Learn From History: How Winning Brands Kept Winning During a Recession

Netflix, Starbucks, Amazon, Airbnb: they are all companies that have thrived during economic downturns. And history tells us that downturns are not just about survival, but can also be great growth opportunities in certain areas of your business and your strategy. Now on today’s podcast, we’re going to learn from these companies, and about what history is telling us about how to adapt our own strategies alongside changing consumer behaviours.

We’re going to take a look at becoming more customer-centric and flexible, and focusing on creating unique value propositions, while demonstrating the importance of adaptability and innovation with the current marketing strategy. And by adapting your strategy through understanding and meeting consumer needs during these tough times, you can actually emerge stronger when the economy eventually recovers.

Hi, my name is Jordan McFadyen. Welcome to the Marketing Mindset podcast. So the podcast is designed to help you navigate this cluttered world of marketing, and help to challenge you to actually move away from random acts of marketing towards actually putting together a more intentional marketing strategy that moves with industry evolutions.

I’m going to start with a quote. The quote says, “I was asked what I thought about the recession. I thought about it and decided not to take part.” And this was the famous words of Sam Walton. Now Sam was the founder of Walmart, who instinctively knew pretty much what every successful business owner and successful leader knows as well. And that is that the market’s going to boom, and the market’s also going to have recessions. And it’s an inevitable part of life and of running a business in general.

And really, if we have a look back in the history books and think about where we’re at right now, it can all feel a bit of doom and gloom. From the stock market crash of 1929, that’s the one that kicked off the Great Depression, through to the aftermath of World War II. Then, of course, there’s the financial turbulence of the 1980s, and the bursting of the dot-com bubble in 2000. And then, of course, the 2008 recession.

But the one constant thing that remains is that economic storms are pretty much going to be inevitable, and it’s about how we actually face them. And the one thing that history tells us as marketers is that this can actually also be a time to not only survive, but actually thrive. And I know that sounds really cheesy, but this could actually be a really critical time for you and your business to actually sit down and dissect the different manoeuvres and the different tactics and the different strategies employed by world-leading brands in the past, that have not only weathered previous storms like what we’re going through now, but are actually coming out even stronger as well.

So today, what I want to do is we’re going to have a look back and see what we can actually learn about what history is actually telling us about how businesses have faced these difficult economic times in the past. How did businesses and brands work through the 2008 financial crisis? And what can we actually learn from those things that they did, so that it can help our businesses today?

So the first one I want to have a look at is Netflix. Now, Netflix is obviously a massive company, and all these companies we’re going to talk about are pretty big companies. But I think some of the learnings that we have from these are really important. So Netflix, we’ve seen all the stories about how Netflix essentially obliterated Blockbuster in the United States. And this all happened around the 2008 recession time as well.

Netflix at that time demonstrated, literally, it was a masterclass really in actually being able to meet consumer needs at the time. So what they did is they knew that wallets at that time were obviously tight and light. So what they did is they reviewed the value that they’re actually offering their customers instead. They thrived by essentially offering affordable home entertainment, but adding to the value that they offered customers by actually building their new streaming service to sit alongside their existing DVD rental business.

So their core principle was still there, which was being able to give people an affordable home entertainment solution. But what they did was they had a look at the value that they had, and they kind of expanded and extended on that. They’re able to add more services, more value for their customers, all while remaining constant with their unique selling proposition, which is to be priced better than competitors.

And essentially, by doing this, by really focusing in on the customer, they were then able to see earnings rise throughout that period. By 2019, they hit something like 9 million subscriptions to Netflix back then. So even back then, it was an incredible kind of shift that they saw, all by having a look at their customer and the customer needs, and trying to build on the existing value that their existing customers actually have.

The other company was Starbucks. Doing a bit of reading on Starbucks, obviously, around that time, they also faced a potential meltdown. Around the 2008 recession is when customers really started to deem Starbucks as being just simply too pricey when compared to some of their rivals like McDonald’s. So McDonald’s at the time were really starting to up their coffee game, moving away just from burgers. But remember, it’s like the cafe times, and they were really trying to get more consumers in to buy their coffee. And they were starting to offer a coffee at a lower price, and more of a fast service for their customers.

So Starbucks, what they had to do is they took a tactic of actually going right back. Now, they had a few shifts in actual management in the company around that time as well. But also during that time, they took a tactic of going right back and focusing on their customers, and primarily focusing on their customer experience.

