Four Primary Ways to Fight Market Volatility With Your Digital Business Strategy
This article is co-authored with Carsten Pingel, the Vice President of Commercial Strategy & Data Transformation at Valtech.
With the warning signs of an upcoming recession flashing with increasing intensity, businesses are forced to reevaluate their strategies to be prepared for a swiftly changing market. A Digital business strategy presents a dually-difficult challenge; should digital leaders focus on channels, customers, products, digital infrastructure, or something else entirely?
Instead of rushing to press the panic button when high inflation and other market conditions begin affecting business operations, leaders should instead pause to breathe and reassess their internal priorities and activities, particularly when it comes to revenue and profit protection.
Ultimately, digital strategy during market volatility should come down to four central approaches that drive innovation and unlock value:
Switch up internal workflows for digital business strategy
Before anything else, take this time to look inward to find a successful and manageable operational workflow. Instead of spreading your resources thin across all operations, focus on areas that deliver the most significant impact by identifying workflow inefficiencies, and improve internal processes, structures, and hierarchies to strengthen your company.
Dominos, an American multinational pizza restaurant chain, is a compelling example of how changes to internal operations strengthen performance to counter declining demand. Dominos, who in the early 2000s were plagued by troublesome years of waning profits and negative brand affinity, found themselves in need of a transformation. During this downswing, they took the time to analyze what their business truly was, and how it was currently run. The result was an understanding that Dominos was not just responsible for making good pizza, but they were also responsible for the delivery of their product. The recognition of these responsibilities transformed Domino’s from a food service company to a transportation company. As a result, significant personal investments were made into the transportation divisions, as well as software & analytics divisions to ensure effective delivery. This transformational restructure has led to operational efficiencies that have enabled Domino’s to increase & scale demand.
Prioritize effective and profitable marketing strategies
Analyze your digital business’ budget and compare it to your company marketing priorities to ensure they are in sync. If needed, challenge your current approach and identify pockets of growth to further boost value. Focus on finding a marketing mix that combines a strategic view with the greatest impact on results. Optimize all approaches you know to be effective, but also experiment with new ones to always be innovating.
Marketing budgets will always be examined in detail, particularly in times of economic downturn, which is why it is vital to focus on the most effective marketing leads and monopolize on their momentum. Additionally, make sure your marketing strategy is supported by data proving its success. Leverage your data science capabilities, such as building self-generating reports with marketing spending recommendations and predicted uplift. As a result, your digital business has a clear, transparent strategy with an eye on results, even in the face of market volatility.
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Reinvest in customer experience
Businesses should pay close attention to their existing customer segments and ensure they deliver on what they want from their business. Capture customer data from website visits and surveys, identify important customer clusters, and use non-identifiable data for personalization. Target your advertising to these insights and make each and every customer interaction more personalized and valuable.
The result? Customers feel appreciated as you remind them of what sets you apart from your competitors. By bringing the customer focus back to your pre-existing value, you stoke loyalty, keeping your best customers coming back. This both increases short-term value and secures long-term business for the future. This emphasis on customer experience protects the value of your business.
Dedicate time to analyzing and utilizing data
Finally, embrace a data-driven, analytics-first approach in your business, especially in times of economic turmoil. Not only will this help you understand how your business functions in varying market situations, but it in turn helps support maximum efficiency across the board to whether economics volatility. You will validate your proven strategies, such as those listed above, and surface previously hidden value, providing stability and protection from any external shocks. Examples of useful data sets include behavioral data of customers and website visitors, traffic sources, and information on financial systems.
However, this data-backed strategy shouldn’t be limited to behind-the-scenes insights.
If used during the entire customer journey, businesses can use this data to unlock more value by finding new sources of revenue and maximizing best practices across the board. You can discover marginal gains and larger-scale growth opportunities, which will ultimately help outperform the competition, even in shaky markets.
Working through uncertain market conditions is daunting for any company, no matter the size and presumed stability of the organization. However, there are many steps digital businesses can take to not only stabilize performance during economic downturns, but to thrive and grow in previously undiscovered ways. Faced with the great challenge of survival in a volatile economy, businesses have a once-in-a-lifetime chance to regroup internally and strengthen from the inside out. By focusing on the four key areas listed above, any digital company can take advantage of new opportunities and unlock untapped value.