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32 Managing Customers Through Economic Cycles

relative to changes in economic cycles. For example, the
airline industry may be a “canary in the coal mine” to hotels
or other vacation destinations. Therefore, hotels should be
monitoring not only their industry but other suppliers to
their industry.

Another dimension beyond where in the supply chain a
business finds itself is also what position they are in the
discretionary versus nondiscretionary spending of a con-
sumer. Discretionary spending would be a leading indicator
to nondiscretionary spending in a down turning
environment.

In an improving economical cycle, the “canary” indi-
cators would be reversed, e.g. nondiscretionary spending
would stabilize and increase, then discretionary would
follow.

While scenario planning can provide direction on what
to do and when, businesses still need to be able to
evaluate their actions and decisions with business cases.
This is particularly true for Business 2 Business (B2B)
companies.

At any given time, there are businesses booming and
others going bust. In one B2B report, it stated typically
(regardless of economic cycle):

● 30% to 40% of businesses were experiencing rapid to
exponential growth.

● 40% of businesses were stable
● 20% were unstable or in decline.

Some business strategies work in one economic cycle
and some are relevant to all cycles. Regardless, the first
strategy for any business should be to understand its
current economic environment while planning for the
next.