So what they built was this thing called My Starbucks Idea. And this was essentially an online space that was really built, and is where coffee lovers could literally share their visions for the ultimate Starbucks experience. And that actually turned out to be an ingenious move for Starbucks. Because what they found then is they actually doubled down on being able to actually focus on their core customer, while also they turned their cafes into these cosy community hubs, which in turn actually built this mix of loyalty, this brand loyalty, and building in this customer engagement.

So by going direct to the customer, asking them to get involved, they were able to actually help flip their strategy and really listen to their customers and transform their business. And they also flipped their marketing strategy at the same time. They looked at ways on how they could become the brand that was seen as the pricey brand, especially compared to businesses like McDonald’s, but instead tried to actually change their brand and their values to be more trendy, or worth it, or worth that value. And I think that was really important as part of that My Starbucks Idea that they came out with, of actually hearing that from their customers so that they could adapt at that time.

And by focusing on the customer experience, and by focusing on retention of their existing customers, Starbucks were then able to see some solid growth during that 2008 recession.

And then there’s Amazon. Really quickly, they tackled the recession with offering more innovation. This is around the time when the Kindle came out. The Kindle launched in 2007, just before that 2008 recession time. And literally the Kindle became an overnight sensation, and they literally were able to sell all of their first edition within five and a half hours. And by Christmas 2009, so after the recession kind of started to peter out, e-books started to eclipse print sales for the first time ever.

So Amazon’s, I guess, their recipe that they were trying to focus on for recession resilience really was really just focusing on this relentless drive for innovation and diversification. And really, again, going back to their consumer and connecting with the consumer needs. They saw a gap in the market, and they took feedback on from their consumers, and they created a product that was going to suit those consumers as well.

And then finally, the other brand that was literally built during the 2008 recession. And we can’t look back in history without having a look at Airbnb. Because Airbnb was another company that kind of really hit the ground running, well, started during the 2008 recession. But also, it was interesting that they literally had a strong focus on a very solid customer audience and a very solid pain point, which was the high cost of accommodation. And they were niched down. They found a very, very particular audience and kind of grew from there.

So they began pretty modestly, if you don’t know the story behind Airbnb, by literally offering air mattresses in a loft for $80 a night, literally for a San Francisco conference, a conference that was on. So it was a very, very niche core market that they were trying to attract. And they had a very solid problem, which was the conference. People wanted to go to the conference, but they couldn’t afford the high accommodation prices. So the conference attendees, and the value-based USP that they had, solved a real pain point, which was expensive beds, essentially.

And by 2012, Airbnb was, what, valued in the billions of dollars range. So again, what they did, even during a recession, is they were able to find and build true value with a core group of customers, and to be able to kickstart and build their business.

So I guess from those stories and those brands and what they did in 2008, what can we learn? What can we learn and use in our businesses right now? How can we adapt our marketing strategies? How can we adapt our business strategies right now? How can we even adapt our thinking and the way that we’re attacking all of this now, currently? Is it our value propositions, our focus of the business, even if we are having to face tighter budgets at the moment?

Well, so here’s what I think anyway. Adopting a customer-centric marketing approach during these tough economic times should be one of your big focuses. Ensuring you truly understand your customer. You understand their pain points or their desires, what they value, and how the economic crunch that we’re all facing may be affecting them right now.

Because in the 2008 recession, remember, Starbucks created My Starbucks Idea. Now, this was, again, basically a suggestion box. It was also so much more than that, though. Because what it did was it gave existing and also new customers a bit of a voice in shaping the Starbucks experience, when they were faced with increasing pressure from the recession, and the innovations of other businesses and competitors like McDonald’s and their faster coffee.

So My Starbucks Idea, what that did was it blended this innovation and customer co-creation and community into one awesome strategy. It was this mix of brand loyalty and consumer engagement, which, of course, put customers first. And they had a really clear strategy for who they wanted to target, which was their existing customers first, and then new customers second. And they found new innovative ways of how to actually reach those people as well.

And then think of Airbnb, founded on that concept of providing an alternative to expensive travel accommodation. Again, they saw a massive gap in the accommodation market. They found a particular audience at the time, people looking for accommodation for literally one specific conference. And they’re able to grow literally a multi-million dollar business offer.

And then there’s Kindle, Amazon’s Kindle, that met the consumer’s evolving preference for digital reading. They understood what their customers actually wanted. They found some specific pain points and created an actual product that satisfied their customers, even during a time where wallets were thinner.

