Economic forecasts for the upcoming months do not fill with optimism, as for several years now; we have been experiencing financial, social, and geopolitical turbulence for several years now. We’ve gained a new word coined on the circumstances: “permacrisis,” which, according to the editors of the Collins English Dictionary, stands for “an extended period of instability and insecurity.” In recent years, the global economy has been impacted by major themes like the pandemic, Russia’s invasion of Ukraine, and soaring inflation. This state of affairs drives economic uncertainty and forces business leaders to adjust to the dynamic situation and confront increasingly significant global challenges. Though how to operate effectively within such an unpredictable environment? Businesses must think big, strategize, and stay focused on long-term plans and value. Despite the path you decide on, whether it’s cost-cutting or building business resilience, the actual way to endure the global crisis is through investment in digital technology.
New technologies are perfectly capable of improving your business performance and efficiency. It’s a sound investment that ensures return on investment. To put it another way, if you improve your organization’s productivity by deploying new IT solutions, the business will bring more profit despite the recessive trend in the economy and hence will become more resilient to crisis. We are currently observing a drop in spending power and, at the same time, a rapid increase in business maintenance costs. Economists expect a rolling recession will reach us still within 2023, accompanied by growing input prices, supply chain shifts, cost-cutting, layoffs, and a lack of energy security. Business is already focusing on improving cost efficiency and productivity, but how to hedge against recession, endure, get back on track, and thrive afterward? Read on to find out how your company can counteract and survive the global crisis thanks to new technologies. We have answered the five most frequently asked questions regarding securing a business during the raging global economy crisis when building a strategy seems a pretty tough nut to crack.
How do I retain customers?
Retaining your existing customers seems like the most reasonable and cost-efficient way to grow your business in these economically challenging times sustainably. Loyal customers lead to growth; hence your focus should be on strengthening the relations with your top clients. According to Forbes, quoting the book Marketing Metrics, “businesses have a 60 to 70% chance of selling to an existing customer, while the probability of selling to a new prospect is only 5% to 20%”. And that’s a solid reason for you to do your best to provide top-notch customer service, as you should focus on meeting expectations and adapting to changing requirements. Provide tailored solutions relevant and personalized to their individual needs. By experiencing excellent customer experience, your clients will be more likely to continue cooperation. According to a recent study, existing customers are 50% more likely to try a new product, so persuade them to stay.
Another way to entice your customers to the ongoing partnership is through an education program, which will prove a long-term investment in your business relation. Provide your customers with a knowledge base where they can find solutions before they reach out to the support team. You may share quality content extending services you provide and cover generic subjects related to industry-focused matters and trends, such as HubSpot, which delivers courses on marketing, sales, and customer-related topics. Technology usage for customer retention provides organizations with the tools and data to understand customer journeys and preferences and automate customer service processes. IT solutions increased the convenience of customer interactions with businesses, providing multiple communication options, like chatbots, knowledge-base, and seamless customer experience. With data and analytic tools, you may easily gain insight into customer behavior, which can be used to improve your offer and communication to make it more customized. This way, you can retarget your customers by offering the exact product or service they need or like. Just as in the case of the Netflix algorithm, which determines content proposals based on the already consumed items and reverts with something you will most likely add to your watchlist.
What can I do to increase the cost efficiency of my company?
Companies invest in technology during a recession, even though the budgets are tight. Against all odds, the downturn period is perfect for equipping your company with IT solutions. Due to the slowdown, businesses gained time resources, and the capacity to implement technologies that might have been tricky to deploy during the intense time of the entire operation. Digital transformation aims at increasing business efficiency and introducing operational improvements, which translates into cutting costs. That’s why it is the right move for organizations to prioritize new technologies implementation, as it will pay off quickly. IT investments make companies more flexible and agile, hence, able to adjust during the uncertain economy.
Automating operations provides plenty more benefits than time savings; we’re talking improved analytics, efficiency boost, and enhanced competitiveness. Thanks to automating processes in an organization, it’s possible to handle labor shortages, minimize the number of tedious tasks, improve accuracy, and add value to a company’s bottom line. It is becoming more of a necessity rather than a choice, as businesses have to think forward and prepare themselves for the market to recover. Another way to increase cost efficiency is by purchasing new IT equipment and software. According to recent Gartner digital markets insights, nearly 90% of businesses believe technology is crucial for achieving organizational goals. Over two-thirds of companies plan to spend more on IT and software in 2023 to drive efficiency and cost savings. Updating technologies and investing in IT architecture and security software can help your business become more efficient, productive, and equipped with better data protection tools.
