It is a common practice among company managers and other leaders to think that if they cut the costs, they can also reduce the prices and thereby save the situation. While there might be some truth in such an approach, the approach can be labeled “shortsighted.” This is because when considering plans as such, the managers are entirely overlooking the long term relationship that is supposed to continue once the economy recovers. According to Roberts and Hiller, they believe that all companies should invest heavily in their marketing activities during the recession compared to when the economy is doing well. Their articles refer to PIMS (Profit Impact of Market Study) studies that clearly show that organizations that continued investment in marketing and even increased their spending did not make significantly less profit during a recession.
On the other hand, companies that retained or increased their marketing budget and went about their marketing activities aggressively, the profits increased much faster compared to their counterparts who decided to reduce the budgets. Apart from profits, organizations that increased their marketing budget managed to gain market share three times more quickly after the recession period was over. Moreover, according to Srinivasan, explain in their work, “Turning adversity into advantage,” how an economic downturn through proactive marketing can become an advantage for some firms. According to his research, companies that relentlessly continue investing in marketing even during the crisis are not only better off after the crisis is over, but there are immediate returns as well. It is essential to continue to invest in future products.
Business Strategies to Recover From Coronavirus
There are numerous reasons why a company should keep advertising or selling during a crisis. However, how should the organization approach the issue of marketing or selling? Below is a list of some of the strategies that SaaS players can use.
Offering Loyalty Programs
Given the impact of coronavirus, both short-term and long-term, companies should focus their efforts on developing new marketing strategies. What strategies should SaaS companies use to navigate through the crisis? As it stands, it is tough for companies to get new clients; hence, organizations should concentrate on retaining their existing clients. Given that companies might be forced to reduce their expenditure if the crisis continues, SaaS companies can attain customer retention through offering loyalty programs. The main aim of this approach is to make the customer feel valued. The process has been used by many companies in various sectors and should prove a success for SaaS firms.
Companies Should Consider Cross-Selling
The current economic environment will not allow most businesses to purchase new products. Hence, SaaS firms should consider cross-selling as one of the marketing strategies. Cross-selling involves selling additional non-core products that provide the customer with a more comprehensive solution.
A SaaS player might, for example, offer premium help or item training as additional items to their software product. Combinations with third parties also enable cross-sell. A Customer Resource Management framework with standard functionality could be supplemented by offering a partner’s email marketing program. Today, some apparatuses permit perceiving these incorporations with the goal that terms and conditions are regarded among the accomplices.
By using cross-selling, a company manages to churn exposure by:
- Acting as the main differentiator, giving a more extensive solution than different organizations with less hearty item contributions.
- Giving an “in” over numerous capacities on the grounds that with a wide(r) assortment of items, you can take care of more business issues across an organization.
- Driving expanded client tally, which builds the scope and stickiness of your offerings.
So as to effectively cross-sell, SaaS organizations need knowledge into the money related, conduct, and segment information of their clients. The capacity to investigate use designs, subscriber preferences and money related measurements are critical to revealing the sorts of cross-selling openings that lead to extra income and client retention.
Upselling is a Strategy
This is a beneficial marketing strategy that can be used to boost a company’s revenue, especially in times of crisis, when new clients are hard to attract. At the point when an organization needs to upsell an item, it presents its clients with a more feature-rich (and normally increasingly costly) option in contrast to the one they have just chosen.
Upsells work best on the off chance that they’re offered when the client needs the extra highlights — this could be a defined success milestone, for example, being a client for a year, or usage-based, as in the Dropbox model. The offer must sound suitable to the client and should include observable worth.
Effects of Cross-Selling to the Revenue
As per the market research organization, Forrester, up-sell, and up-sell and cross-sell recommendations constitute between 10–30% of web-based business income. Organizations, for example, Amazon, which has put intensely in these two deals strategies, are probably going to acquire much higher benefits through this channel.
Cross-selling and upselling, while deals strategies are not merely structured because of organization incomes. Whenever done appropriately, strategically pitching and upselling permit clients to see proposals of items and administrations that are custom-fitted to their inclinations, yet which offer a bespoke scope of arrangements.
Strategically pitching appears explicitly to pay off in a greater number of ways than deals. As indicated by a SAAS Radar report by McKinsey and Co and Gainsight, of the later stage organizations they assessed (those with an income of US25-US$75M), the organizations that had the most reduced agitate rate were the ones that strategically pitched to roughly 33% of their clients. This affirms, the more items and arrangements clients purchase from one association, the almost certain they are to stay.
Points to Consider
Upselling and cross-selling are only going to work adequately for organizations that can characterize their clients’ user experience. This should be possible by mining usage statistics and dividing clients by commitment, for example, login frequencies, features utilized, and resources consumed (for example, capacity, as in the Dropbox model).
In the event that essential items aren’t recommended or appeared at the ideal time, click-throughs and transformations will be poor, as will the clients’ purchasing experience.
Two elements to assess while advancing upsells and cross-selling to customers are:
Worth
Abstain from proposing items and services for upselling or cross-sell that lopsidedly raises the expense of the general request. The cost of the contribution ought to be appealing and sensible.
Commonality
Try not to show a broad bunch of new items. This will just confuse the client. The more comfortable your clients are with the add-on features or services, the better the chances of you selling them the product.
To wrap things up, it’s never acceptable to over-sell. Focusing on clients with new proposals and suggestions on each page will just harm their perspective on the organization brand. In cross-sell and upselling, success will come down to knowing your client and nurturing the relationship with care.
