What Organizations Can Do Amidst COVID-19 and an Economic Downturn
This is an unprecedented time in modern history. With markets falling dramatically and lock downs and social distancing affecting the country, the full economic impact of COVID-19 remains uncertain. It is no longer business as usual. In the 2008 recession, organizations that focused on their return on invested capital came out ahead. Those who retreated faltered.
What can you do right now to minimize the risk of your 2020 goals slipping?
The answer starts with getting back to the basics: know your donor, know your customer.
Follow this proven 3-point strategy to keep your momentum in the midst of economic instability and uncertainty due to the coronavirus, COVID-19.
Managing in Uncertainty?
Read our guide to learn key strategies to protect and grow your organization amidst economic instability.
1. Engage with Your Community, Focus on Impact
Historically, during economic downturns, organizations that use this time to create stronger relationships come out ahead.
Being there for donors and customers gets you closer to them. The more you do for your community, the more goodwill you generate. This builds your brand and tightens your relationship with your audience.
To connect with your audience, share stories about the impact you are making on others during this difficult time. You will get attention by touching people’s hearts.
LVMH, home to brands such as Louis Vuitton and Fendi, is manufacturing hand sanitizers in their factories that normally produce perfume. The goal is to help address the dramatic shortage of hand sanitizer, especially in hospitals that so desperately need it. By showing their commitment to a larger cause, they are reinforcing their brand. They have already received a sizable amount of free publicity for their efforts.
Banks are offering very low or no interest loans and short-term lines of credit to small businesses. WaFd in Seattle, an area hit very hard, is offering a $200,000 business line of credit for 90 days and is fast-tracking loans up to $30,000 for small firms that saw a 10% or more drop in cash flow due to the coronavirus. They are standing by their community and have prepared $100 million for these loans.
Just about every type of organization can have an impact. Celebrity chef José Andrés closed his restaurants and set up community kitchens to offer packaged lunches to those who aren’t able to get meals. As the founder of World Central Kitchen, his organization provides relief during natural disasters. While he loses money providing free meals, his attitude and approach is to pay it forward.
Travel and Hospitality
Several colleges have shutdown, leaving students with little time to move out and return home. One student got to curb side check-in at the airport only to find that her bag was overweight. She had packed her text books and other heavy items. Rather than charge $75 overweight baggage fee, the Southwest Airlines rep asked if she was a college student returning home due to COVID-19. Exasperated, she said “yes!” The airline’s rep immediately waived the extra charge so the student could get home without added stress.
The student’s mother shared this heartwarming story on social media. While Southwest isn’t a luxury brand, the student and her mom (and many of her social media friends) now have a stronger relationship with the company. The airline rep’s gesture generated far more goodwill than $75 of advertising could buy.
Knowing what your customer needs right now will score points that will create a stronger relationship going forward. It will also help you increase your return in invested capital.
2. Stay Top of Mind, Don’t Retreat
With the Dow Jones losing so much of its value in a week, even wealthy consumers will feel (and likely be) less rich than they were a month ago. They may postpone previously scheduled meetings that you set up. Some might say that they are not in a position to do any business with you due to significant losses in the stock market. Others could hold back on financial commitments till they see a rainbow after the storm passes.
Staying top of mind is a critical element in maintaining momentum during an economic downturn. Those who retreat will lose market share.
While your first instinct may be to reduce your investments, retreating from activity can make your situation worse. John Quelch’s Harvard Business Review article on How to Market During a Recession stresses that organizations should maintain their marketing efforts during a downturn. Again, it’s not business as usual. How you approach your prospects to build bonds will influence their lifetime value with your organization.
This blueprint works regardless of your type of organization. The Chronicle of Philanthropy recommends a very similar strategy for charities to connect with donors in a looming recession.
Now is the time to reach out with a personalized message.
Your outreach will be different for everyone so knowing what makes your prospects, donors and clients tick is critical. You can use your WealthEngine account to find insights to personalize your approach to donors, customers and prospects. Learn what types of causes they donate to, who their connections are, and other intelligence to prepare your conversation.
3. Strategize for a High Return on Invested Capital (ROIC)
In a tighter market for dollars, your competitors include everyone pursuing the wealthy client’s cherished bank account. This includes nonprofits vying for their cause, banks claiming they can manage wealth better, and luxury brands who offer unique lifestyles and experiences.
The stocks deemed as winners in the 2008-2009 recession had one thing in common. All of them had a high return on invested capital (ROIC) that outperformed their peers. The Financial Times reports that organizations who prioritized ROIC generated 15-20% growth whereas those who retreated lost 15% or more.
History will repeat itself. Inaction now will hurt your organization in 2020. Optimizing your invested capital can make or break your year.
The key to success is to make your outreach as efficient as possible. That’s why getting back to the basics, knowing your donor or customer, is so important. Wealth and lifestyle insights about your audience empowers you to craft your message in ways that your competitors won’t.
Small Gestures Build Big Bridges
The country’s lock down is preventing in-person meetings. Many organizations are scrambling to move online to conduct business. Their staff is simultaneously dealing with children who are now at home due to school closures. If you know a top prospect has children under age 18, something you can find instantly using WealthEngine, you know they are likely struggling with schools being shut down temporarily. Send them a link to kids activities. It can help them stay occupied while the whole family is self-quarantined.
Use wealth and lifestyle data to increase your return on invested capital. It can help you come out of our current economic downturn better positioned for growth than others who are competing for the same dollar. You want to show that you care now, not later when things are rosy.
Markets abruptly tanked, leaving many people nervous. Some people will be reluctant to commit immediately. This is precisely why you need to know who your best targets are. They can withstand market fluctuations better than others.
We will eventually get out of this economic situation and you want to be as well-positioned as possible.
In every downturn, those who invest in getting closer to clients come out ahead.
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