We don’t have to look far from our backyard to provide an example of process automation, as we’ve recently developed a digital counting system for… an industrial shrimp farm. Using Deep Learning methods, we’ve provided a system enabling digital and contact-free estimation of the number of shrimps based on density maps and object-detecting functionality. Can you imagine the time saved?
How to enhance the effectiveness of my team?
Your team is the foremost important driver of growth for your business. Hence investing in your staff development, you are putting people right at the heart of your business, working on attracting new talents and retaining the ones that contribute to building your business. Sure, keep an eye on expenses, though if your first thought is to cut back on employee development, with all due respect, reconsider this move. “Whether in a pandemic, a recession, or an economic boom, you need people who can do their jobs well. So even when you have to think more strategically about your budget, growth strategy, and business priorities, employee development is not an investment you should ignore,” says Christine Tao, CEO & Co-Founder of Sounding Board, on the pages of Forbes.
The job market is going through changes that leave employers with key positions and vacancies difficult to fulfill, while employee retention rates are decreasing due to the quiet quitting trend. Hence, invest in people strategy and don’t allow them to move on, as losing key staff is a costly problem, money and time-wise, as you might find it rather difficult to get a replacement now. Upskill, introduce performance management, make use of quiet hiring, and equip your employees with development opportunities. To provide an example, Comcast, a major global telecom company, has adopted an LMS platform that helps optimize and easily scale up processes connected with customer service staff training, compliance with company policies, and synchronized courses for over 40 000 employees. Another case in point worth quoting is a forklift operator training system custom-made and delivered to an automotive market leader. Its job is to train future forklift operators with the help of AR and AI algorithms, with minimal instructor involvement.
What are the alternatives for layoffs?
Mass redundancies have reached the headlines of economic journals. With growing concern, we learn about subsequent waves of layoffs announced by high-profile giants like Amazon, Google, and Microsoft. Should other businesses follow the example, or are there any alternative ways to layoffs? Luckily, letting people go is not the only way to go when looking for labor cost savings. One of the possible solutions is hiring frizes. Instead, companies may opt for quiet hiring, which, quoting Gartner, allows organizations to “address acute, immediate business needs by assigning existing employees to new roles, expanding existing employees’ responsibilities through stretch and upskilling opportunities.” Layoffs lower employee morale, though they negatively influence the companies.
Reducing your workforce might not be the best idea when all your business actually needs is a productivity boost. Instead, companies should consider less disruptive and more cost-effective measures like working hours reductions or performance-related pay. Getting people fired while struggling economically difficult period may keep your business afloat short-term, though it’s not a long-term strategy for a downturn. According to the new benchmark data from the Society for Human Resource Management (SHRM), the average cost per hire in 2022 was nearly $4,700. Assuming the economic decline will come to an end before long, current layoffs would only put your company up for substantial reemployment costs as soon as the recession is over. Apple, for example, has avoided layoffs in times of crisis, mainly due to its careful employment policy and hiring freeze preventively implemented already in November 2022.
How to prepare for the market to recover?
According to the World Economic Forum economists, a global recession is considered very likely to take place still in 2023. The economy will slow down considerably, with a recession rolling unevenly depending on the geographical location. The market downturn may last several months; however, the recovery is expected to take years. Most companies will withstand the crisis due to cost optimization, though to bounce back, they will need a strong team of specialists and new technologies implemented to stay in the game and be competitive. Instead of devoting 100% attention to growth prospects, inflation, and the uncertainty of the global economy, business leaders should already switch to long-term thinking, enabling organizations to prepare for the new normal. Having set the course of action, continue developing and improving your business during a recession, especially by investing in technologies. This way, you will be able to grow sustainably in the post-crisis economy. Prioritizing investments in IT will enable your company to keep pace with emerging trends, such as artificial intelligence, web 3.0, or metaverse technologies, that will impact all industries in the upcoming years. Staying up to date with the ongoing advanced digitalization may give an impression of being in control over your business in an uncontrollable environment.
From a downturn to the new business reality
Even though the global economic outlook still does not look promising, investing in business development should remain a long-term priority. Organizations investing in new technologies strengthen their digital resilience by increasing efficiency, streamlining processes, and remaining competitive. According to IMB commissioned Global Tech Investment Predictions Report, businesses plan on deploying AI and automation services to augment teams and workflows and build services on top of that infrastructure, including AI and automation. Despite the unpredictable market situation, IT investment is increasing steadily as businesses seek ways to increase efficiency and reduce costs. New technology and digital transformation have become essential for companies to endure the economically difficult time and keep up with the rapidly evolving technology landscape. But it also emerges as a prerequisite for businesses to bounce and thrive after the recession finally fades away. By embracing digital technologies, companies will have an edge on staying competitive, meeting changing customer expectations, and driving innovation and growth.