The other thing is remaining adaptable during a recession really is another key lesson we can take away and learn from past businesses thriving in economic times. Let’s go back to Starbucks, which went right back to its brand and marketing strategy during the 2008 recession, and shifted its focus back towards its customers. They adapted, they took feedback direct from customers, and they found their voice and rebranded themselves away from being seen as pricey when compared to competitors like McDonald’s. And they more wanted to be known as trendy and worth it, so more valuable.

And they adapted, and they built value for their target consumer. And the value was building these cosy community hubs, instead of just a cafe or just a fast food joint. And again, during the 2008 recession, they showed this flexible approach in their strategy, which allowed them to then adapt their focus and meet where their customers were at that time, and provide value to them and to what their customers’ needs were at that time as well. So again, being adaptable to really focus in on their customers and what their customers actually needed.

And as I studied how these brands reacted to the recession in the past, I also found so many similarities between brands that truly focused and pivoted on their unique value proposition, and focused on how their unique value proposition spoke to their core audience as well. Some brands either focused on reducing the cost to the consumer as their unique value, and price hunting, essentially discounting, while some looked at how they actually increased the perceived value of their product and service instead.

So this really comes down to knowing your customer and where they are. That literally is the key that you need to focus on here. You also don’t need to purely focus on just reducing how much you sell your product or service for. Instead, I would say you’d need to refocus on building and marketing the best value product that your core audience just simply can’t ignore.

You can also show your adaptability by considering bundling your products or services together, as a new way of increasing the perceived value of your product or service. Or you could look at adding new features to your existing services that then offer added value to your target market’s pain points. Or, of course, you could just simply improve and better reposition, better market the existing features that you already have now. And that’s an easy one, and it’s cost-effective, and it’s something that all businesses can do now.

Let’s take Netflix. Again, for example, they continue to offer their affordable home entertainment. That is their core value proposition. However, they changed their value proposition to online streaming at a time when their core business was literally sending DVDs via the mail. They showed better value to their customers, who were simply sick of waiting for a DVD to arrive in the mail.

So, again, I think thinking about your unique value proposition, and I think the key one there is thinking about how you could kind of reposition those existing things that you do so well now. How can you re-get in front of those customers, based on how your customer is adapting to this changing environment now?

And then building a community during tougher times is also really key. It’s a thing that’s really stuck out to me as a tactic that was really successful and affordable in past recessions: building this community engagement with your brand. If we take Starbucks in the 2008 recession, turned its cafes into these community hubs, and then engaged with customers through that online portal. My Starbucks Idea is what they called it. Literally a suggestion box, but so much more than that.

And I know we’ve covered this already, but I just think it’s so important. Starbucks learned about their core customers wanted, and then they reflected that back into their marketing strategy to attract more customers who shared similar interests to those people. And they built and focused this retention strategy with the customers that they already had. They fostered relationships and community to build on the customers that they already had retained, and then use what they’d learned from those existing customers to then generate awareness to find new ones. It’s genius, really. Building communities can really help your business through some struggling times.

So at the end of the day, from past recessions, it’s really clear that we can see that the brands that have succeeded are those that have been adaptable, they’ve been innovative, they’ve focused on their customers, they’ve provided true value to what their customers actually need or actually desire. And then they build a community of those people, of those customers. So being able to pivot and align with your consumer needs and preferences during challenging times can actually position your company for success when the economy does eventually recover.

And look, I know that it can be a lot to take in. However, building these strategies and supporting businesses through these strategies is what we do best here at Done By Nine: focusing on finding your key customers, helping you build your community, and essentially ensuring that you are retaining your customers, retaining your super fans, and going out and finding new ones at the same time.

So if you do want to learn more about those strategies, you need some advice or direction, or you need to adapt your strategy, you can get in touch with me and the rest of the team at our website. We are donebynine.com. You can go to donebynine.com/contact, and you can find all the details about how to get in touch with us. Also, if you do want to work with us, there’s a very simple two-minute questionnaire that you fill in, and then a member of the team will get back in touch, and we’ll see if we’re the right fit for working with you.

And look, if you found today’s episode helpful, I’d love it if you could share these ideas and this podcast with your network, or simply leave me a five-star review. It would literally mean the absolute world to me. And so if you could do either of those things, it would be absolutely amazing. And look, thank you so much for joining us again for another episode of the Marketing Mindset podcast. All the best with these strategies, and we’ll chat to you again on next Thursday’s episode.