The coronavirus pandemic has changed the definition of “business as usual.” Regardless of industry or geographic location, the entire world has experienced tremendous disruption. We’ve all had to adjust overnight and remain nimble as we’ve seen health guidance, government restrictions, and consumer attitudes shift on a daily basis.
Now that the turbulent time of dealing with the initial shock of the pandemic has passed, people around the world are beginning to ask, “What’s next?” What will the new normal look like, and how will it affect our businesses in the short-, medium-, and long-term?
That was the topic of our latest Campfire Chat. In this interactive webinar series, we’ve brought together leaders from across our network to discuss common challenges and share the strategies and solutions we’ve all been testing out along the way.
At our Chat the other week, we examined how we can take the changes we’ve made over the past few months and move forward with them. Some will stay, some will go, and some will shift. But there should be a structured, data-driven conversation around evaluating how to define the road ahead for your business.
Pockets of Growth
Many headlines have focused on the negative implications of the pandemic: unemployment, shrinking growth rates, not to mention the effects on individuals’ health and lives outside of the business world. However, many businesses have also unearthed slivers of opportunity over the past months. It’s likely they weren’t with your regular customers or in your ordinary areas of expertise. But many savvy leaders have found pockets of growth and leaned into them.
Taking a look back at what Heather Becker of Vistage Worldwide shared at a previous Campfire Chat, we can see some examples of businesses that pivoted quickly to serve new consumer needs.
She shared the story of Case-Mate, a consumer brand that usually sells cell phone covers and accessories at brick-and-mortar stores. They realized that with major cell service providers shutting down their in-person retail locations, their traditional sales channel was disappearing overnight.
So Case-Mate’s team decided to create a new product that met a novel, pressing need. They developed sanitizing wipes that remove dirt and germs from cell phones and other electronics. In the midst of a pandemic, they created a product that addressed consumers’ valid fears about the spread of the coronavirus.
Now that we’re returning to normal, though, businesses like Case-Mate will have to reassess. Will the desire for sanitizing phone wipes remain? Or will people eschew the need for this additional level of cleanliness as they begin to return to normal life?
Businesses that have pivoted need to revisit whether any upsides they uncovered during the pandemic will be permanent. If so, is there any opportunity to double down on those investments and create even greater growth opportunities?
The other thing to consider is the pull-forward effect (we’re looking at you, toilet paper manufacturers!). People stocked up on certain items during the initial panic. Charmin likely had its best month ever in March. But will its sales dip in the coming months now that garages are filled with stacks of TP? If you saw any significant uptick in sales, it’s important to consider whether you could fall victim to this well-known retail phenomenon.
Segments of Decline
While some were lucky to find pockets of growth, just about every business saw some segments of decline, too. Certain industries—like restaurants, hotels, and retail—were hit particularly hard. In some cases, businesses saw upswings in some areas and declines in others.
Again, the big question those organizations now need to answer is: Is the impact permanent or temporary?
Take, for example, gifts and home goods wholesaler Sullivans. CEO Tom Russo spoke on the chat about how the business had to pivot fast after its usual customer base of US-based mom-and-pop retailers saw their brick-and-mortar locations shuttered overnight as shelter-in-place orders went into effect.
Sullivans was able to transition quickly to serving its existing clients in new ways. The company began shipping directly from its warehouse to wholesale clients’ customers.
The Sullivans fulfillment team gracefully pivoted to this new dropship model, handling an influx of smaller orders needing to be shipped from its warehouses.
Customers greatly appreciated these new offerings Sullivans created for the short-term. Now that many clients are beginning to reopen, the question becomes how to assess what those clients’ needs will be. Hopefully, they’ll all go back to placing their regular orders. But depending on where those mom-and-pop shops are located, the reopening process might be faster or slower.
Sullivans is also considering the possibility of pent-up demand. With many consumers eager to get out of their homes and resume normal lives, will they be rushing to their favorite local home goods store to purchase plantings and decor for summer barbeques? Or are consumers nervous about their employment status and unlikely to go on a shopping spree? Time will tell, and Sullivans is ready for either scenario.
As businesses try to find what the new normal will look like, they need to evaluate their own financial situations. Ensuring that you’re well-positioned to weather liquidity issues is key. This is particularly true for those industries (like hospitality) that will be slower to get back on their feet.
We’ve talked about digital acceleration at several of our other Campfire Chats. When everyone went into lockdown, suddenly e-commerce was the only option. Whether your business is a B2B or B2C, all of your customers were online.
At a chat back in May, Mark Odekoven of Annie’s Publishing shared how they leveraged digital marketing channels to give their online sales a huge boost. Annie’s Publishing already had a solid e-commerce platform up and running. All that was left to do was send targeted ads to the right captive audience. When they did this, they saw tremendous growth online.
Other businesses—particularly B2B organizations that lost lead generation sources like events, or B2B2C companies that lost distribution channels like brick-and-mortar stores—scurried to build out and enhance their digital platforms. Now, they are experiencing triple-digit growth in these new-to-them channels.
