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2 Managing Customers Through Economic Cycles

If we hearken back to previous generations especially
“depression babies” spending was characteristically stoic
with patience and endurance toward one’s lifestyle, i.e. if
they didn’t have it, they didn’t spend it.

This is in direct contrast to behaviors during these recent
boom times. Consumers conspicuously consumed. They
were able to leverage homes and other assets to gain
access to extra money and so have been able to purchase
more. However, they were also able to go further into
debt. Credit cards have enabled us to spend more money
than we actually earn. From a behavioral perspective, this
has created an expectation of material entitlement beyond
that which most generations could typically afford.

During 2008, the economy tanked. Real estate plummeted.
People’s life savings were shattered, i.e. cut in half. Jobless
claims reached a 26-year high. Consumers’ behaviors
changed, and changed quickly.

What happened to businesses? What happened to their
customers? Those businesses that were prepared and able
to proactively use the economic turn as an opportunity
flourished. Those that weren’t struggled to survive and in
some cases, disappeared.

What was the difference?
That was the question we asked ourselves. So following
the 2008 melt-down, we at the Centre for Information Based
Competition started tracking:

● Consumer behavioral changes
● Business behavioral changes
● Businesses’ response to behavioral changes
● How business changed buying behavior.

And using that data determined which core business com-
petencies were critical to sustained success during changing
economic times.