As the option to sell and shop in-person returns, businesses are wondering what buyers and consumers will do. Will the acceleration to digital channels continue, or will customers fully revert to their old ways? Now that they have the choice to shop online, it’s unlikely that digital demand will disappear completely. Organizations should be thinking about a hybrid model for the future.
Now is the time to undertake a thorough assessment of potential channel conflict issues. Develop a new chapter in your playbook that outlines clear rules for what goes through e-commerce versus traditional channels.
Think about the economics and scalability of the new ways of doing business. Beyond the e-commerce platform itself, how do you need to retrain and redeploy your sales force? Is your fulfillment team set up to handle this new way of operating? Have you created an incredible customer experience online that will keep existing customers returning and will delight new folks who stumble upon you post-COVID?
In talking about the Sullivans example earlier, we touched upon the concept of lag effect. No business relationship exists in a vacuum; your customers have customers, too. And when their customers’ needs and behaviors change, it can affect your business.
Sullivans’ mom-and-pop customers are reopening for business. They need to ensure they have enough product on-hand to keep up with customer demand.
If their consumers are eager to return to normal life and unconcerned about their economic situation in the future, they might very well be excited to spruce up the homes they’ve been locked inside of for the past three months. However, if they’re still worried about social distancing or feel their job is on shaky footing, they might hold off on making non-essential purchases.
The same goes for your supply chain. Different areas of the globe are feeling the effects of the pandemic differently. For example, New Zealand has eradicated coronavirus and is making a full return to normal life. However, Brazil is seeing a huge spike in cases that show no sign of stopping.
If your suppliers are in an area that’s gotten the virus under control, you might not see any slowdowns. But if you’re relying on a hard-hit area for essential goods or services, you need to prepare accordingly and perhaps find alternative suppliers.
Cost of Doing Business
As we transition out of shelter-in-place, one major question remains: Which changes are temporary, and which will remain for the medium- or long-term?
Social distancing and mask-wearing will likely remain in place until a vaccine is discovered—and estimates vary widely on when that will be. That, of course, affects our ability to gather in-person, too. So for those industries (like cruise ships) or those parts of a business (like conferences and events) that require large crowds to gather in confined spaces, there’s no telling how long it will be until those return.
The shift to work from home also raises some important questions for both B2B and B2C businesses. There has been many a think-piece penned about whether or not the in-person office is dead. Some businesses might opt to forego the overhead of renting office space and transition to a fully-remote workforce. Others will feel that the in-person collaboration that happens in a shared space is invaluable.
No matter where you end up falling on these issues, they will affect the economics of your business. The team at Sullivans, for example, faced a specific concern around in-person events.
Many of its wholesale clients typically make purchasing decisions by attending in-person buyers’ showcases. These happen in large convention halls, where the mom-and-pop owners get to connect with wholesalers and decide on inventory for their next season. However, with large-scale in-person events still on pause for the foreseeable future, Sullivans needed to find another way to showcase its latest products to buyers.
So the team created a showroom in their Sioux Falls headquarters. They filmed a walkthrough of their products, providing an opportunity for retail buyers to browse and shop virtually. Even after in-person events start up again, this strategy might remain in place as a way to reach those buyers who don’t attend the showcases.
Who knows? Maybe these virtual showrooms will replace those conferences forever. Or perhaps we’ll see a return to the convention hall floor once COVID fears have waned.
No matter what kind of questions you’re grappling with in your business, embracing the spirit of measuring and experimenting with your data will be critical. We’ve already seen unprecedented change over the past few months. None of us can say for sure what’s in store for the rest of 2020 and beyond.
But if we let the numbers serve as our guide, we can continue to identify issues and opportunities as they arise. From there, we triage the most pressing concerns and come up with creative solutions to address challenges or take advantage of promising breaks.
About the Sterling Woods Group, LLC
The Sterling Woods Group’s mission is to help clients make sense of their data to predictably grow sales. We apply data science to help you optimize your sales funnel, improve your marketing ROI, launch new products successfully, and enter new markets profitably.
We use a hypothesis-driven, data-supported methodology to discover insights that no one else is paying attention to. Then, we help you assemble the right sales strategies, marketing plans, technologies, and resources to seize this opportunity.
About the Author
Rob Ristagno, founder and CEO of the Sterling Woods Group, previously served as a senior executive at several digital media and e-commerce businesses, including as COO of America’s Test Kitchen. Starting his career at McKinsey, his focus has always been on embracing digital technology and data science to spur strategic growth.
Rob is the author of A Member is Worth a Thousand Visitors and is a regular keynote speaker at conferences around the world. He has been featured on ABC, NBC, CBS, Fox, and Digiday.
He holds degrees from the Harvard Business School and Dartmouth College and has taught at both Harvard and Boston College.
Rob lives outside Boston, MA with his wife, Kate; daughter, Leni; and black lab, Royce.